tion from the LHA of the information contained in the Packet.

§ 1272.207 Submission of proposals.

(a) Owners and/or developers shall be required to submit sealed copies of their complete proposals to the LHA before the published deadline, in the number of copies specified in the Developer's Packet. Proposal documents shall be sealed in an envelope or package which shall be clearly marked with a label contained in the Developer's Packet. The label shall be clearly and distinctively marked "Section 23 Housing Assistance Payments Program-New Construction Proposal", shall show the name of the LHA and the project designation, and shall be addressed to the LHA. The label on the inner envelope shall be marked "Sealed Proposal-Open on (date and time)."

(b) Submission of proposals shall be by hand delivery or certified mail. Any proposal received by the LHA after the deadline shall not be accepted by the LHA but shall be returned unopened. No proposal shall be opened by the LHA until after the deadline. The LHA shall advise HUD by letter immediately after the deadline for receipt of proposals as to the number of proposals received and the names of the proposers.

§ 1272.208 Proposal contents.

(a) Each proposal shall include the following:

(1) A description of the housing proposed together with preliminary drawings and plans and outline specifications on the prescribed form. Preliminary drawings and plans shall include: site layout based on the topographical information available from existing records and the known subsurface soil conditions; landscape plans; general floor plans and unit plans, at the scale of 14 inch equals one foot; and elevation drawings for each typical building at the same scale.

(2) A copy of the site option agreement(s) contract(s) of sale, or other document(s) which evidences developer's effected control of the site(s).

(3) A neighborhood map showing the location(s) of the site(s) and the racial composition of the neighborhood(s).

(4) A completed HUD Environmental Information Form.

(5) A statement as to whether the proposed project is expected to displace site occupants; the number of families,

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individuals and business concerns to be displaced (identified by race or minority group status); an estimate of relocation costs; and a statement that the owner and/or developer recognizes the relocation requirements that apply if the proposed project will cause displacement, will assume full responsibility for the funding of all costs incurred in providing to displaced persons the full relocation payments and services authorized by the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and will comply with all relocation requirements pursuant to that Act unless other commitments, which the owner believes to be satisfactory to HUD, have been made for the funding of such relocation costs. In the latter case, the owner shall specify such other commitments.

(6) Submission of an Affirmative Fair Housing Marketing Plan, a signed assurance of compliance with Title VI of the Civil Rights Act of 1964, and in bid condition areas, certifications required pursuant to Executive Order 11246.

(7) Submissions as required by HUD regulations and other requirements pursuant to section 3 of the Housing and Urban Development Act of 1968.

(8) Submission of evidence of management capability and a proposed management program as required by Appendix V of this part, which shall include both a statement that all the management and maintenance services required by the LHA will be provided and a list of those services. If the owner proposes to contract with the LHA (see § 1272.103 (p)) he shall demonstrate that adequate management, maintenance, or operation services are not otherwise available in the locality and attach a proposed contract, specifying the proposed fee.

(9) A statement that none of the types of financing prohibited in § 1272.103 (n) (2) will be utilized.

(b) In addition, each proposal shall indicate or include:

(1) Who the developer, the builder and the owner/lessor will be; the qualifications and experience of each; and the names of officials and principal members, shareholders and investors, and other parties having substantial interest, using the prescribed form.

(2) The present zoning and proposed action for rezoning if current zoning is not permissive.

(3) The gross rents required by unit size, the portion of such rents attributable to each utility, and which utilities, if any, are to be paid directly by the families.

(4) The anticipated time required for construction of the improvements after the Agreement is signed (if the project is to be completed in stages, identification of the units comprising each stage and the estimated dates for commencement and completion of each stage).

§ 1272.209 Site and neighborhood standards.

(a) Proposed sites for new construction projects must be approved by HUD as meeting the following standards:

(1) The sites and neighborhoods shall be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968 (and of Executive Order 11063 with respect to creed), and HUD regulations issued pursuant thereto.

(2) The site shall not be located in: (i) An area of minority concentration unless (A) sufficient, comparable opportunities exists for housing for minority families, in the income range to be served by the proposed project, outside areas of minority concentration, or (B) the project is necessary to meet overriding housing needs which cannot otherwise feasibly be met in that housing market area. (An "overriding need" may not serve as the basis for determining that a site is acceptable if the only reason the need cannot otherwise feasibly be met is that discrimination on the basis of race, color, religion, creed, or national origin renders sites outside areas of minority concentration unavailable.)

(ii) A racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents in the area.

(3) The site shall be free from adverse environmental conditions, natural or manmade, such as instability, flooding, septic tank backups, sewage hazards, or mudslides; harmful air pollution, smoke or dust; excessive noise, vibration, or vehicular traffic; rodent or vermin infestation; or fire hazards. Moreover, the neighborhood must not be one which is seriously detrimental to family life; and substandard dwellings or other undesirable elements should not predominate

unless there is actively in progress a concerted program intended to upgrade the neighborhood.

(b) The housing shall be accessible to social, recreational, educational, commercial, and health facilities and services, and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of unsubsidized, standard housing of similar market rents.

(c) Travel time and cost via public transportation or private automobile, from the neighborhood to places of employment providing a range of jobs for lower income workers, is not excessive. (While it is important that elderly housing not be totally isolated from employment opportunities, this requirement need not be adhered to rigidly for such projects.)

(d) The project may not be built on a site which has occupants unless (1) the owner and/or developer of the project voluntarily undertakes liability for and provides for the funding of all relocation costs (see section 7 of the Agreement) or (2) other commitments, satisfactory to HUD, have been made for the funding of such costs.

(e) The project may not be built in an area that has been identified by HUD as having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, unless the project is covered by flood insurance as required by the Flood Disaster Protection Act of 1973.

§ 1272.210 Prohibition of use of pre

selected sites.

With the exception of sites in Urban Renewal areas, the use of preselected sites, e.g. sites designated by the LHA for development of section 23 housing held under options transferrable to a selected developer, is prohibited. Where needed to meet special situations, a waiver of this prohibition on a case basis may be provided by the Assistant Secretary for Housing Production and Mortgage Credit-FHA Commissioner upon receipt of appropriately documented justification and recommendations for approval from the appropriate HUD field office and the appropriate HUD Regional Office.

§ 1272.211 Evaluation of proposals.

(a) Identity of interest. Any proposal from an owner having an identity of

interest with the LHA shall not be eligible for consideration. Any proposal which includes the use of a management agent having an identity of interest with the LHA shall be unacceptable with respect to the management program (this does not preclude contracting with LHAS as provided in § 1272.103 (p)).

(b) LHA evaluation of proposals. Each proposal received shall be evaluated by the LHA, utilizing the LHA Review Checklist for section 23 New Construction Proposals (shown as Appendix VI to this part), on the basis of all pertinent factors including, but not limited to: Site; design and construction quality; rents; capability and responsibility of developer, builder, and owner; management capability of owner and/or management agent, or, where applicable, the acceptability of the proposed management contract with the LHA; and compliance with Equal Opportunity requirements and with requirements for provision of employment and training and business opportunities in the project area. In making its selection from among proposals, but taking into account its evaluation of all other factors listed above, the LHA shall select the proposal with the lowest gross rents. If such proposal is not selected by the LHA, the LHA shall submit to HUD a justification for selecting another proposal over a proposal (s) with lower gross rents at the time it notifies HUD of its tentative selection (see paragraph (c) of this section). For purposes of determination of acceptability, no changes in proposals shall be considered after the deadline date for receipt of proposals, except that the LHA may request clarification of individual items or additional information which does not alter the scope of the proposal.

(c) Tentative selection of developer. The LHA shall tentatively select a proposal or proposals and submit such proposal (s), together with a copy of the completed LHA Review Checklist, to HUD for approval prior to disclosure of the LHA's tentative selection.

(d) HUD evaluation of proposal. Upon receipt HUD shall evaluate the submitted proposal(s) and send a copy of the developer's completed HUD Environmental Information Form, to the appropriate A-95 Clearinghouse for review, if applicable. HUD shall notify the LHA as to whether or not the proposal is approvable. If the proposal is unapprovable, the

LHA shall be advised that it may submit another proposal which the LHA believes meets all program requirements, or readvertise. If HUD finds the proposal approvable only if the proposed rents are reduced to amounts considered approvable by HUD, the LHA shall be so notified and instructed to notify the developer that he may be selected only if the rents are reduced, without reducing the quality of the project, in accordance with the HUD determination. A copy of any such notification to the developer shall be sent to the HUD field office.

§ 1272.212 Notification of developer selection.

(a) LHA selection of developer. Upon receipt by the LHA of HUD approval, the LHA shall notify the developer(s) of his (their) selection using the prescribed form of letter (Notification of Developer Selection) shown as Appendix VIII to this part. Upon acceptance of the Notification by the developer, the LHA shall immediately transmit a copy of the accepted Notification to the HUD field office together with a copy of the LHA's resolution selecting the developer. If the developer does not accept the Notification by the date specified, the LHA may rescind the Notification and submit to HUD for approval another proposal which the LHA believes meets all program requirements, or the LHA may readvertise.

(1) Estimate of relocation costs. If the estimate of relocation costs provided in the proposal (see § 1272.208(a) (5)) is determined by HUD to be inaccurate, the developer shall be advised in the letter of notification as to the correct amount.

(2) Architect's certification. The LHA letter of notification to the developer shall advise him that before the LHA may enter into an Agreement, the developer shall submit to HUD and the LHA the architect's certification required in the Notification. Such certification shall be prepared by the architect responsible for the preparation of the working drawings and specifications. If the developer fails to submit the certification by the date specified in the letter, the LHA shall rescind the Notification unless it determines that a reasonable extension of time should be granted. A copy of the letter of extension or recision shall be transmitted to HUD.

(b) Availability of LHA analysis of proposals. The LHA analysis of each proposal shall be held available for public

inspection in the LHA office for at least three years following the Notification of Developer Selection.

§ 1272.213 Annual contributions contract.

Upon receipt of the architect's certification, the HUD field office shall prepare the Annual Contributions Contract, utilizing the prescribed form shown as Appendix X to this part. The Annual Contributions Contract shall be transmitted to the LHA for execution and return to HUD.

§ 1272.214 Agreement to enter into housing assistance payments contract. (a) Preparation of agreement. The Agreement shall be prepared by HUD at the time the Annual Contributions Contract is prepared (see § 1272.213), utilizing the prescribed form shown in Appendix XI to this part. The Agreement shall include, but not be limited to, the following:

(1) A description of the property and the improvements to be constructed.

(2) An attachment of the proposed Contract, complete in all respects except for execution, which shall specify the amount of rent to owner and conform to the prescribed form shown as Appendix XII to this part.

(3) Construction initiation and completion dates, including initiation and completion dates of stages if staged completion is agreed to.

(4) How project completion shall be evidenced (see § 1272.215(a)).

(5) A provision that the owner may not:

(i) Make any sale, assignment, or conveyance or transfer in any other form of his interests in the Agreement except:

(A) With the prior consent of the LHA and HUD; or

(B) To a financial institution for the purpose of obtaining financing.

(ii) Change to a different developer from the one named in the Agreement without prior consent of the LHA and HUD.

The assignment by the owner of the Agreement or project to a limited partnership of which the owner is the general partner shall not be considered an assignment hereunder.

(6) Provisions that the owner shall comply with relocation requirements as set forth in applicable HUD issuances, HUD Equal Opportunity (including equal employment opportunity) requirements

as set forth in applicable HUD issuances and regulations, and the requirements of section 3 of the Housing and Urban Development Act of 1968 and regulations issued pursuant thereto in regard to providing opportunities for training and employment to lower income residents of the project area, and in regard to awarding contracts to business concerns located in, or owned in substantial part by residents of, the project area.

(b) Execution of agreement. After receipt of the LHA-executed ACC, HUD shall execute the ACC and shall transmit a fully executed copy to the LHA, together with four copies of the unexecuted Agreement. A copy of the Agreement, executed by the LHA and the owner, shall be returned to HUD.

(c) Construction. Upon execution of the Agreement, the owner shall promptly proceed with construction as provided in the Agreement. In the event the work is not so commenced and/or diligently continued, the LHA shall have the right to cancel the Agreement, subject to HUD approval. For projects financed with HUD-insured mortgages, required HUD inspection procedures shall be followed. § 1272.215 Project completion.

(a) Notification of completion. Upon completion of the project, the owner shall notify the LHA and HUD that the project is completed and shall submit to the LHA the evidence of completion described in paragraph (b) of this section.

(b) Evidence of completion. Completion of the project shall be evidenced by the following:

(1) A set of as-built drawings;

(2) A certificate of occupancy and/or other official approvals necessary for occupancy;

(3) Separate certifications by the registered architect responsible for the preparation of the working drawings and specifications (see § 1272.212(a)) and by the owner that:

(i) All work has been completed in accordance with the requirements of the Agreement;

(ii) The project is in good and tenantable condition;

(iii) There are no defects or deficiencies in the project other than ordinary punchlist items, If there are punchlist items, the owner shall, as agreed to by the LHA, the owner and HUD, make a deposit in escrow to cover such items. In such case, if the owner fails to complete the punchlist items within a reasonable

time to the satisfaction of the LHA, the LHA may, upon 30 days notice and with the approval of HUD, terminate the Housing Assistance Payments Contract.

(c) HUD inspection. (1) Within ten working days of the receipt of the owner's notification of project completion, the LHA representative, accompanied by a HUD representative, shall inspect the project and review the evidence of completion listed in paragraph (b) above. As promptly as possible HUD shall notify the LHA as to whether or not the project has been satisfactorily completed and whether the requirements of § 1272.216 (a) have been complied with.

(2) If it is determined that the project has not been satisfactorily completed, HUD shall notify the LHA and advise it of the corrective action needed.

(3) In the event the owner disputes HUD's finding, he may submit the controversy to third-party arbitration, at his expense, provided that the arbitration is advisory only.

(4) Prior to authorizing execution of the Housing Assistance Payments Contract, HUD shall verify that appropriate corrective action has been taken.

(d) Staged completion. If the project is to be completed in stages, the procedures of paragraphs (a), (b), and (c) of this section shall apply to each stage. § 1272.216 Execution of housing assistance payments contract.

(a) Prior to HUD's authorization of execution of the Housing Assistance Payments Contract, the owner must certify in writing that there has been no change in the evidence of management capability and proposed management program as specified in his proposal other than changes approved in writing by the LHA and HUD in accordance with section 3 of the Agreement.

(b) If HUD determines that the project has been satisfactorily completed in accordance with the provisions of § 1272.215 above and approves such certification and the changes, if any, as to the evidence of management capability and management program, HUD shall authorize execution of the Contract.

(c) Upon receipt of authorization from HUD, the LHA shall execute the Housing Assistance Payments Contract with the owner and transmit a copy of the executed Contract to the HUD field office for approval. If the Contract is found approvable, an approved copy shall be returned to the LHA. If the Contract is not

approvable, the LHA shall be notified by HUD as to the necessary changes to be made before the Contract can be approved.

§ 1272.217 Project operation.

(a) Occupancy. Marketing by the owner and determinations of family eligibility and approval of owner-family leases by the LHA shall begin no later than 90 days prior to project completion and be accomplished so as to achieve rapid occupancy.

(b) Compliance with equal opportunity requirements and applicable LHA admission regulations. Marketing of units and selection of families by the owner shall be in accordance with the owner's HUD-approved Affirmative Fair Housing Marketing Plan and with all regulations relating to fair housing advertising including use of the equal opportunity logotype, statement, and slogan in all advertising, and with applicable LHA regulations establishing admission policies, including policies, if any, carrying out its responsibility for rehousing displaced families. Projects shall be managed and operated without regard to race, color, creed, sex, or national origin.

(c) Selection of families for participation. The owner shall be responsible for selection of families, subject to certification of eligibility by the LHA. The owner shall request the LHA, in accordance with procedures to be agreed upon by the owner and the LHA, to certify the eligibility of a selected family and to approve the proposed owner-family lease. Such request shall be made by submitting to the LHA the Determination of Family Eligibility and Lease Approval, shown as Appendix XIII to this part. The owner and the family shall complete Part I of the form, Request for Determination, and submit, with the request, the proposed owner-family lease, complete except for execution and the amount of rent payable by the family.

(d) LHA determination of family eligibility and lease approval. Within the time period specified in the Agreement and the Contract, the LHA shall return a copy of Part II of Appendix XIII to this part, Authority Determination, to the owner and the family indicating one of the following:

(1) That additional, specified information is required from the owner to enable the LHA to make its determination.