This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

66813

Vol. 66, No. 248

Thursday, December 27, 2001

FEDERAL ELECTION COMMISSION

11 CFR Part 106

[Notice 2001–20]

Notice of Disposition Regarding Party

Committee Transfers of NonFederal

Funds for Payment of Allocable

Expenses

AGENCY: Federal Election Commission.

ACTION: Notice of disposition.

SUMMARY: The Commission will not

issue a statement of enforcement policy

regarding party committee transfers of

nonfederal funds for payment of

allocable expenses. On November 7,

2001, the Commission requested

comments on a Draft Statement of

Policy. The Draft Statement indicated

that in light of the suspension of

fundraising activities by some party

committees after the terrorist attacks of

September 11, 2001, the Commission

would consider exercising its

prosecutorial discretion by not pursuing

prima facie violations of the 60 day

limit for party committee transfers of

nonfederal funds to pay for the

nonfederal share of allocable expenses.

After receiving and considering public

comments, the Commission declined to

adopt a final Statement of Policy by a

3–3 vote.

DATES: November 29, 2001.

FOR FURTHER INFORMATION CONTACT:

Rosemary C. Smith, Assistant General

Counsel, or Richard Ewell, Staff

Attorney, 999 E Street, NW,

Washington, DC 20463, (202) 694–1650

or (800) 424–9530.

SUPPLEMENTARY INFORMATION: The

Commission’s regulations at 11 CFR

106.1 and 106.5 allow party committees

to defray the costs of activities that

relate to both federal and nonfederal

elections by allocating the costs between

their federal and nonfederal accounts,

so long as they pay an amount equal to

or greater than the federal portion of

these expenses with funds that are

permissible under the Federal Election

Campaign Act, 2 U.S.C. § 431 et seq.

[‘‘FECA’’ or ‘‘the Act’’]. The

Commission’s regulations provide that

party committees, after paying an

allocable expense, have a 60 day

‘‘window’’ to transfer funds from a

nonfederal account to cover the

nonfederal portion of the allocable

expense. See 11 CFR 106.5(g)(1)(i) and

(ii); 11 CFR 106.5(g)(2)(ii)(B).

In many instances, party committees

plan and execute allocable activities

based, in part, on the expectation that

they will subsequently receive

nonfederal funds that can be transferred

to their federal or allocation accounts

before the expiration of the 60-day

transfer window in section

106.5(g)(2)(ii)(B). In light of the fact that

some party committees temporarily

suspended their fundraising activities in

the immediate aftermath of the

September 11, 2001 terrorist attacks,

these party committees may not have

sufficient funds in their nonfederal

accounts to make transfers to their

federal accounts or allocation accounts

within the required 60 day transfer

window.

Consequently, the Commission sought

and received public comment on a draft

proposal to exercise its prosecutorial

discretion by not pursuing prima facie

violations of the 60 day time limit for

a specified period of time. See 66 FR

56247 (Nov. 7, 2001). On November 29,

2001, the Commission declined to adopt

a final statement of policy by a vote of

3–3. See Agenda Document Number 01–

61. Because the motion did not receive

an affirmative vote of four members of

the Commission, the Commission is

announcing that no further action on the

proposed statement of policy will be

taken at this time. See 2 U.S.C. 437c(c).

Dated: December 18, 2001.

David M. Mason,

Vice Chairman, Federal Election Commission.

[FR Doc. 01–31616 Filed 12–26–01; 8:45 am]

BILLING CODE 6715–01–P

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 951

[No. 2001–30]

RIN 3069–AB14

Affordable Housing Program

Amendments

AGENCY: Federal Housing Finance

Board.

ACTION: Proposed rule.

SUMMARY: The Federal Housing Finance

Board (Finance Board) is proposing to

amend its regulation governing the

operation of the Affordable Housing

Program (AHP) to improve the operation

and effectiveness of the AHP. The

proposed changes include: making the

requirements for approval of postcompletion project modifications the

same as the current requirements for

pre-completion project modifications;

allowing the Federal Home Loan Banks

(Banks) to define ‘‘homeless household’’

for purposes of scoring applications for

AHP subsidy to finance housing for

such households; allowing the Banks to

award scoring points to projects using

Federal government properties,

regardless of the price at which they are

conveyed, and for projects using nongovernment properties conveyed for an

amount significantly below their fair

market value; permitting the Banks to

allow project sponsors or members to reuse recaptured direct subsidies or

unused interest-rate subsidies from

prepaid mortgage loans to assist another

AHP-eligible household to purchase an

owner-occupied unit; permitting a Bank

to allocate up to the greater of $3

million or 25 percent of its annual

required AHP contribution for the

subsequent year to the current year’s

AHP competitive application program;

including the Federal Financial

Institutions Examination Council as a

source of area median income data that

may be used to determine household

income eligibility; removing the

requirement that the amount of AHP

subsidies offered by a Bank in each

funding period must be comparable;

removing the requirement that the

Banks must determine the feasibility of

projects before their applications may be

scored; and allowing the Banks

additional time after completion of a

rental project to review the

66814 Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules

1Each Bank is required generally to contribute

annually to its AHP 10 percent of its net earnings

for the previous year. If the aggregate amount of

such annual payments by all of the Banks is not at

least $100 million, each Bank must contribute to its

AHP its pro rata share of $100 million. See 12

U.S.C. 1430(j)(5).

documentation received from the

project owner for project compliance.

DATES: The Finance Board will accept

written comments on the proposed rule

that are received on or before February

25, 2002.

ADDRESSES: Send written comments to:

Elaine L. Baker, Secretary to the Board,

at the Federal Housing Finance Board,

1777 F Street, NW., Washington, DC

20006, or to BakerE@fhfb.gov.

Comments will be available for

inspection at this address.

FOR FURTHER INFORMATION CONTACT:

Charles E. McLean, Deputy Director,

(202) 408–2537, Melissa L. Allen,

Program Analyst, (202) 408–2524, Office

of Policy, Research and Analysis; or

Sharon B. Like, Senior AttorneyAdvisor, (202) 408–2930, Office of

General Counsel, Federal Housing

Finance Board, 1777 F Street, NW.,

Washington, DC 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

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

Loan Bank Act (Bank Act) requires each

Bank to establish a program to subsidize

the interest rate on advances to

members of the 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

AHP. See 12 U.S.C. 1430(j)(1), (9). The

Finance Board’s existing regulation

governing the operation of the AHP,

which made comprehensive revisions to

the AHP, was adopted in August 1997

and became effective January 1, 1998.

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

at 12 CFR part 951).

Various amendments have been made

to the AHP regulation since 1998 in

order to clarify AHP requirements and

improve the operation and effectiveness

of the AHP. The Banks, project sponsors

and Finance Board staff have, over the

course of implementation of the AHP,

identified additional amendments that it

is believed would improve the operation

and effectiveness of the AHP. The

proposed amendments are discussed

further below. The Finance Board

welcomes written comments on all

aspects of the proposed rule.

II. Analysis of Proposed Rule

A. Definitions—Section 951.1

1. Removal of Definition of ‘‘Homeless

Household’’

For the reasons discussed in section

F. below, the proposed rule would

remove the definition of ‘‘homeless

household’’ in § 951.1 of the AHP

regulation, and allow each Bank to

define the term for purposes of scoring

applications for AHP subsidy to finance

housing for homeless households under

§ 951.6(b)(4)(iv)(D).

2. Inclusion of FFIEC in Definition of

‘‘Median Income for the Area’’

Under the AHP regulation,

households are eligible for AHP

subsidies if they have an income at or

below the targeted income level,

expressed as a percentage of median

income for the area, specified in the

AHP application. See 12 CFR

951.6(b)(4)(iv)(C). Section 951.1 of the

AHP regulation defines ‘‘median income

for the area’’ generally as one or more

of the following, as determined by the

Bank: (1) The median income for the

area, as published annually by the

Department of Housing and Urban

Development (HUD); (2) the applicable

median family income, as determined

under 26 U.S.C. 143(f) and published by

a state mortgage revenue bond program;

(3) the median income for the area, as

published by the U.S. Department of

Agriculture; or (4) the median income

for any definable geographic area, as

published by a Federal, state or local

government entity for purposes of that

entity’s housing programs, and

approved by the Finance Board, at the

request of a Bank, for use under the

AHP. See 12 CFR 951.1.

The Federal Financial Institutions

Examination Council (FFIEC) is a

Federal government source that

publishes updated median income data

for areas, based on existing HUD median

income data. Since the FFIEC median

income data is derived from existing

HUD data, which is a permissible source

of area median income data for

determining the income eligibility of

households under the AHP regulation,

the Finance Board believes that the

Banks should also be able to use such

FFIEC data for determining household

income eligibility. This proposed

change would be consistent with the

Finance Board’s recent amendment to

the definition of ‘‘median income for the

area’’ in its Community Investment Cash

Advance (CICA) Programs Regulation to

include FFIEC as a source of median

income data that may be used to

determine income eligibility for projects

and households funded under CICA

programs. See 66 FR 50293 (Oct. 3,

2001) (codified at 12 CFR 952.3).

Accordingly, the proposed rule would

add new paragraphs (1)(ii) and (2)(ii) to

the existing definition of ‘‘median

income for the area’’ in § 951.1 to

include FFIEC as a data source, and

would renumber the remaining

paragraphs accordingly.

B. Permitting Banks To Allocate AHP

Funds From the Subsequent Year’s

Required Annual AHP Contribution to

the Current Year’s Competitive

Application Program—Section

951.3(a)(2)

The AHP regulation provides that in

cases where the amount of AHP

homeownership set-aside funds applied

for by members in a given year exceeds

the amount available for that year, a

Bank may allocate up to the greater of

$3 million or 25 percent of its annual

required AHP contribution for the

subsequent year to the current year’s

homeownership set-aside programs. See

12 CFR 951.3(a)(1). The AHP regulation

does not allow the Banks to make a

similar allocation of AHP funds from

the subsequent year’s required annual

AHP contribution to the current year’s

AHP competitive application program.

See 12 CFR 951.3(a)(2).1

A number of Banks have indicated

that there may be special circumstances

in which it would be beneficial to have

the flexibility to allocate a portion of the

subsequent year’s required AHP

contribution to fund additional

applications in the current year under

the competitive application program.

Such special circumstances could

include natural or man-made disasters

or other emergencies, or sudden changes

in market conditions or demand caused

by significant economic changes, that

increase the need for affordable housing

in the current year. Another

circumstance might be a demand for

additional AHP funds for use in

conjunction with a special allocation of

housing funds made by a Federal, state

or local government agency in the

current year.

Several Banks also have raised the

issue that a change in national

accounting standards, contained in

Federal Accounting Standard (FAS) 133,

could affect the timing of when a Bank

recognizes some of its net earnings and

thereby cause fluctuations in the Bank’s

required AHP contributions from year to

year. Allowing the Banks to allocate

AHP funds from the subsequent year’s

required AHP contribution to the

current year under the competitive

application program would give the

Banks flexibility to mitigate some of

these year-to-year fluctuations in

Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules 66815

required AHP contributions when the

Bank’s required AHP contribution

under-represents the Bank’s actual

earnings because of accounting rules.

The proposal also would give the Banks

flexibility to mitigate the effects on the

amount of the Bank’s required AHP

contribution in a year in which the

Bank’s actual earnings are otherwise

lower than expected or desired.

The Finance Board believes that this

proposal could be beneficial to the AHP.

The Finance Board recognizes that

allowing the allocation of AHP funds

from the subsequent year’s required

AHP contribution to the current year

may result in less AHP funds available

for the subsequent year. However, the

overall amount of AHP funds available

would not decrease; a portion of the

funds would simply be available in the

current year rather than in the

subsequent year. Moreover, there is no

guarantee in any case that the amount

of AHP funds available in a given year

will be the same as the amount available

in the previous year, given fluctuations

in Bank net earnings from year to year.

Accordingly, the proposed rule would

amend § 951.2(a)(2) to provide that a

Bank, in its discretion, may allocate up

to the greater of $3 million or 25 percent

of its annual required AHP contribution

for the subsequent year to the current

year’s competitive application program.

The limit of $3 million or 25 percent is

the same as the annual limit applicable

to the homeownership set-aside

programs. See 12 CFR 951.3(a)(1). As

with the homeownership set-aside

programs, the proposed rule would

include a Consumer Price Index (CPI)

adjustment provision for the maximum

dollar limit under the competitive

application program.

C. Removal of Requirement That Banks

Offer Comparable Amounts of Subsidies

in Each Funding Period— Section

951.6(b)(1)

The AHP regulation provides that the

amount of AHP subsidies offered by a

Bank in each funding period under the

competitive application program shall

be comparable. See 12 CFR 951.6(b)(1).

A number of Banks have suggested that

this requirement be removed, in order to

give the Banks flexibility to offer

different amounts of AHP funds in each

funding period to coincide with the

funding cycles of other key funding

sources in the Bank’s district, or with

different demands based on market or

housing construction cycles. The

Finance Board agrees that it would be

beneficial for the Banks to have greater

flexibility to manage their AHP funding

in this way.

Accordingly, the proposed rule would

remove the requirement in § 951.6(b)(1)

that the amount of AHP subsidies

offered in each Bank’s funding period

must be comparable.

D. Removal of Requirement That Banks

Determine Compliance of AHP

Applications With Eligibility

Requirements Before Scoring

Applications—Section 951.6(b)(4)(i)

The AHP regulation provides that

projects receiving AHP subsidies

pursuant to a Bank’s competitive

application program must meet the

eligibility requirements of the

regulation. See 12 CFR 951.5(b). The

AHP regulation further provides that a

Bank shall score only those applications

meeting the eligibility requirements of

§ 951.5(b). See 12 CFR 951.6(b)(4)(i).

This means that a Bank must first

determine whether each application

received satisfies all of the regulatory

eligibility requirements, including an

assessment of each project’s financial

feasibility, before the Bank may score

the application.

Some Banks maintain that, given the

high volume of applications received, it

is burdensome and time consuming to

have to determine the eligibility, and in

particular, the financial feasibility, of

each application before the application

may be scored, especially when many of

the applications determined to be

eligible end up scoring too low to be

awarded AHP funds. These Banks

suggest that it would be more efficient

to be able to score the applications first,

and then determine their eligibility

starting with the highest scoring

applications and continuing on down

the list, until all of the AHP subsidy is

committed. The Finance Board agrees

that the Banks should have the

discretion to determine which approach

works best for that Bank. Section

951.5(b) would still require that AHP

subsidy may only be awarded to

projects meeting the regulatory

eligibility requirements, including

financial feasibility. See 12 CFR

951.5(b).

Accordingly, the proposed rule would

amend § 951.6(b)(4)(i) by removing the

requirement that the Bank score only

those applications meeting the

regulatory eligibility requirements.

E. Permitting Banks to Award Scoring

Points for Projects Using Properties

Conveyed by the Federal Government

Regardless of the Amount Charged for

Conveyance, and for Projects Using

Properties Conveyed by NonGovernment Entities for an Amount

Substantially Below Their Fair Market

Value—Section 951.6(b)(4)(iv)(A)

The AHP regulation includes, as one

of nine criteria for scoring AHP

applications, 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 12 CFR 951.6(b)(4)(iv)(A). A

‘‘nominal’’ price is defined in the

regulation as 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. See 12

CFR 951.6(b)(4)(iv)(A). Scoring points,

therefore, may not be awarded to

projects using Federal government or

non-government properties that were

conveyed for more than a ‘‘nominal’’

price.

In a number of markets throughout

the country, there are substantial

quantities of foreclosed housing units

owned by HUD and other Federal

government agencies. Allowing the

Banks to award scoring points for

projects using units conveyed by the

Federal government, regardless of the

amounts charged for their conveyance,

would be consistent with the Bank Act

provisions encouraging the use of AHP

funds in projects involving housing

owned or held by the Federal

government, and coordination of the

AHP with other Federal or federallysubsidized affordable housing activities

to the maximum extent possible. See 12

U.S.C. 1430(j)(3)(B), (j)(9)(G).

Accordingly, the proposed rule would

amend § 951.6(b)(4)(iv)(A) to provide

that a Bank may award scoring points to

projects using a significant proportion of

housing units conveyed by the Federal

government or any agency or

instrumentality thereof, regardless of the

amount charged for such conveyance.

The proposed rule would retain the

current provision allowing the Banks to

award scoring points for projects using

land donated by the Federal

government.

In addition, some Banks maintain that

the definition of ‘‘nominal’’ in the

regulation may be too restrictive in not

recognizing the variety of ways in which

properties are being conveyed by nongovernment entities to affordable

housing project sponsors under different

66816 Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules

local market conditions in each Bank

district. For example, properties may be

conveyed to project sponsors for a price

of one dollar, for a price that is more

than one dollar but significantly below

the property’s fair market value, or for

payment of liens on the property such

as back taxes, or the administrative costs

of transferring the property, which may

be more than one dollar but

significantly below the property’s fair

market value. The Banks suggest that

the regulation should explicitly allow

scoring points to be awarded for

properties conveyed from nongovernment entities under these

circumstances, where the amounts paid

for the properties are significantly below

their fair market value. The Finance

Board agrees that this proposal could be

beneficial to the AHP, and that the

Banks should have the discretion to

define what is an amount significantly

below the fair market value of the

property, since these amounts may vary

depending on local market conditions in

each Bank district.

Accordingly, the proposed rule would

amend § 951.6(b)(4)(iv)(A) by removing

the ‘‘nominal price’’ requirement and

adding language clarifying that a Bank

may award scoring points for properties

conveyed by a non-government entity at

an amount that is significantly below

their fair market value, as defined by the

Bank in its AHP implementation plan.

The proposed rule would retain the

current provision allowing the Banks to

award scoring points for projects using

land donated by non-government

entities.

F. Removal of Definition of ‘‘Homeless

Household’’ for Purposes of the

Homeless Households Scoring

Criterion—Section 951.6(b)(4)(iv)(D)

The AHP regulation also includes as

a scoring criterion the creation of

housing for homeless households, as

further described in the regulation. See

12 CFR 951.6(b)(4)(iv)(D). The term

‘‘homeless household’’ is defined in the

regulation as a household made up of

one or more individuals, other than

individuals imprisoned or otherwise

detained pursuant to state or federal

law, who:

(1) Lack a fixed, regular and adequate

nighttime residence; or

(2) Have a primary nighttime

residence that is:

(i) A supervised publicly or privately

operated shelter designed to provide

temporary living accommodations

(including welfare hotels, congregate

shelters, and transitional housing for the

mentally ill);

(ii) An institution that provides a

temporary residence for individuals

intended to be institutionalized; or

(iii) A public or private place not

designed for, or ordinarily used as, a

regular sleeping accommodation for

human beings.

See 12 CFR 951.1.

A number of Banks have maintained

that this definition of ‘‘homeless

household’’ should include persons in

certain additional situations who may

be viewed as homeless, or at imminent

risk of homelessness. For example,

although the current definition covers

victims of domestic violence living in

organized shelters, it does not cover

victims of domestic violence in rural

areas where there are no organized

shelters and the victims may have no

alternative but to live in the homes of

their abusers. Nor does the definition

cover persons living in shared

overcrowded housing in extremely cold

climates where there is a shortage of

organized shelters and it is impossible

to survive living on the streets or in

cars. Other situations may include

children living in foster care who are

about to reach the age of 18 and must

leave the foster care system, and

households facing imminent loss of

their homes due to condemnation or

eviction. The Finance Board agrees that

the Banks should be able to award

scoring points for projects serving these

additional types of households. The

Finance Board believes that the Banks

should have the discretion to define

what is a ‘‘homeless household,’’ since

the types of homeless households may

vary depending on local conditions in

each Bank district. Allowing the Banks

to define what is a ‘‘homeless

household’’ would be consistent with

the discretionary authority the Banks

already have under the scoring criteria

in the AHP regulation to define and

provide preferences for other targeted

groups, such as special needs

households or first-time homebuyers.

See 12 CFR 951.6(b)(4)(iv)(F) (1), (3).

Accordingly, the proposed rule would

remove the definition of ‘‘homeless

household’’ in § 951.1 and amend

§ 951.6(b)(4)(iv)(D) to provide that, for

purposes of scoring applications that

reserve units for ‘‘homeless

households,’’ a ‘‘homeless household’’

shall have the meaning as defined by

the Bank in its AHP implementation

plan.

G. Making The Requirements for PostCompletion Modifications The Same as

the Current Requirements for PreCompletion Modifications —Sections

951.7, 951.9

The AHP regulation sets forth

different requirements that must be

satisfied in order for a Bank to approve,

in its discretion, a modification to the

terms of a project’s application,

depending on whether the modification

would be made prior to or after the

project’s completion. The regulation

provides that a Bank, in its discretion,

may approve a modification request,

including requests for additional AHP

subsidy, made prior to project

completion, provided that:

(1) The project, incorporating any

such changes, would meet the

regulatory eligibility requirements;

(2) The application, as reflective of

such changes, continues to score high

enough to have been approved in the

funding period in which it was

originally scored and approved by the

Bank; and

(3) There is good cause for the

modification.

See 12 CFR 951.7.

A Bank, in its discretion, may approve

modification requests, not including

requests for additional AHP subsidy,

made after project completion, provided

that:

(1) The project, incorporating any

material changes, would meet the

regulatory eligibility requirements;

(2) the application, as reflective of

such changes, continues to score high

enough to have been approved in the

funding period in which it was

originally scored and approved by the

Bank;

(3) the project is in financial distress,

or is at substantial risk of falling into

such distress (financial distress

requirement); and

(4) the project sponsor or owner has

made best efforts to avoid

noncompliance with the terms of the

application for subsidy and the

requirements of the regulation.

See 12 CFR 951.9.

Because a Bank may not approve

additional AHP subsidy for a postcompletion modification of a project,

projects seeking additional subsidy have

to submit a new application for subsidy

in a regular competitive application

funding period and score highly enough

to be approved in that funding period.

Projects may be unable to score

successfully in the new funding period

because the scoring criteria and

priorities in the new funding period

may not be the same as those applicable

in the funding period when the projects

Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules 66817

were originally approved. Some Banks

have argued that they should be able to

approve modifications of completed

projects for good cause even when the

project is not faced with financial

distress. A number of Banks also have

indicated that the inability to provide

additional subsidy to completed but

troubled projects makes it difficult or

impossible for the Banks to participate

with other funding sources in workout

arrangements to help such projects

retain their affordable units or forestall

financial distress. The projects may then

fail to comply with their AHP regulatory

requirements or application

commitments, subjecting them to

possible recapture of the AHP subsidy.

See 12 CFR 951.12. The Finance Board

believes that it would be beneficial for

such projects if the Banks had more

flexibility to participate in such

workouts. Therefore, the proposed rule

would allow the Banks, in their

discretion, to approve increases in

subsidy, would remove the financial

distress requirement, and would

otherwise make the post-completion

modification requirements the same as

those currently applicable to precompletion modifications. The Finance

Board will be requesting information

from the Banks on how this new

authority is being implemented.

A number of Banks and project

sponsors also have suggested that the

Finance Board consider removing the

requirement in § 951.7(a)(2) that a

project, as proposed to be modified,

must continue to score high enough to

have been approved in the funding

period in which it was originally scored

and approved by the Bank, in order to

be approved for a modification. In some

cases, the project may need to be

modified because of changed market

conditions, but the project, as modified,

would not continue to score high

enough to have been approved in its

original funding period. Banks and

project sponsors have argued that

market conditions may change

dramatically over many years, and that

it is impractical to hold a project to the

same scoring criteria that existed years

earlier. While the Finance Board

recognizes the points raised by this

argument, the Finance Board remains

concerned about the potential that

modifications offer for an applicant to

manipulate the scoring system by

making overly optimistic commitments

that it knows it cannot reasonably meet,

in its AHP application, in order to score

successfully, with the anticipation of

getting a modification after approval to

reduce those commitments. Moreover,

the Finance Board has a waiver process

that would enable the Finance Board,

upon a showing of good cause, to waive

the re-scoring requirement for a

modification, on a case-by-case basis.

See 12 CFR 907.2. The proposed rule,

therefore, would retain the current rescoring requirement in § 951.7(a)(2).

In short, the proposed rule would

remove § 951.9, and make the

requirements of § 951.7 applicable to

post-completion, as well as precompletion, modification requests.

H. Providing the Banks With an

Additional 120 Days to Conduct the

Initial Monitoring of Completed Rental

Projects—Section 951.10(c)(2)

The AHP regulation provides that

within the first year after completion of

a rental project, the project owner must:

(i) certify to the Bank that the services

and activities committed to in the AHP

application have been provided in

connection with the project; and

(ii) provide a list of actual tenant rents

and incomes to the Bank, and certify

that the tenant rents and incomes are

accurate and in compliance with the

rent and income targeting commitments

made in the AHP application, and that

the project is habitable.

See 12 CFR 951.10(a)(2)(ii).

The regulation further provides that

each Bank must take the steps necessary

to determine that:

(i) within the first year after

completion of a rental project, the

services and activities committed to in

the AHP application have been

provided in connection with the project;

and

(ii) the AHP subsidies were used for

eligible purposes, the project’s actual

costs were reasonable and customary in

accordance with the Bank’s project

feasibility guidelines, and the subsidies

were necessary for the financial

feasibility of the project, as currently

structured.

See 12 CFR 951.10(c)(2).

A number of Banks have indicated

that if a project owner does not provide

its certifications and other

documentation to the Bank until late in

the first year after project completion,

the Bank may not be able to complete

its reviews of the documentation and

make its determinations of compliance

under § 951.10(c)(2) by the end of that

year, as prescribed by the regulation.

The suggestion has been made that the

Banks be given some additional

reasonable period of time after receipt of

the project owners’ documentation to

conduct their own review and

compliance determinations. This would

be consistent with the approach taken in

the regulation for Bank reviews of

owner-occupied certifications. See 12

CFR 951.10(c)(1).

The Finance Board believes that

providing the Banks with an additional

120 days after receipt of the project

owner documentation would be a

reasonable amount of time to complete

the compliance reviews. The Finance

Board also believes that this

requirement should apply not only to

the services and activities review, but

also to the review of eligible purposes,

actual costs and feasibility required

under existing § 951.10(c)(2)(ii).

Accordingly, the proposed rule would

amend § 951.10(c)(2) to require each

Bank to complete the compliance

reviews required thereunder within 120

days after receiving the project owner

documentation.

I. Permitting the Banks to Allow Re-Use

by Project Sponsors or Members of

Recaptured Direct Subsidies or Unused

Interest-Rate Subsidies From Prepaid

Mortgage Loans For Owner-Occupied

Projects—Sections 951.12(e),

951.13(c)(3)(iii)

Prior to 1995, sponsors of owneroccupied projects were allowed to reuse recaptured AHP direct subsidies to

provide the same kind of direct subsidy

assistance to subsequent eligible

households in accordance with the

sponsor’s approved application. A

sponsor also could use the unused

interest-rate subsidy of a prepaid

mortgage loan funded with an AHP

subsidized advance to subsidize the

interest rate on another mortgage loan to

an eligible household that replaced the

prepaid mortgage loan in a pool of

mortgage loans held by the member.

In 1995, the Finance Board

discontinued authorization of these

types of re-use of AHP funds in new

projects, pending a comprehensive

review and revision of the AHP

regulation. The current regulation,

which went into effect in 1998,

continues to prohibit such re-use of

AHP funds. Specifically, the AHP

regulation provides generally that an

owner-occupied unit that is purchased,

constructed, or rehabilitated with the

proceeds of an AHP direct subsidy must

be subject to a deed restriction requiring

that the homeowner repay directly to

the Bank a pro rata share of the subsidy

if the unit is sold to an ineligible

household or refinanced prior to the end

of the five-year retention period and is

no longer subject to a deed restriction.

See 12 CFR 951.13(d)(1). The Bank may

use these recaptured AHP subsidies to

fund project modifications, interest-rate

increases in approved projects,

homeownership set-aside applications,

or an approved alternate project if

66818 Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules

sufficient other funds are available. See

12 CFR 951.8(c)(4), 951.12(e),

951.14(a)(2). Where mortgage loans

financed by an AHP subsidized advance

are prepaid by the project to the

member, the AHP regulation provides

generally that the member must either

repay the advance to the Bank and

possibly be subject to a prepayment

penalty, or maintain the advance

outstanding subject to the Bank resetting

the interest rate. See 12 CFR

951.13(c)(3).

A number of Banks and project

sponsors have requested that the

Finance Board allow owner-occupied

project sponsors (or members in the case

of AHP direct subsidies provided

through the homeownership set-aside

program) to re-use direct subsidies in

the ways described above. The Banks

and project sponsors maintain that

allowing such re-use of direct subsidies

can be an efficient use of AHP subsidies.

The amounts recaptured or unused are

generally quite small, the sponsor

receives no additional subsidy from the

Bank, and the re-used subsidy continues

to assist AHP-eligible households in

accordance with the original application

commitments. Any household assisted

through the re-use of recaptured or

unused direct subsidy would be subject

to a new five-year retention agreement.

See 12 CFR 951.5(a)(5), 951.13(c)(4),

951.13(d)(1). Permitting such re-use of

direct subsidies can help those sponsors

whose projects are aimed at maintaining

a core of homeowners in particular areas

to promote neighborhood stabilization

and revitalization in those areas.

For the reasons discussed above, the

Finance Board believes that the Banks

should have the authority to allow the

re-use of recaptured or unused direct

subsidy. Accordingly, the proposed rule

would amend §§ 951.12(e) and

951.13(c)(3) to authorize each Bank, in

its discretion, as provided in its AHP

implementation plan, to allow project

sponsors or members to re-use

recaptured or unused direct subsidy,

respectively, as further prescribed in the

proposed rule. One concern that has

been raised is that recaptured or unused

direct subsidies might not be re-used

quickly and could remain idle, when

they otherwise could be made available

by the Bank for project modifications or

new AHP-eligible projects. The

proposed rule would address this

concern by requiring the Bank to specify

in its AHP implementation plan a time

limit by which such subsidy must be reused by the sponsor. A second concern

that has been raised is whether the

sponsor could earn interest on the

recaptured funds while they remain

idle. This would not be possible under

the proposed rule, which would retain

the current requirement that any

recaptured or unused direct subsidy be

returned directly to the Bank rather

being held by the project sponsors,

pending subsequent disbursement by

the Bank for re-use by the sponsor.

III. Paperwork Reduction Act

The proposed rule does not contain

any collections of information pursuant

to the Paperwork Reduction Act of 1995.

See 44 U.S.C. 3501 et seq. Therefore, the

Finance Board has not submitted any

information to the Office of

Management and Budget for review.

IV. Regulatory Flexibility Act

The proposed rule would apply only

to the Banks, which do not come within

the meaning of ‘‘small entities,’’ as

defined in the Regulatory Flexibility Act

(RFA). See 5 U.S.C. 601(6). Thus, in

accordance with section 605(b) of the

RFA, 5 U.S.C. 605(b), the Finance Board

hereby certifies that the proposed rule,

if promulgated as a final rule, will not

have a significant economic impact on

a substantial number of small entities.

List of Subjects in 12 CFR Part 951

Community development, Credit,

Federal home loan banks, Housing,

Reporting and recordkeeping

requirements.

Accordingly, the Finance Board

hereby proposes to amend part 951, title

12, chapter IX, Code of Federal

Regulations, as follows:

PART 951—AFFORDABLE HOUSING

PROGRAM

1. The authority citation for part 951

continues to read as follows:

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

2. Amend § 951.1 by:

a. Removing the definition of

‘‘Homeless household’’; and

b. In the definition of ‘‘Median

income for the area’’, redesignating

paragraphs (1)(ii) through (1)(iv) and

paragraph (2)(ii) as paragraphs (1)(iii)

through (1)(v) and paragraph (2)(iii),

respectively; and adding new

paragraphs (1)(ii) and (2)(ii).

The revisions read as follows:

§ 951.1 Definitions.

* * * * *

Median income for the area.

(1) * * *

(ii) The median income for the area

obtained from the Federal Financial

Institutions Examination Council;

* * * * *

(2) * * *

(ii) The median income for the area

obtained from the Federal Financial

Institutions Examination Council;

* * * * *

3. Revise § 951.3(a)(2) to read as

follows:

§ 951.3 Operation of Program and

adoption of AHP implementation plan.

(a) * * *

(2) Competitive application program.

That portion of a Bank’s required annual

AHP contribution that is not set aside to

fund homeownership set-aside

programs shall be provided to members

through a competitive application

program, pursuant to the requirements

of this part. A Bank may allocate up to

the greater of $3 million or 25 percent

of its annual required AHP contribution

for the subsequent year to the current

year’s competitive application program.

Beginning in 2002 and for subsequent

years, the maximum dollar limit set

forth in this paragraph shall be adjusted

annually by the Finance Board to reflect

any percentage increase in the

preceding year’s Consumer Price Index

(CPI) for all urban consumers, as

published by the Department of Labor.

Each year, as soon as practicable after

the publication of the previous year’s

CPI, the Finance Board shall publish

notice by Federal Register, distribution

of a memorandum, or otherwise, of the

CPI-adjusted limit on the maximum

competitive application dollar amount.

* * * * *

4. Amend § 951.6 by:

a. Removing the last sentence in

paragraph (b)(1);

b. Removing the first sentence in

paragraph (b)(4)(i);

c. Revising paragraph (b)(4)(iv)(A);

and

d. Revising paragraph (b)(4)(iv)(D).

The revisions read as follows:

§ 951.6 Procedure for approval of

applications for funding.

* * * * *

(b) * * *

(4) * * *

(iv) * * *

(A) Use of donated or conveyed

government-owned or other properties.

The creation of housing using a

significant proportion of:

(1) Land donated by the Federal

government or any agency or

instrumentality thereof, or any other

party;

(2) Units conveyed by the Federal

government or any agency or

instrumentality thereof, regardless of the

amount charged for such conveyance; or

(3) Units conveyed by any other party

for an amount significantly below the

fair market value of the property, as

Federal Register / Vol. 66, No. 248 / Thursday, December 27, 2001 / Proposed Rules 66819

defined by the Bank in its AHP

implementation plan.

* * * * *

(D) Housing for homeless households.

The creation of rental housing,

excluding overnight shelters, reserving

at least 20 percent of the units for

homeless households, the creation of

transitional housing for homeless

households permitting a minimum of

six months occupancy, or the creation of

permanent owner-occupied housing

reserving at least 20 percent of the units

for homeless households. For purposes

of this paragraph, the term ‘‘homeless

households’’ shall have the meaning as

defined by the Bank in its AHP

implementation plan.

* * * * *

§ 951.7 [Amended]

5. Amend § 951.7 by:

a. In the section heading, adding the

words ‘‘or after’’ between the words

‘‘to’’ and ‘‘project’’; and

b. In the introductory text of

paragraph (a), adding the words ‘‘or

after’’ between the words ‘‘to’’ and

‘‘final.’’

§ 951.9 [Removed]

6. Remove § 951.9.

7. Revise § 951.10(c)(2) introductory

text and paragraph (c)(2)(i) to read as

follows:

§ 951.10 Initial monitoring requirements.

* * * * *

(c) * * *

(2) Rental projects. Each Bank must

take the steps necessary to determine

that, within 120 days after receiving the

documentation described in paragraph

(a)(2)(ii) of this section:

(i) The services and activities

committed to in the AHP application

have been provided in connection with

the project; and

* * * * *

8. Amend § 951.12 by revising

paragraph (e) to read as follows:

§ 951.12 Remedial actions for

noncompliance.

* * * * *

(e) Use of repaid subsidies—(1) Use of

repaid AHP subsidies in other AHPeligible projects. Except as provided in

paragraph (e)(2) of this section, amounts

of AHP subsidy repaid to a Bank

pursuant to this section, including any

interest, shall be made available by the

Bank for other AHP-eligible projects.

(2) Re-use of repaid AHP subsidies in

same project. Where AHP direct subsidy

has been provided by the project

sponsor (or the member in the case of

direct subsidy provided through the

homeownership set-aside program) as

downpayment, closing cost,

rehabilitation or interest rate buydown

assistance to a household to purchase an

owner-occupied unit pursuant to an

approved AHP application, amounts of

AHP subsidy repaid to the Bank,

including any interest, may, if

authorized, in the Bank’s discretion, in

its AHP implementation plan and

within the period of time specified by

the Bank in such plan, be made

available by the project sponsor or

member to another AHP-eligible

household to purchase an owneroccupied unit in accordance with the

terms of the approved AHP application.

* * * * *

9. Amend § 951.13 by adding

paragraph headings to paragraph

(c)(3)(i) and (c)(3)(ii), and adding

paragraph (c)(3)(iii) to read as follows:

§ 951.13 Agreements.

* * * * *

(c) * * *

(3) * * *

(i) Repayment of advance. ***

(ii) Maintain advance outstanding

with reset interest rate. ***

(iii) Loan pool substitution. If

authorized, in the Bank’s discretion, in

its AHP implementation plan, continue

to maintain the advance outstanding

without the Bank resetting the interest

rate, provided that:

(A) The loan, before its prepayment,

was used by a household to purchase an

owner-occupied unit pursuant to the

project sponsor’s approved AHP

application;

(B) The loan was purchased by the

member from the project sponsor and

held by the member as part of a pool of

loans financed by subsidized advances

or direct subsidies and purchased from

the project sponsor;

(C) Within the period of time

specified by the Bank in its AHP

implementation plan, the member

makes the unused AHP subsidy

resulting from the prepaid loan

available to the project sponsor to

reduce the interest rate on a new loan

from the project sponsor to another

AHP-eligible household to purchase an

owner-occupied unit in accordance with

the terms of the approved AHP

application;

(D) Within the period of time

specified by the Bank in its AHP

implementation plan, the member

purchases the new loan for inclusion in

the loan pool; and

(E) After substitution of the new loan

for the prepaid loan in the loan pool, the

aggregate principal balance of the loan

pool is the same as or higher than the

original principal balance of the loan

pool.

* * * * *

Dated: December 11, 2001.

By the Board of Directors of the Federal

Housing Finance Board.

J. Timothy O’Neill,

Chairman.

[FR Doc. 01–31569 Filed 12–26–01; 8:45 am]

BILLING CODE 6725–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–ANE–61–AD]

RIN 2120–AA64

Airworthiness Directives; Pratt &

Whitney (PW) PW2000 Series Turbofan

Engines

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Supplemental notice of

proposed rulemaking (NPRM);

reopening of comment period.

SUMMARY: This action revises an earlier

proposed airworthiness directive (AD),

applicable to certain Pratt & Whitney

(PW) PW2000 series turbofan engines,

that would supersede an existing

airworthiness directive (AD) by

modifying the airworthiness limitations

section of the manufacturer’s manual

and an air carrier’s approved continuous

airworthiness maintenance program to

incorporate additional inspection

requirements. This action revises the

proposed rule by adding the low

pressure compressor (LPC) hub

assembly, high pressure turbine (HPT)

1st stage disk, and HPT 2nd stage hub

to the additional inspection

requirements. The regulatory section

revises the manufacturer’s

Airworthiness Limitations Section

(ALS) of the Instructions for Continued

Airworthiness (ICA), and for air carrier

operations revises the approved

continuous airworthiness maintenance

program. The actions specified by this

proposed AD are intended to prevent

critical life-limited rotating engine part

failure, which could result in an

uncontained engine failure and damage

to the airplane.

DATES: Comments must be received by

January 28, 2002.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), New England

Region, Office of the Regional Counsel,

Attention: Rules Docket No. 98–ANE–