Source: https://www.federalregister.gov/documents/2010/08/27/2010-21322/multifamily-housing-reform-and-affordability-act-projects-eligible-for-a-restructuring-plan-when
Timestamp: 2017-11-20 14:04:24
Document Index: 358385354

Matched Legal Cases: ['arts 401', 'arts 401', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', 'art 402', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', 'art 50', 'art 401', '§\u2009401']

Federal Register :: Multifamily Housing Reform and Affordability Act: Projects Eligible for a Restructuring Plan; When Eligibility Is Determined
A Proposed Rule by the Housing and Urban Development Department on 08/27/2010
Docket No. FR-5304-P-01
2502-AI75
https://www.federalregister.gov/d/2010-21322 https://www.federalregister.gov/d/2010-21322
Comments Due Date: October 26, 2010.
Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number through TTY by calling the Federal Information Relay Service, toll free, at 800-877-8339. Copies of all comments submitted are available for inspection and downloading at http://www.regulations.gov.
Theodore Toon, Deputy Assistant Secretary, Office of Affordable Housing Preservation (OAHP), Department of Housing and Urban Development, 451 Seventh Street, SW., Room 6230, Washington, DC 20024, telephone number 202-708-0001 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.
The Multifamily Assisted Housing Reform and Affordability Act (42 U.S.C. 1437f note) (MAHRA) introduced a Mark-to-Market program designed to preserve housing affordability, while Start Printed Page 52690reducing the long-term costs of Federal assistance. Section 514 of MAHRA provides for mortgage restructuring and rental adjustment via an Operating Cost Adjustment Factor (OCAF). Section 524 of MAHRA deals specifically with renewals of project-based Section 8 assistance without mortgage restructuring. Section 512(2) of MAHRA requires that an eligible multifamily housing project be subject to one of eight different types of rental assistance contracts and further requires that (i) project rents be above-market and (ii) the project be subject to FHA-insured or HUD-held financing. Essentially, these eligible projects are: (1) Those with rents that on average exceed the rents of comparable properties in the same market area; (2) multifamily properties consisting of more than four dwelling units; (3) financed by a mortgage held or insured by HUD; and (4) covered in whole or part by a contract for assistance under one of several specified programs. These specified programs include current and former programs authorized under the following authorities: (1) Section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f); (2) section 23 of the U.S. Housing Act of 1937 as in effect before January 1, 1975 (the Section 23 Leased Housing program, found at section 103 of the Housing and Urban Development Act of 1965 (Pub. L. 89-117, approved August 10, 1965), which was the predecessor to the current Section 8 program); (3) Rent Supplements under 12 U.S.C. 1701s; and (4) the Section 8 program following its conversion from the Rent Supplement program.
On September 11, 1998, HUD issued an interim rule implementing the Mark-to-Market program in 24 CFR parts 401 and 402 (63 FR 48943). HUD accepted public comments on this interim rule as a basis for future rulemaking on this subject. HUD issued a subsequent final rule on March 22, 2000 (65 FR 15485), primarily to make regulatory changes regarding procedures other than the renewal procedures in section 524 of MAHRA, which were left to future rulemaking. On January 12, 2006, HUD issued a final rule, amending its regulations in 24 CFR parts 401 and 402 (71 FR 2120).
The regulatory definition of an eligible project was originally codified at 24 CFR 401.100. The version of § 401.100 published in the 1998 interim rule was a more succinct and general regulatory provision than that published in the later January 2006 final rule. The variation between the 1998 codification and the later codification of § 401.100 was due in part to the fact that a portion of the regulation that became part of § 401.100 was contained in the definition of “eligible project,” published as part of the 1998 interim rule (63 FR 48944). As published in the 1998 interim rule, the definition of “eligible project” read:
Eligible project means a project with a mortgage insured or held by HUD, project-based assistance expiring on or after October 1, 1998, and rents for assisted units exceeding comparable market rents; and otherwise meeting the definition of “eligible multifamily housing project” in section 512(2) of MAHRA.
Section 401.100 of the 1998 interim rule read:
* * * Which projects are eligible for a Restructuring Plan under this part?
General eligibility. A Restructuring Plan may be requested by an owner of an eligible project that:
(a) Has project-based assistance with an expiration date of October 1, 1998, or later;
(b) Has current gross potential rent for the project-based assisted units that exceeds the gross potential rent for the project based assisted units using comparable market rents; and
(c) Is not described in section 514(h) of MAHRA.
A HUD final rule published on March 22, 2000 (65 FR 15480) removed § 401.100 and entirely placed the material in the definition section, combining it with the definition of `eligible project' in § 401.2(c)). Consequently, the March, 2000 definition of “eligible project” reads as follows:
(1) Has a mortgage insured or held by HUD;
(2) Receives project-based assistance expiring on or after October 1, 1998;
(3) Has current gross potential rent for the project-based assisted units that exceeds the gross potential rent for the project based assisted units using comparable market rents;
(4) Has a first mortgage that has not previously been restructured under this part or under a Reengineering demonstration program;
(5) Is not described in section 514(h) of MAHRA; and
(6) Otherwise meets the definition of “eligible multifamily housing project” in section 512(2) of MAHRA.
As provided in the March 2000 final rule, the list of eligible multifamily housing projects is provided in the regulation by cross reference to the statutory provision, section 512(2) of MAHRA.
The preamble to the March, 2000 final rule stated that further changes to 24 CFR part 402 would be forthcoming based on the public comments on the 1998 interim rule (65 FR 15476). The final rule published on January 12, 2006 made these changes. Additionally, this January 2006 final rule reinstates 24 CFR 401.100 instead of locating the material related to project eligibility entirely in the definition section. Section 401.100(a), rather than cross-referencing section 512(2) of MAHRA, lists the types of eligible projects.
Section 401.100(b) established the point in time at which a project is judged to be eligible or ineligible for restructuring. Both §§ 401.100(a) and 400.100(b) as promulgated in the 2006 final rule included matters that HUD believed were simply interpretive rules not requiring public comment.
However, § 401.100(b) was successfully challenged in the case of Steinhorst Associates v. Preston, 572 F.Supp.2d 112, 122, 124 (D.D.C. 2008) on the basis that “HUD promulgated the regulation without following notice-and-comment procedures.” (See Steinhorst at 124.) The District Court vacated § 401.100(b) and remanded it to HUD for further proceedings “consistent with this opinion.” (See 572 F.Supp.2d at 125). Since the failure to follow notice-and-comment procedures was found by the court to have made the rule defective, the appropriate remedial action for HUD is to propose the rule for notice and public comment.
Accordingly, HUD is proposing 24 CFR 401.100(b) for public comment. Since 24 CFR 401.100(a) has a similar procedural history, even though that section was not challenged in the Steinhorst case, HUD is also reopening public comment on § 401.100(a). HUD will consider all public comments and reach a de novo determination about the content of these regulatory sections.
A Finding of No Significant Impact with respect to the environment was previously made regarding this rule in accordance with HUD regulations in 24 CFR part 50 that implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) (See 71 FR 2120). The initial finding of no significant impact remains applicable, and is available for public inspection between 8 a.m. and 5 p.m. weekdays in the office of the Regulations Division, Department of Housing and Urban Development, 451 7th Street, SW., Room 10276, Washington, DC 20410-0500.
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and subject to comment rulemaking requirements, unless the Start Printed Page 52691agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule affects only multifamily Section 8 owners. There are very few multifamily Section 8 owners that are small entities. Therefore, this rule would not affect a substantial number of small entities within the meaning of the RFA.
Accordingly, for the reasons stated in the preamble, HUD proposes to amend 24 CFR part 401 as follows:
Authority: 12 U.S.C. 1715z-1 and 1735f-19(b); 42 U.S.C. 1437f(c)(8), 1437f(t), 1437f note, and 3535(d).
2. Revise § 401.100 to read as follows:
[FR Doc. 2010-21322 Filed 8-26-10; 8:45 am]