27668 Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations

agency records. 5 U.S.C. 552(a)(4)(i). On

March 15, 1991 the Board published for

comment in the Federal Register its

proposed FOIA Fee Schedule. 56 FR

11114. No comments were received in

response to that notice and the Board

issued a final Fee Schedule on May 6,

1991.

Pursuant to 10 CFR 1703.107(b)(6) of

the Board’s regulations, the Board’s

General Manager will update the Fee

Schedule once ever 12 months. Previous

Fee Schedule updates were published in

the Federal Register and went into

effect, most recently, on June 1, 1997. 62

FR 30432, June 4, 1997.

Board Action

Accordingly, the Board issues the

following schedule of updated fees for

services performed in response to FOIA

requests:

Defense Nuclear Facilities Safety Board

Schedule of Fees for FOIA Services

(Implementing 10 CFR § 1703.107(b)(6))

Search or Review Charge: $52 per hour

Copy Charge (paper): $.05 per page, if

done in-house, or generally

available commercial rate

(approximately $.10 per page)

Copy Charge (3.5’’ diskette): $5.00 per

diskette

Copy Charge (audio cassette): $3.00 per

cassette

Duplication of Video: $25.00 for each

individual videotape; $16.50 for

each additional individual

videotape

Copy Charge for large documents (e.g.,

maps, diagrams): Actual

commercial rates

Dated: May 31, 1998.

Kenneth M. Pusateri,

General Manager.

[FR Doc. 98–13345 Filed 5–19–98; 8:45 am]

BILLING CODE 3670–01–M

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 960

[No. 98–18]

RIN 3069–AA73

Amendment of Affordable Housing

Program Regulation

AGENCY: Federal Housing Finance

Board.

ACTION: Interim final rule.

SUMMARY: The Federal Housing Finance

Board (Finance Board) is amending its

regulation governing the operation of

the Affordable Housing Program (AHP

or Program) to make certain technical

revisions to the regulation that would

clarify Program requirements and

improve the operation of the AHP.

EFFECTIVE DATE: The interim final rule

shall be effective on June 19, 1998. The

Finance Board will accept written

comments on this interim final rule on

or before July 20, 1998.

ADDRESSES: Mail comments to Elaine L.

Baker, Secretary to the Board, Federal

Housing Finance Board, 1777 F Street,

N.W., Washington, D.C. 20006.

Comments will be available for public

inspection at this address.

FOR FURTHER INFORMATION CONTACT:

Richard Tucker, Deputy Director,

Compliance Assistance Division, Office

of Policy, (202) 408–2848, or Sharon B.

Like, Senior Attorney-Advisor, (202)

408–2930, or Roy S. Turner, AttorneyAdvisor, (202) 408–2512, Office of

General Counsel, Federal Housing

Finance Board, 1777 F Street, N.W.,

Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

Section 10(j)(1) of the Federal Home

Loan Bank Act (Act) requires each

Federal Home Loan Bank (Bank) to

establish a Program to subsidize the

interest rate on advances to members of

the Federal Home Loan Bank System

(Bank System) engaged in lending for

long-term, low- and moderate-income,

owner-occupied and affordable rental

housing at subsidized interest rates. See

12 U.S.C. 1430(j)(1). The Finance Board

is required to promulgate regulations

governing the Program. See id. The

Finance Board’s existing regulation

governing the operation of the Program

is set forth in part 960 of the Finance

Board’s regulations (AHP regulation).

See 12 CFR part 960.

On August 4, 1997, the Finance Board

published a final rule adopting

comprehensive revisions to the AHP

regulation, which, among other changes,

authorized the 12 Banks, rather than the

Finance Board, to approve applications

for AHP subsidies beginning January 1,

1998. See 62 FR 41812 (Aug. 4, 1997).

In the course of implementing the

changes to the Program under the recent

revisions to the AHP regulation, the

Banks and Finance Board staff have

identified a number of technical issues

whose resolution would clarify Program

requirements and improve the

effectiveness of the Program. The

Finance Board previously published a

list of Questions and Answers prepared

by Finance Board staff in order to

provide guidance on some of these

issues. See 62 FR 66977 (Dec. 23, 1997).

This interim final rule codifies portions

of the Finance Board staff guidance

contained in the Questions and Answers

and addresses additional technical

issues that have arisen in the course of

implementing the 1997 revisions to the

AHP regulation. Although the interim

final rule will become effective 30 days

after publication in the Federal

Register, the Finance Board requests

comment on all aspects of the rule

during a 60-day comment period.

II. Analysis of Interim Final Rule

A. Definitions—Section 960.1

1. Definition of ‘‘Affordable’’

Under § 960.5(b)(1) of the current

AHP regulation, in order for rental

housing to be eligible to be financed by

an AHP subsidy, at least 20 percent of

the units must be occupied by and

affordable for very low-income

households. See 12 CFR 960.1,

960.5(b)(1). Section 960.1 of the current

AHP regulation provides that

‘‘affordable’’ means that ‘‘the rent

charged to a household for a unit that

is committed to be affordable in an AHP

application does not exceed 30 percent

of the income of a household of the

maximum income and size expected,

under the commitment made in the

AHP application, to occupy the unit

(assuming occupancy of 1.5 persons per

bedroom or 1.0 person per unit without

a separate bedroom).’’ See id. § 960.1

This definition is intended to make

clear that the 30 percent-of-income

limitation on rent applies to all units in

a project which, according to the

commitments made in the AHP

application, are to be reserved for

occupancy by households with incomes

at or below 80 percent of the median

income for the area. However,

subsequent to the adoption of the

definition, questions have arisen as to

which units in a rental project are

subject to the 30 percent-of-income

limitation. The revised definition of

‘‘affordable’’ is intended to clarify this

issue. The interim final rule defines

‘‘affordable’’ to mean that ‘‘the rent

charged for a unit which is to be

reserved for occupancy by a household

with an income at or below 80 percent

of the median income for the area, does

not exceed 30 percent of the income of

a household of the maximum income

and size expected, under the

commitment made in the AHP

application, to occupy the unit

(assuming occupancy of 1.5 persons per

bedroom or 1.0 person per unit without

a separate bedroom).’’
Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations 27669

2. Definitions of ‘‘Low- or ModerateIncome Household’’ and ‘‘Very LowIncome Household’’ for Housing With

Current Occupants

Under § 960.1 of the current AHP

regulation, in the case of projects

involving the purchase or rehabilitation

of occupied rental housing, a household

occupying such housing is deemed to be

a ‘‘very low-income household’’ if, at

the time the purchase or rehabilitation

of the housing is completed, the

household has an income at or below 50

percent of the median income for the

area. See id. This provision may make

it difficult for the sponsor of such a

project to commit to reserve a specific

proportion of units for very low-income

households because of the uncertainty

as to how many of the current occupants

will qualify as very low-income

households at some future date when

the project purchase or rehabilitation is

completed. Consequently, the interim

final rule provides that current

occupants will be deemed to by very

low-income households if they have

incomes at or below 50 percent of the

median income for the area at the time

the application for AHP subsidy is

submitted to the Bank. The interim final

rule makes a parallel change to the

definition of ‘‘low- or moderate-income

household’’ in § 960.1 of the current

AHP regulation.

3. Definition of ‘‘Owner-Occupied Unit’’

as Including Two-to-Four Family

Housing

Section 960.1 of the current AHP

regulation defines ‘‘owner-occupied

unit’’ as a unit in an ‘‘owner-occupied

project,’’ which is defined as a project

involving the purchase, construction, or

rehabilitation of owner-occupied

housing, including condominiums and

cooperative housing, by or for very lowor low- or moderate-income households.

See id. § 960.1. The interim final

clarifies that two-to-four family owneroccupied housing consisting of one

owner-occupied unit and one or more

rental units constitutes a single owneroccupied unit for purposes of the AHP.

The income eligibility and affordability

requirements of the AHP regulation do

not apply to the rental units in two-tofour family housing.

4. Definition of ‘‘Rental Project’’ as

Including Overnight Shelters for

Homeless Households

Under § 960.1 of the current AHP

regulation, a ‘‘rental project’’ is defined

to include ‘‘transitional housing for

homeless households.’’ See id. The

interim final rule clarifies that overnight

shelters for homeless households also

are considered rental housing under the

AHP.

B. Terms of Advisory Council

Members—Section 960.4(d)

Section 960.4(d) of the current AHP

regulation provides that a Bank’s board

of directors shall appoint Advisory

Council members to serve for no more

than three consecutive terms of three

years each, and such terms shall be

staggered to provide continuity in

experience and service to the Advisory

Council. See id. § 960.4(d). The interim

final rule restates this requirement to

make clear that, as intended by the

current AHP regulation, an Advisory

Council member’s individual term must

be three years. The interim final rule

also adds language to clarify that an

Advisory Council member appointed to

fill a vacancy shall be appointed for the

unexpired term of his or her predecessor

in office and that appointments for the

unexpired term of a predecessor shall

not count toward the three-term limit.

C. Minimum Eligibility Standards For

AHP Projects—Section 960.5

1. Fair Housing Compliance—

§ 960.5(b)(9)

Section 960.5(b)(9) of the interim final

rule clarifies the requirement in the

current AHP regulation that projects, as

proposed, must comply with applicable

fair housing law requirements and

demonstrate how the project will be

affirmatively marketed in order to be

eligible to receive AHP funds. See id.

§ 960.5(b)(9). The interim final rule is

intended to clarify that compliance with

any applicable fair housing laws

includes compliance with applicable

federal and state laws on housing

accessibility for the disabled, as well as

affirmative marketing requirements

under the Fair Housing Act, as they

relate to disabled persons.

There are a number of federal and

state fair housing laws relating to

persons with disabilities that may apply

to AHP projects, depending upon: the

type of housing or housing design

(single-family, multifamily, homeless

shelters, buildings with or without

elevators, or mixed use buildings);

whether the project involves

acquisition, rehabilitation or new

construction; and whether the project

involves federal or state funds. Given

the number of different laws governing

fair housing and accessibility

requirements for the disabled, it is

recommended that the appropriate

enforcing agencies be consulted for

clarification on any specific issue

relating to compliance.

2. District Eligibility Requirements—

Section 960.5(b)(10)

Section 960.5(b)(10)(i) of the current

AHP regulation authorizes a Bank, after

consultation with its Advisory Council,

to establish one or more of the following

additional eligibility requirements for

AHP applications: (1) A requirement

that the amount of subsidy requested for

the project does not exceed limits

established by the Bank as to the

maximum amount of AHP subsidy

available per member each year; or per

member, per project, or per project unit

in a single funding period; (2) a

requirement that the project is located

in the Bank’s District; or (3) a

requirement that the member submitting

the application has made use of a credit

product offered by the Bank, other than

AHP or Community Investment Program

(CIP) credit products, within the

previous 12 months. See id.

§ 960.5(b)(10)(i). Section 960.5(b)(10)(ii)

further provides that District eligibility

requirements must apply equally to all

members. See id. § 960.5(b)(10)(ii).

Several of the Banks would like to

have the option to make the use of a

minimum amount of Bank credit

products a prerequisite for applying for

large amounts of AHP subsidy. Under

§ 960.5(b)(10)(i)(C) of the current AHP

regulation, which authorizes the Banks

to condition the availability of AHP

subsidy upon a member’s use of ‘‘a’’

credit product, this option is not now

available. See id. § 960.5(b)(10)(i)(C).

Further, these Banks have proposed that

the required level of credit product

usage be linked to a member’s asset size.

For example, a Bank proposes to allow

all members to have access to up to

$50,000 of AHP subsidy per year, but

require members wishing to apply for

more than $50,000 to have outstanding

average daily balances of Bank credit

products in an amount equal to at least

1.5 percent of the member’s total assets.

In support of this kind of requirement,

the Banks have argued that because

AHP subsidies are derived from a

Bank’s earnings, fairness requires that

availability of subsidies be linked to the

extent to which a member contributes to

the Bank’s earnings through the

purchase of other Bank credit products.

These Banks argue that a member’s use

of a single Bank credit product does not

make a meaningful contribution to Bank

earnings.

Accordingly, the interim final rule

revises the language of

§ 960.5(b)(10)(i)(C) of the current AHP

regulation to permit a Bank to establish

a requirement that a member submitting

an AHP application has made use of a

minimum amount of a credit product
27670 Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations

offered by the Bank, other than AHP or

CIP credit products, within the previous

12 months, provided that such a

minimum threshold for credit product

usage established by a Bank shall not

exceed 1.5 percent of a member’s total

assets, and all members shall have

access to some amount of AHP subsidy,

as determined by the Bank, regardless of

whether they meet the Bank’s minimum

threshold for credit product usage.

Section 960.5(b)(10)(ii) of the current

AHP regulation provides that ‘‘District

eligibility requirements must apply

equally to all members.’’ See id.

§ 960.5(b)(10)(ii). The interim final rule

revises this language to clarify that

‘‘[a]ny limit on the amount of AHP

subsidy available per member must

result in equal amounts of AHP subsidy

available to all members.’’ This

requirement is intended to ensure that

such limits are not structured or applied

in a discriminatory manner.

D. Procedure for Approval of

Applications for Funding—Section

960.6

1. Instructions for the Competitive

Scoring Process—Section 960.6(b)(4)(ii)

and (iii)

The interim final rule adds specific

references to the targeting and subsidyper-unit scoring criteria to clarify the

cross references in §§ 960.6(b)(4)(ii) and

(iii) of the current AHP regulation. See

id. §§ 960.6(b)(4)(ii), (iii).

2. Scoring Criterion on Use of Donated

Government-Owned or Other

Properties—Section 960.6(b)(4)(iv)(A)

Under § 960.6(b)(4)(iv)(A) of the

current AHP regulation, an application

may receive points if it involves the

creation of housing using a significant

proportion of units or land donated or

conveyed for a nominal price by the

federal government or any agency or

instrumentality thereof, or by any other

party. See id. § 960.6(b)(4)(iv)(A).

Questions have arisen as to what should

be considered a ‘‘nominal price.’’ The

interim final rule adds language to

§ 960.6(b)(4)(iv)(A) clarifying that a

nominal price is a small, negligible

amount, most often one dollar, and may

be accompanied by modest expenses

related to the conveyance of the

property.

3. Targeting Score for Owner-Occupied

Projects—Section 960.6(b)(4)(iv)(C)(2)

The first sentence of

§ 960.6(b)(4)(iv)(C)(2) of the current

AHP regulation provides that

applications for owner-occupied

projects shall be awarded points based

on the percentage of units in the project

to be provided to households with

incomes at or below 80 percent of the

median income for the area. See id.

§ 960.6(b)(4)(iv)(C)(2). The wording of

this sentence creates the erroneous

implication that an AHP owneroccupied project may contain one or

more units for households with incomes

above 80 percent of the median income

for the area. Under the Act, AHP

subsidies may be used only to finance

owner-occupied housing for households

with incomes at or below 80 percent of

the median income for the area. See 12

U.S.C. 1430(j)(2)(A). Consequently, the

interim final rule deletes the first

sentence of § 960.6(b)(4)(iv)(C)(2) of the

current AHP regulation. Applications

for owner-occupied projects shall be

awarded points based on a declining

scale, with projects having the highest

percentage of units targeted to

households with the lowest percentage

of median income for the area awarded

the highest number of points.

4. Scoring Criterion for Housing for

Homeless Households—Section 960.6

(b)(4)(iv)(D)

Under § 960.6(b)(4)(iv)(D) of the

current AHP regulation, an application

may receive points if it involves ‘‘[t]he

creation of transitional housing,

excluding overnight shelters, for

homeless households permitting a

minimum of six months occupancy, or

the creation of rental housing reserving

at least 20 percent of the units for

homeless households.’’ Id.

§ 960.6(b)(4)(iv)(D). The interim final

rule restates this provision in order to

clarify the language. No substantive

change is intended. The revised

language omits the express exclusion of

overnight shelters contained in the

current language, because it is clear that

overnight shelters do not come within

the category of housing permitting a

minimum of six months occupancy.

5. Scoring Criterion for Economic

Diversity—Section 960.6(b)(4)(iv)(F)(8)

Under § 960.6(b)(4)(iv)(F)(8) of the

current AHP regulation, applications for

AHP subsidy may receive points for

meeting the ‘‘Economic Diversity’’

scoring criterion if they involve the

creation of housing that either: (1) is

part of a strategy to end isolation of very

low-income households by providing

economic diversity through mixedincome housing in low- or moderateincome neighborhoods, or (2) provides

very low- or low- or moderate-income

households with housing opportunities

in areas where the median household

income exceeds 80 percent of the

median income for the area. Id.

§ 960.6(b)(4)(iv)(F)(8).

One of the Banks has pointed out an

ambiguity in the second alternative

described above, which makes that

alternative unworkable. Specifically,

assuming the word ‘‘area’’ refers to the

same area each time it appears in the

following phrase, it will always be the

case that a project provides ‘‘housing

opportunities in areas where the median

household income exceeds 80 percent of

the median income for the area,’’

because the median income for an area,

by definition, always exceeds 80 percent

of the median income for that area.

The general intent of the second

alternative requirement in the

‘‘Economic Diversity’’ criterion is to

promote housing opportunities for very

low- and low- or moderate-income

households in areas that are wealthier

relative to the surrounding areas.

Therefore, the interim final rule revises

the second alternative to provide that

applications may receive points for

‘‘Economic Diversity’’ if they involve

the creation of housing that provides

very low- or low- or moderate-income

households with housing opportunities

in neighborhoods or cities where the

median income exceeds the median

income for the larger area—such as the

city, county, or Primary Metropolitan

Statistical Area—in which the

neighborhood or city is located.

6. Scoring Criterion for Community

Involvement—Section

960.6(b)(4)(iv)(F)(10)

Under § 960.6(b)(4)(iv)(F)(10) of the

current AHP regulation, an application

for AHP subsidy may receive points for

meeting the ‘‘Community Involvement’’

scoring criterion if it shows

demonstrated support for the AHP

project by local government, community

organizations, or individuals, other than

as project sponsors, through the

commitment by such entities or

individuals of donated goods and

services, or volunteer labor. Id. § 960.6

(b)(4)(iv)(F)(10). Several of the Banks

have requested clarification of what

constitutes a donated good or service

from a local government. For example,

local governments may provide support

to housing projects in the form of

property tax deferment or abatement,

zoning changes or variances,

infrastructure improvements, or fee

waivers. Each of these forms of local

government initiatives constitutes the

kind of non-cash support for the project

that merits scoring credit under the

‘‘Community Involvement’’ criterion.

Therefore, the interim final rule

specifies that these items and any

similar types of non-cash support for a

project by local government are to be
Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations 27671

considered under the ‘‘Community

Involvement’’ criterion.

E. Modifications of Applications—

Sections 960.7 and 960.9

Sections 960.7 and 960.9 of the

current AHP regulation govern

modifications to approved AHP

applications prior to and subsequent to

project completion, respectively. See id.

§ § 960.7, 960.9. Each of these sections

provides that as a threshold requirement

for the approval of a modification, it

must be shown that ‘‘there is or will be

a change in the project that materially

affects the facts under which the

application was originally scored and

approved under the Bank’s competitive

application program * * * .’’ See id.

§ § 960.7(a), 960.9. A number of the

Banks have requested clarification of

what constitutes a ‘‘material change’’

affecting the facts under which the

application was originally scored and

approved. Accordingly, the interim final

rule revises § § 960.7 and 960.9 of the

current AHP regulation by replacing the

‘‘material change’’ requirement with

language clarifying that a modification

is triggered where there is or will be a

change to a project that would change

the score that the project application

received in the funding period in which

it was originally scored and approved,

had the changed facts been operative at

that time.

F. Use of Repaid Subsidies—Section

960.12(e)

Under §§ 960.12(a) and (b) of the

current AHP regulation, which set forth

the requirements for the recovery of

AHP subsidy in cases of noncompliance

with AHP requirements, interest on

AHP subsidies must be recovered,

where appropriate. See id. § 960.12(a),

(b). Section 960.12(e) of the current AHP

regulation provides that amounts repaid

to a Bank as a result of noncompliance

with AHP requirements shall be made

available for other AHP-eligible projects.

See id. § 960.12(e). The interim final

rule clarifies that any recovered interest

on such amounts also must be made

available for other AHP-eligible projects.

G. Agreements—Section 960.13

1. Retention Agreements for OwnerOccupied Units Constructed or

Rehabilitated With AHP-Assisted

Financing—Sections 960.13(c)(4) and

(d)(1)

Section 960.13(c)(4) of the current

AHP regulation sets forth the required

elements for retention agreements for

AHP-assisted owner-occupied units

financed by a loan from the proceeds of

a subsidized advance. See id.

§ 960.13(c)(4). Specifically, it requires

such units to be subject to a deed

restriction or other legally enforceable

retention agreement or mechanism

requiring that: (1) the Bank or its

designee is to be given notice of any sale

or refinancing of the unit occurring

prior to the end of the retention period;

and (2) in the case of a refinancing prior

to the end of the retention period, the

full amount of the interest rate subsidy

received by the owner, based on the pro

rata portion of the interest rate subsidy

imputed to the subsidized advance

during the period the owner occupied

the unit prior to refinancing, shall be

repaid to the Bank from any net gain

realized upon the refinancing, unless

the unit continues to be subject to a

deed restriction or other legally

enforceable retention agreement or

mechanism for the remainder of the 5-

year retention period. See id.

The retention agreement described in

§ 960.13(c)(4) is intended to be used in

situations where a member uses the

proceeds of a subsidized advance to

provide permanent financing for the

purchase of individual units. Because

each permanent loan is funded by a

subsidized advance, the permanent loan

incorporates some level of interest rate

subsidy that the household purchasing

a unit benefits from during the term of

the loan. Thus, there is a direct link

between the subsidized advance and the

permanent financing for the unit.

Section 960.13(c)(4) does not address

the situation where a member uses a

subsidized advance to finance a loan to

a housing developer to build or

rehabilitate owner-occupied units,

which then are purchased by

households with permanent financing

from another source. In this situation,

the purchaser essentially receives a pro

rata portion of the interest rate subsidy

in the construction or rehabilitation

loan in the form of a lump-sum

reduction in the purchase price

resulting from the subsidized financing.

The amount of the reduction in the

purchase price can be determined by

spreading the total value of the AHP

subsidy across all the units financed by

the construction or rehabilitation loan,

and apportioning the subsidy on a pro

rata basis based upon the relative prices

of the units. In effect, the units are

financed with AHP subsidy in a similar

manner to units purchased by

homebuyers who receive a direct

subsidy in the form of downpayment

assistance.

Under § 960.13(d)(1) of the current

AHP regulation, where a purchaser uses

a direct subsidy in the form of

downpayment assistance to purchase a

unit, the unit must be subject to a deed

restriction or other legally enforceable

retention agreement or mechanism

requiring that: (1) The Bank or its

designee is to be given notice of any sale

or refinancing of the unit occurring

prior to the end of the retention period;

(2) in the case of a sale prior to the end

of the retention period, an amount equal

to a pro rata share of the direct subsidy,

reduced for every year the seller owned

the unit, shall be repaid to the Bank

from any net gain realized upon the sale

of the unit after deduction for sales

expenses, unless the purchaser is a lowor moderate-income household; and (3)

in the case of a refinancing prior to the

end of the retention period, an amount

equal to a pro rata share of the direct

subsidy, reduced for every year the

occupying household has owned the

unit, shall be repaid to the Bank from

any net gain realized upon the

refinancing, unless the unit continues to

be subject to a deed restriction or other

legally enforceable retention agreement

or mechanism for the remainder of the

retention period. See id. § 960.13(d)(1).

In sum, the AHP interest rate subsidy

in a construction or rehabilitation loan

can be viewed as the functional

equivalent of a lump-sum reduction in

the ultimate purchase prices of all the

units financed by such loan. This is

similar to the situation where units are

purchased by homebuyers who receive

a direct subsidy in the form of

downpayment assistance. Therefore, the

Finance Board proposes to add a new

paragraph (c)(4)(ii) to § 960.13(c)(4) of

the current AHP regulation requiring

owner-occupied units financed by AHPsubsidized construction or

rehabilitation loans to be subject to

retention agreements similar to those

required by § 960.13(d)(1) for owneroccupied units financed by a direct

subsidy.

The interim final rule also revises the

language of § 960.13(d)(1) to address

situations parallel to those discussed

above, but which involve an AHP direct

subsidy. For example, in some

situations, a housing developer may

receive the proceeds of a direct subsidy

to finance the construction or

rehabilitation of owner-occupied units,

which then are purchased by

households with permanent financing

from another source. As in the case

where such units are constructed or

rehabilitated with an AHP-subsidized

loan, the purchasers of the units

essentially receive a pro rata portion of

the direct subsidy used to finance the

construction or rehabilitation of the

units, in the form of a lump-sum

reduction in the units’ purchase price.

The interim final rule is intended to

make clear that, although the purchasers
27672 Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations

of the units do not directly receive the

proceeds of the direct subsidy, the units

must be subject to AHP retention/

recapture mechanisms.

2. Termination of AHP IncomeEligibility and Affordability Restrictions

After Foreclosure—Sections

960.13(c)(5)(iv) and (d)(2)(iv)

Under §§ 960.13(c)(5)(iv) and

(d)(2)(iv) of the current AHP regulation,

a retention agreement for an AHP rental

project must incorporate a provision

providing that the income-eligibility

and affordability restrictions applicable

to the project may terminate upon

foreclosure or transfer in lieu of

foreclosure. See id. §§ 960.13(c)(5)(iv),

(d)(2)(iv). The purpose of this provision

is to ensure that in cases where an AHP

project goes into foreclosure, the AHP

income-eligibility and affordability

restrictions do not impede transfer of

the project after foreclosure. As

currently worded, §§ 960.13(c)(5)(iv)

and (d)(2)(iv) could be read mistakenly

to mean that upon the initiation of

foreclosure, AHP income-eligibility and

affordability restrictions automatically

terminate. This is not the intended

meaning of these provisions. Rather, the

Finance Board intends that AHP

income-eligibility and affordability

restrictions incorporated in any lien on

a project will be extinguished in the

foreclosure process in connection with

the repayment, if any, of AHP subsidy.

Similarly, the Finance Board intends

that any deed restriction on the project

incorporating AHP income-eligibility

and affordability requirements will be

extinguished after foreclosure.

Consequently, the interim final rule

replaces the word ‘‘upon’’ in

§§ 960.13(c)(5)(iv) and (d)(2)(iv) of the

current AHP regulation with ‘‘after,’’ so

that the regulation provides for the

termination of AHP income-eligibility

and affordability restrictions after

foreclosure.

In addition, the interim final rule

deletes the reference to transfers in lieu

of foreclosure, because transfers in lieu

of foreclosure do not extinguish liens on

the property transferred other than the

lien of the transferee. Consequently,

when an AHP project is transferred in

lieu of foreclosure, the transferee must

foreclose on the project to remove any

remaining AHP lien and the incomeeligibility and affordability restrictions

incorporated in the lien. After such

foreclosure, §§ 960.13(c)(5)(iv) and

(d)(2)(iv) provide for the termination of

the AHP income-eligibility and

affordability restrictions. The interim

final rule adds similar language to the

provisions of the AHP regulation

governing retention agreements for

AHP-assisted owner-occupied projects.

See id. §§ 960.13(c)(4), (d)(1).

III. Regulatory Flexibility Act

Because no notice of proposed

rulemaking is required for this

regulation, the provisions of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.) do not apply.

List of Subjects in 12 CFR Part 960

Credit, Federal home loan banks,

Housing, Reporting and recordkeeping

requirements. Accordingly, the Finance

Board hereby amends title 12, chapter

IX, part 960, Code of Federal

Regulations, as follows.

PART 960—AFFORDABLE HOUSING

PROGRAM

1. The authority citation for part 960

continues to read as follows:

Authority: 12 U.S.C. 1430(j).

2. Amend § 960.1, by revising the

definitions of ‘‘Affordable’’, ‘‘Low-or

moderate-income household’’ paragraph

(2)(ii), ‘‘Owner-occupied unit’’, ‘‘Rental

project’’, and ‘‘Very low-income

household’’ paragraph (2)(ii) to read as

follows:

§ 960.1 Definitions.

* * * * *

Affordable means that the rent

charged for a unit which is to be

reserved for occupancy by a household

with an income at or below 80 percent

of the median income for the area, does

not exceed 30 percent of the income of

a household of the maximum income

and size expected, under the

commitment made in the AHP

application, to occupy the unit

(assuming occupancy of 1.5 persons per

bedroom or 1.0 person per unit without

a separate bedroom).

* * * * *

Low- or moderate-income household.

* * * * *

(2) * * *

(ii) Housing with current occupants.

In the case of projects involving the

purchase or rehabilitation of rental

housing with current occupants, low- or

moderate-income household means an

occupying household with an income at

or below 80 percent of the median

income for the area at the time an

application for AHP subsidy is

submitted to the Bank.

* * * * *

Owner-occupied unit means a unit in

an owner-occupied project. Housing

with two to four dwelling units

consisting of one owner-occupied unit

and one or more rental units shall be

considered a single owner-occupied

unit.

Rental project means a project

involving the purchase, construction, or

rehabilitation of rental housing,

including overnight shelters and

transitional housing for homeless

households and mutual housing, where

at least 20 percent of the units in the

project are occupied by and affordable

for very low-income households.

* * * * *

Very low-income household.

* * * * *

(2) * * *

(ii) Housing with current occupants.

In the case of projects involving the

purchase or rehabilitation of rental

housing with current occupants, very

low-income household means an

occupying household with an income at

or below 50 percent of the median

income for the area at the time an

application for AHP subsidy is

submitted to the Bank.

* * * * *

3. Section 960.4 is amended by

revising paragraph (d) to read as

follows:

§ 960.4 Advisory Councils.

* * * * *

(d) Terms of Advisory Council

members. Advisory Council members

shall be appointed by the Bank’s board

of directors to serve for terms of three

years, and such terms shall be staggered

to provide continuity in experience and

service to the Advisory Council. An

Advisory Council member appointed to

fill a vacancy shall be appointed for the

unexpired term of his or her predecessor

in office. No Advisory Council member

may be appointed to serve for more than

three consecutive terms. Appointments

for the unexpired term of a predecessor

shall not count toward the three-term

limit.

* * * * *

4. Section 960.5 is amended by

revising paragraphs (b)(9), (b)(10)(i)(C),

and (b)(10)(ii) to read as follows:

§ 960.5 Minimum eligibility standards for

AHP projects.

* * * * *

(b) * * *

(9) Fair housing. The project, as

proposed, must comply with applicable

federal and state laws on fair housing

and housing accessibility, including, but

not limited to, the Fair Housing Act, the

Rehabilitation Act of 1973, the

Americans with Disabilities Act of 1990,

and the Architectural Barriers Act of

1969, and must demonstrate how the

project will be affirmatively marketed. (10) District eligibility requirements.

(i) * * *

(C) A requirement that the member

submitting the application has made use

of a minimum amount of a credit
Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations 27673

product offered by the Bank, other than

AHP or CIP credit products, within the

previous 12 months, provided that such

a minimum threshold for credit product

usage established by a Bank shall not

exceed 1.5 percent of a member’s total

assets, and all members shall have

access to some amount of AHP subsidy,

as determined by the Bank, regardless of

whether they meet the Bank’s minimum

threshold for credit product usage.

(ii) Any limit on the amount of AHP

subsidy available per member must

result in equal amounts of AHP subsidy

available to all members.

5. Section 960.6 is amended by

revising the second sentence of

paragraph (b)(4)(ii), the fourth sentence

of paragraph (b)(4)(iii), and paragraphs

(b)(4)(iv)(A), (b)(4)(iv)(C)(2),

(b)(4)(iv)(D), (b)(4)(iv)(F)(8), and

(b)(4)(iv)(F)(10) to read as follows:

§ 960.6 Procedure for approval of

applications for funding.

* * * * *

(b) * * *

(4) * * *

(ii) Point allocations. * * * The

scoring criterion for targeting identified

in paragraph (b)(4)(iv)(C) of this section

shall be allocated at least 20 points.

* * *

(iii) Satisfaction of scoring criteria.

* * * A Bank shall designate the

targeting and subsidy-per-unit scoring

criteria identified in paragraphs

(b)(4)(iv)(C) and (H), respectively, of this

section as variable-point criteria. * * *

(iv) * * *

(A) Use of donated governmentowned or other properties. The creation

of housing using a significant

proportion of units or land donated or

conveyed for a nominal price by the

federal government or any agency or

instrumentality thereof, or by any other

party. For purposes of this paragraph, a

nominal price is a small, negligible

amount, most often one dollar, and may

be accompanied by modest expenses

related to the conveyance of the

property for use by the project.

* * * * *

(C) * * *

(2) Owner-occupied projects.

Applications for owner-occupied

projects shall be awarded points based

on a declining scale, with projects

having the highest percentage of units

targeted to households with the lowest

percentage of median income for the

area awarded the highest number of

points.

* * * * *

(D) Housing for homeless households.

The creation of rental housing reserving

at least 20 percent of the units for

homeless households, or the creation of

transitional housing for homeless

households permitting a minimum of

six months occupancy.

* * * * *

(F) * * *

(8) Economic diversity. The creation

of housing that is part of a strategy to

end isolation of very low-income

households by providing economic

diversity through mixed-income

housing in low- or moderate-income

neighborhoods, or providing very low-or

low- or moderate-income households

with housing opportunities in

neighborhoods or cities where the

median income exceeds the median

income for the larger surrounding area—

such as the city, county, or Primary

Metropolitan Statistical Area—in which

the neighborhood or city is located;

* * * * *

(10) Community involvement.

Demonstrated support for the project by

local government, other than as a project

sponsor, in the form of property tax

deferment or abatement, zoning changes

or variances, infrastructure

improvements, fee waivers, or other

similar forms of non-cash assistance, or

demonstrated support for the project by

community organizations or

individuals, other than as project

sponsors, through the commitment by

such entities or individuals of donated

goods and services, or volunteer labor;

* * * * *

6. Section 960.7 is amended by

revising paragraph (a) to read as follows:

§ 960.7 Modifications of applications prior

to project completion.

(a) Modification procedure. If, prior to

final disbursement of funds to a project

from all funding sources, there is or will

be a change in the project that would

change the score that the project

application received in the funding

period in which it was originally scored

and approved, had the changed facts

been operative at that time, a Bank, in

its discretion, may approve in writing a

modification to the terms of the

approved application, provided that:

* * * * *

7. Section 960.9 is amended by

revising the introductory text to read as

follows:

§ 960.9 Modifications of applications after

project completion.

Modification procedure. If, after final

disbursement of funds to a project from

all funding sources, there is or will be

a change in the project that would

change the score that the project

application received in the funding

period in which it was originally scored

and approved, had the changed facts

been operative at that time, a Bank, in

its discretion, may approve in writing a

modification to the terms of the

approved application, provided that:

* * * * *

8. Section 960.12 is amended by

revising paragraph (e) to read as follows:

§ 960.12 Remedial actions for

noncompliance.

* * * * *

(e) Use of repaid subsidies. Amounts

repaid to a Bank pursuant to this

section, including any interest, shall be

made available for other AHP-eligible

projects.

* * * * *

9. Section 960.13 is amended by

revising paragraphs (c)(4), (c)(5)(iv),

(d)(1), and (d)(2)(iv) to read as follows:

§ 960.13 Agreements.

* * * * *

(c) * * *

(4) Retention agreements for owneroccupied units. (i) Units with AHPassisted permanent financing. The

member shall ensure that an owneroccupied unit with permanent financing

obtained from the proceeds of a

subsidized advance is subject to a deed

restriction or other legally enforceable

retention agreement or mechanism

requiring that:

(A) The Bank or its designee is to be

given notice of any sale or refinancing

of the unit occurring prior to the end of

the retention period;

(B) In the case of a refinancing prior

to the end of the retention period, the

full amount of the interest rate subsidy

received by the owner, based on the pro

rata portion of the interest rate subsidy

imputed to the subsidized advance

during the period the owner occupied

the unit prior to refinancing, shall be

repaid to the Bank from any net gain

realized upon the refinancing, unless

the unit continues to be subject to a

deed restriction or other legally

enforceable retention agreement or

mechanism described in this paragraph

(c)(4)(i); and

(C) The obligation to repay AHP

subsidy to the Bank shall terminate after

any foreclosure.

(ii) Units constructed or rehabilitated

with AHP-assisted financing. The

member shall ensure that an owneroccupied unit constructed or

rehabilitated with a loan from the

proceeds of a subsidized advance but

which does not have permanent

financing from the proceeds of a

subsidized advance, is subject to a deed

restriction or other legally enforceable

retention agreement or mechanism

requiring that:
27674 Federal Register / Vol. 63, No. 97 /Wednesday, May 20, 1998 /Rules and Regulations

(A) The Bank or its designee is to be

given notice of any sale or refinancing

of the unit occurring prior to the end of

the retention period;

(B) In the case of a sale prior to the

end of the retention period, an amount

equal to the pro rata portion of the

interest rate subsidy imputed to the

subsidized advance that financed the

construction or rehabilitation loan for

the unit, reduced for every year the

seller owned the unit, shall be repaid to

the Bank from any net gain realized

upon the sale of the unit after deduction

for sales expenses, unless the purchaser

is a low- or moderate-income

household;

(C) In the case of a refinancing prior

to the end of the retention period, an

amount equal to the pro rata portion of

the interest rate subsidy imputed to the

subsidized advance that financed the

construction or rehabilitation loan for

the unit, reduced for every year the

owner occupied the unit, shall be repaid

to the Bank from any net gain realized

upon the refinancing, unless the unit

continues to be subject to a deed

restriction or other legally enforceable

retention agreement or mechanism

described in this paragraph (c)(4)(ii);

and

(D) The obligation to repay AHP

subsidy to the Bank shall terminate after

any foreclosure.

(5) * * *

(iv) The income-eligibility and

affordability restrictions applicable to

the project terminate after any

foreclosure.

* * * * *

(d) Special provisions where members

obtain direct subsidies. (1) Retention

agreements for owner-occupied units.

The member shall ensure that an owneroccupied unit that is purchased,

constructed, or rehabilitated with the

proceeds of a direct subsidy is subject

to a deed restriction or other legally

enforceable retention agreement or

mechanism requiring that:

(i) The Bank or its designee is to be

given notice of any sale or refinancing

of the unit occurring prior to the end of

the retention period;

(ii) In the case of a sale prior to the

end of the retention period, an amount

equal to a pro rata share of the direct

subsidy that financed the purchase,

construction, or rehabilitation of the

unit, reduced for every year the seller

owned the unit, shall be repaid to the

Bank from any net gain realized upon

the sale of the unit after deduction for

sales expenses, unless the purchaser is

a low- or moderate-income household;

(iii) In the case of a refinancing prior

to the end of the retention period, an

amount equal to a pro rata share of the

direct subsidy that financed the

purchase, construction, or rehabilitation

of the unit, reduced for every year the

occupying household has owned the

unit, shall be repaid to the Bank from

any net gain realized upon the

refinancing, unless the unit continues to

be subject to a deed restriction or other

legally enforceable retention agreement

or mechanism described in this

paragraph (d)(1); and

(iv) The obligation to repay AHP

subsidy to the Bank shall terminate after

any foreclosure.

(2) * * *

(iv) The income-eligibility and

affordability restrictions applicable to

the project terminate after any

foreclosure.

* * * * *

Dated: April 22, 1998.

By the Board of Directors of the Federal

Housing Finance Board.

Bruce A. Morrison,

Chairman.

[FR Doc. 98–13428 Filed 5–19–98; 8:45 am]

BILLING CODE 6725–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–NM–13–AD; Amendment

39–10535; AD 98–11–08]

RIN 2120–AA64

Airworthiness Directives; Airbus Model

A300, A310, and A300–600 Series

Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD),

applicable to certain Airbus Model

A300, A310, and A300–600 series

airplanes, that requires replacement of

the non-return valves located in the

engine fuel feed lines on the outer fuel

tank with new return valves; and, for

certain airplanes, replacement of the

inner tank booster pump canisters with

modified canisters. This amendment is

prompted by issuance of mandatory

continuing airworthiness information by

a foreign civil airworthiness authority.

The actions specified by this AD are

intended to prevent sticking of nonreturn valves located in the fuel system,

which could result in an internal fuel

transfer from the center tank to the inner

or outer tank. Such a transfer of fuel

could lead to fuel spillage overboard

through the vent system, and

consequent insufficient fuel for the

airplane to reach its flight destination.

DATES: Effective June 24, 1998.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of June 24,

1998.

ADDRESSES: The service information

referenced in this AD may be obtained

from Airbus Industrie, 1 Rond Point

Maurice Bellonte, 31707 Blagnac Cedex,

France. This information may be

examined at the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, Rules Docket,

1601 Lind Avenue, SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Norman B. Martenson, Manager,

International Branch, ANM–116, FAA,

Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington

98055–4056; telephone (425) 227–2110;

fax (425) 227–1149.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39) to

include an airworthiness directive (AD)

that is applicable to certain Airbus

Model A300, A310, and A300–600

series airplanes was published in the

Federal Register on March 27, 1998 (63

FR 14849). That action proposed to

require replacement of the non-return

valves located in the engine fuel feed

lines on the outer fuel tank with new

return valves; and, for certain airplanes,

replacement of the inner tank booster

pump canisters with modified canisters.

Comments

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. Due

consideration has been given to the

single comment received.

The commenter supports the

proposed rule.

Conclusion

After careful review of the available

data, including the comment noted

above, the FAA has determined that air

safety and the public interest require the

adoption of the rule as proposed.

Cost Impact

The FAA estimates that 103 Model

A300, A310, and A300–600 series

airplanes of U.S. registry will be affected

by this AD.

The FAA estimates that the required

replacement of the non-return valves

will take approximately 66 work hours