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Sec.

ments, including those under develop1270.119 Homeowners Association-Condo

ment or in operation on the effective minium.

date of this subpart, as follows: 1270.120 Relationship of Homeowners Association to HBA.

(1) With respect to any development 1270.121 Use of Appendices.

to be operated as Turnkey III, the AnAppendix I-Annual Contributions Con

nual Contributions Contract (ACC) shall tract—"Special Provisions for Turnkey III contain the “Special Provisions for

Homeownership Opportunity Project” Turnkey III Homeownership OpportunAppendix II-Homebuyers Ownership Op

ity Project” as set forth in Appendix I. portunity Agreement (Turnkey III)

A Turnkey III development may include Appendix III–Certification of Homebuyer Status

only units which are to be operated as Appendix IV–Promissory Note for Payment such under Homebuyers Ownership OpUpon Resale by Homebuyer at Profit

portunity Agreements. If for any reason Subpart Homeownership Counseling and it is determined that certain units should Training

be operated as conventional rental units, 1270.201 Purpose.

such units must comprise or be made 1270.202 Objectives. 1270.203 Planning.

part of a conventional rental project. 1270.204 General Requirements and Infor- (2) With respect to Turnkey III demation.

velopments pursuant to an executed ACC 1270.205 Training Methodology.

where no Agreements with Homebuyers 1270.206 Funding. 1270.207 Use of Appendix.

have been signed, the ACC shall be Appendix I-Content Guide for Counseling

amended (i) to include the “Special Proand Training Program

visions" set forth in Appendix I, (ii) to

extend its term to 30 years, and (iii) to Subpart Homebuyers Association (HBA)

reduce its Maximum Contribution Per1270.301 Purpose. 1270.302 Membership.

centage to a rate that will amortize the 1270.303 Organizing the HBA.

debt in 30 years at the minimum Loan 1270.304 Functions of the HBA,

Interest Rate specified in the ACC for 1270.305 Funding of HBA.

the specific Turnkey III project involved. 1270.306 Performing Management Services.

Further development and operation shall 1270.307 Alternative to HBA.

be in accordance with this subpart in1270.308 Relationship with Homeowners As

cluding use of the form of Homebuyers sociation.

Ownership Opportunity Agreement set 1270.309 Use of Appendices.

forth in Appendix II. 1270.310 Waivers.

(3) With respect to developments Appendix 1—Articles of Incorporation and By-Laws of Homebuyers As

where Agreements with homebuyers sociation

have been signed, the following steps

shall be taken: Appendix II-Recognition Agreement Be

tween Local Housing Au- (i) The ACC shall be mended to inthority and Homebuyers

clude the Special Provisions" set forth Association

in Appendix I; further development and AUTHORITY: Sec. 7(d), 79 Stat. 670; 43

operation of the Project shall be in acU.S.C. 3535(d).

cordance with this subpart. SOURCE: 39 FR 10966, Mar. 22, 1974, unless

(ii) The LHA shall offer all qualified otherwise noted.

homebuyers in the development a new Subpart A-Introduction to Low-Rent

Homebuyers Ownership Opportunity Housing Howeownership Opportunity Program (Reserved]

Agreement as set forth in Appendix II

with an amendment to section 16a to Subpart B-Turnkey III Program

refer to "the latest approved DevelopDescription

ment Cost Budget, or Actual Develop& 1270.101 Introduction.

ment Cost Certificate if issued,” in lieu (a) Purpose. This subpart sets forth of “the Development Cost Budget in efthe essential elements of the HUD Home- fect upon award of the Main Construcownership Opportunities Program for tion Contract or execution of the ConLow-Income Families (Turnkey III). tract of Sale," and, if the ACC for the

(b) Applicability. This subpart shall be Project has a term of 25 years, an amendapplicable to all Turnkey III develop- ment to section 16(b) to refer to a term

of 25 years, instead of 30, for the Purchase Price Schedule. Each Purchase Price Schedule shall commence with the first day of the month following the effective date of the initial Agreement. No other modification in the new Agreement may be made. In the event the homebuyer refuses to accept the new Agreement, no modifications may be made in the old Agreement and the matter shall be referred to HUD.

(4) With respect to Projects which were under ACC on the effective date of this subpart, the Total Development Cost Budget shall be revised, if financially feasible, to include the cost of the appraisals which are necessary for computation of the initial purchase prices pursuant to $ 1270.113. In the event this is not financially feasible, the matter shall be referred to HUD, which may, if necessary, authorize a different method for computation of such initial purchase prices on an equitable basis.

(5) With respect to all developments which were completed by the effective date of this subpart, the appraisals which are necessary for computation of the initial purchase prices pursuant to § 1270.113 shall be made as of the date of completion of the development.

1270.102 Definitions.

(a) The term "common property" means the nondwelling structures and equipment, common areas, community facilities, and in some cases certain component parts of dwelling structures, which are contained in the development: Provided, however, That in the case of a development that is organized as a condominium or a planned unit development (PUD), the term "common property” shall have the meaning established by the condominium or PUD documents and the State law pursuant to which the condominium or PUD is organized, under the terms "common areas," "common facilities," "common elements," "common estate," or other similar terms.

(b) The term "development” means the entire undertaking including all real and personal property, funds and reserves, rights, interests and obligations, and activities related thereto.

(c) The term "EHPA” means the Earned Home Payments Account established and maintained pursuant to $ 1270.110.

(d) The term "homebuyer" means the member or members of a low-income family who have executed a Homebuyers Ownership Opportunity Agreement with the LHA.

(e) The term "homebuyers association" (HBA) means an organization as defined in § 1270.106.

(f) The term "homeowner" means a homebuyer who has acquired title to his home.

(g) The term "homeowners association" means an association comprised of homeowners, including condominium associations, having responsibilities with respect to common property.

(h) The term “HUD” means the Department of Housing and Urban Development which provides the LHAs with financial assistance through loans and annual contributions and technical assistance in development and operation.

(i) The term “LHA" means the local housing authority which acquires or develops a low-rent housing development with financial assistance from HUD, owns the homes until title is transferred to the homebuyers, and is responsible for the management of the homeownership opportunity program.

(j) The term “NRMR” means the Nonroutine Maintenance Reserve established and maintained pursuant to g 1270.111.

(k) The term "Project" is used to refer to the development in relation to matters specifically related to the Annual Contributions Contract. 8 1270.103 Development.

(a) Financial framework. The LHA shall finance development or acquisition by sale of its notes (bond financing shall not be used) in the amount of the Minimum Development Cost. Payment of the debt service on the notes is assured by the HUD commitment to provide annual contributions.

(b) Contractual framework. There are three basic contracts:

(1) An Annual Contributions Contract containing "Special Provisions For Turnkey III Homeownership Opportunity Project,” Form HUD-53010C (see Appendix I);

(2) A Homebuyers Ownership Opportunity Agreement (see Appendix II) which sets forth the respective rights and obligations of the low-income occupants and the LHA, including conditions for achieving homeownership; and

(3) A Recognition Agreement (see Appendix II of Subpart D of this part) between the LHA and the HBA under which the LHA agrees to recognize the HBA as the established representative of the homebuyers.

(c) Community Participation Committee (CPC). In the necessary development of citizens' participation in and understanding of the Turnkey III program, the LHA should consider formation and use of a CPC to assist the community and the LHA in the development and support of the Turnkey III program. The CPC shall be a voluntary group comprised of representatives of the low-income population primarily and may also include representatives of community service organizations. & 1270.104 Eligibility and selection of

homebuyers. (a) Announcement of availability of housing; fair housing marketing. (1) The availability of housing under Turnkey III shall be announced to the community at large. Families on the waiting list for LHA conventional rental housing who wish to be considered for Turnkey III must apply specifically for that program (see paragraph (d) of this section).

(2) The LHA shall submit to HUD an Afirmative Fair Housing Marketing Plan and shall otherwise comply with the provisions of the Affirmative Fair Housing Marketing Regulations, 24 CFR Part 200, subpart M, as if the LHA were an applicant for participation in an FHA housing program. This Plan shall be submitted with the development program, and no development program may be approved without prior approval of the Plan pursuant to HUD procedures under said Affirmative Fair Housing Marketing Regulations. If the development program has been approved, but the Annual Contributions Contract has not been executed, prior to the effective date of this subpart, an Affirmative Fair Housing Marketing Plan must be approved prior to execution of said contract.

(b) Eligibility and standards for admission. (1) Homebuyers shall be lowincome families as determined in accordance with the income definitions and limits established by the LHA and approved by HUD (see paragraph (b)(2) of this section). The HUD-approved standards for admission to low-rent housing, including the LHA's established priorities

and preferences and the requirements for administration of low-rent housing under Title VI of the Civil Rights Act of 1964 (Public Law 88–352, 78 Stat. 241, 42 U.S.C. 2000d), shall be applicable except that the procedures used for homebuyer selection under Turnkey III shall be those set forth in this section. In carrying out these procedures the aim shall be to provide for equal housing opportunity in such a way as to prevent segregation or other discrimination on the basis of race, creed, color or national origin in accordance with the Civil Rights Acts of 1964 (Public Law 88–352, 78 Stat. 241, 42 U.S.C. 2000d) and 1968 (Public Law 90–284, 82 Stat. 73, 42 U.S.C. 3601).

(2) An LHA may establish income limits for Turnkey III which are different from those for its conventional rental program, provided that those limits are in accord with all applicable statutory and administrative requirements and are approved by HUD.

(c) Determination of eligibility and preparation of list. The LHA, without participation of a recommending committee (see paragraph (e) (1) of this section), shall determine the eligibility of each applicant family in respect to the income limits for the development and shall then assign each eligible applicant his appropriate place on a waiting list for the development, in sequence based upon the date of the application, suitable type or size of unit and factors affecting preference or priority established by the LHA's regulations.

(d) List of applicants. A separate list of applicants for Turnkey III shall be maintained, consisting of families who specifically apply and are eligible for admission to such housing.

(1) Dating of applications. All applications for Turnkey III shall be dated as received.

(2) Effect on applicant status. The fil. ing of an application for Turnkey III by a family which is an applicant for LHA conventional rental housing or is an occupant of such housing shall in no way affect its status with regard to such rental housing. Such an applicant shall not lose his place on the rental housing waiting list until his application is accepted for Turnkey III and shall not receive any different treatment or consideration with respect to conventional rental housing because of having applied for Turnkey III.

(e) Determination of potential for tion, provided that the following shall homeownership. (1) Recommending be assured: committee. The LHA should consider use (1) Selection procedures that do not of a recommending committee to assist automatically deny admission to a particin the establishment of objective criteria ular class; that insure selection on a nonfor the determination of potential for discriminatory and nonsegregated basis; homeownership and in the selection of and that facilitate achievement of the homebuyers from the families deter- anticipated results for occupancy stated mined to have such potential. If a rec- in the approved Affirmative Fair Housing ommending committee is used, it should Marketing Plan. be composed of representatives of the (2) Achievement of an average CPC (if any), the LHA and the HBA. The monthly payment for the Project, includLHA shall submit to the committee ing consideration of the availability of prompt written justification of any re- the Special Family Subsidy, which is at jection of a committee recommendation, least 10 percent more than the breakstating grounds, the reasonableness of even amount for the Project (see 1270.which shall be in accord with applicable 108). This standard shall be complied LHA and HUD regulations. Each member with both in the initial selection of homeof such a committee, at the time of ap- buyers and in the subsequent filling of pointment, shall be required to furnish vacancies at all times during the life of the LHA with a signed statement that

the Project. If there is an applicant who

has potential for homeownership but the member will (1) follow selection pro

whose required monthly payment under cedures and policies that do not auto

the LHA's Rent Schedule would be less matically deny admission to a particular

than the break-even amount for the class, that insure selection on a nondis

suitable size and type of unit, such applicriminatory and nonsegregated basis,

cant may be selected as a homebuyer, and that facilitate achievement of the provided that the incomes of all selected anticipated results for occupancy stated homebuyers shall result in the required in the approved Affirmative Fair Housing average monthly payment of at least 10 Marketing Plan, and (ii) maintain strict percent more than the break-even confidentiality by not divulging any in

amount for the Project. Such an average formation concerning applicants or the

monthly payment for the Project may be deliberations of the committee to any

achieved by selecting other low-income person except to the LHA as necessary

families who can afford to make required

monthly payments substantially above for purposes of the official business of

the break-even amounts for their suitthe committee.

able sizes and types of units. (2) Potential for homeownership. In

(g) Notification to applicants. (1) order to be considered for selection, a Once a sufficient number of applicants family must be determined to meet at have been selected to assure that the least all of the following standards of provisions of paragraph (f) (2) of this potential for homeownership:

section are met, the selected applicant (i) Income sufficient to result in a re- shall be notified of the approximate date quired monthly payment which is not less of occupancy insofar as such date can than the sum of the amounts necessary

reasonably be determined. to pay the EHPA, the NRMR, and the (2) Applicants who are not selected estimated average monthly cost of util

for a specific Turnkey III development ities attributable to the home;

shall be so notified in accordance with (ii) Ability to meet all the obligations

HUD-approved procedure. The notice

shall state the reason for the applicant's of a homebuyer under the Homebuyers

rejection (including a nonrecommendaOwnership Opportunity Agreement;

tion by the recommending committee (iii) At least one member gainfully unless the applicant has previously been employed, or having an established so notified by the committee) and the source of continuing income.

notice shall state that the applicant will (f) Selection of homebuyers. Home- be given an informal hearing on such buyers shall be selected from those fam- determination, regardless of the reason ilies determined to have potential for for the rejection, if he makes a request homeownership. Such selection shall be for such a hearing within a reasonable made in sequence from the waiting list time (to be specified in the notice) from established in accordance with this sec- the date of the notice.

(h) Eligibility for continued occu- admission shall be advised of the nature pancy. (1) A homebuyer shall cease to of the counseling and training program be eligible for continued occupancy with available to them and the application for the aid of HUD annual contributions admission shall include a statement that when the LHA determines that his ad- the family agrees to participate and cojusted monthly income has reached the operate fully in all official pre-occupancy level, and is likely to continue at such and post-occupancy training and counlevel, at which the current amount of seling activities. Failure to participate as his required monthly payment equals or agreed may result in the family not exceeds the monthly housing cost (see being selected or retained as a homeparagraph (h) (2) of this section). In buyer. such event, if the LHA determines, with

Association HUD approval, that suitable financing

§ 1270.106 Homebuyers

(HBA). is available, the LHA shall notify the homebuyer that he shall either (i) pur- An HBA is an incorporated organizachase the home or (ii) move from the tion composed of all the families who are development; provided, however, that if entitled to occupancy pursuant to a the LHA determines that, due to special Homebuyers Ownership Opportunity circumstances, the homebuyer is unable Agreement or who are homeowners. It to find decent, safe and sanitary housing

is formed and organized for the purposes within his financial reach although mak- set forth in § 1270.304 of this part. The ing every reasonable effort to do so, the HBA shall be funded as provided in homebuyer may be permitted to remain $ 1270.305 of this part. In the absence of for the duration of such a situation if he a duly organized HBA, the LHA shall be pays an increased monthly payment con- free to act without the HBA action resistent with his adjusted monthly in- quired by this subpart. come; provided that this monthly

§ 1270.107 Responsibilities of homepayment shall not exceed the maximum

buyer. provided in § 1270.107(j) (1). Such an increased monthly payment shall also

(a) Repair, maintenance and use of be payable by the homebuyer if he con

home. The homebuyer shall be retinues in occupancy without purchasing

sponsible for the routine maintenance the home because suitable financing is

of the home to the satisfaction of the not available.

HBA and the LHA. This routine mainte(2) The term "monthly housing cost,"

nance includes the work (labor and maas used in this paragraph, means the

terials) of keeping the dwelling strucsum of: (i) The monthly debt service ture, grounds and equipment in good amount shown on the Purchase Price

repair, condition and appearance so that Schedule (except where the homebuyer they may be utilized continually at their can purchase the home by the method designed capacities and at the satisfacdescribed in 1270.113(c) (1) below): (i) tory level of efficiency for their intended one-twelfth of the annual real property purposes, and in conformity with the retaxes which the homebuyer will be re- quirements of local housing code and quired to pay as a homeowner; (iil) one- applicable regulations and guidelines of twelfth of the annual premium at- HUD. It includes repairs (labor and matributable to fire and extended coverage terials) to the dwelling structure, plumbinsurance carried by the LHA with re

ing fixtures, dwelling equipment (such spect to the home; (iv) the current

as range and refrigerator), shades and monthly per unit amount budgeted for

screens, water heater, heating equipment routine maintenance (EHPA), and for routine maintenance-common property;

and other component parts of the dwelland (v) the current LHA and HUD ap

ing. It also includes all interior paint

ing and the maintenance of grounds (lot) proved monthly allowance for utilities

on which the dwelling is located. It does paid for directly by the homebuyer plus

not include maintenance and replacethe monthly cost of utilities supplied by the LHA.

ments provided for by the NRMR de

scribed in $ 1270.111. $ 1270.105 Counseling of homebuyers. (b) Repair of damage. In addition to

The LHA shall provide counseling and the obligation for routine maintenance, training as provided in subpart C of this the homebuyer shall be responsible for part, with funding as provided in repair of any damage caused by him, § 1270.206 of this part. Applicants for members of his family, or visitors.

39-082—75

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