resources and/or other private or public

sources.

(s) Establishment of income limit schedules; 30 percent occupancy by very low-income families. (1) HUD will establish schedules of income limits for defining Lower-Income Families and Very Low-Income Familities.

(2) In the initial renting of Contract units, the Owner shall lease at least 30 percent to Very Low-Income Families and shall thereafter exercise his best efforts to maintain at least 30 percent occupancy of Contract units by Very Low-Income Families.

(t) Establishment of amount of housing assistance payments. The amount of housing assistance payment on behalf of an Eligible Family, to be determined in accordance with schedules and criteria established by HUD, will equal the difference between (1) not less than 15 percent nor more than 25 percent of the Family's gross income and (2) the Gross Rent, taking into consideration the income of the Family, the number of minor children in the household, and the extent of medical or other unusual expenses incurred by the Family, except that, in the case of a large (6 or more minors) Very Low-Income Family or a very large (8 or more minors) LowerIncome Family or a Family with exceptional medical or other expenses, the amount of the housing assistance payment shall be the difference between 15 percent of the Family's gross income and the Gross Rent.

(u) Responsibilities of the owner. The Owner shall be responsible (subject to post-review or audit by HUD or the PHA, as the case may be) for management and maintenance of the project. These responsibilities shall include but not be limited to:

(1) Payment for utilities and services (unless paid directly by the Family), insurance and taxes;

(2) Performance of all ordinary and extraordinary maintenance;

(3) Performance of all management functions including the taking of applications, selection of Families including verification of income and other pertinent requirements, and determination of eligibility and amount of Family contribution in accordance with HUD-established schedules and criteria;

(4) Collection of Family rents;

(5) Termination of tenancies, including evictions;

(6) Preparation and furnishing of information required under the Contract;

(7) Reexaminations of Family income, composition, and extent of exceptional medical or other unusual expenses, and redeterminations, as appropriate, of the amount of Family contribution and amount of housing assistance payment in accordance with HUD-established schedules and criteria;

(8) Redeterminations of amounts of Family contribution and amount of housing assistance payment as a result of an adjustment by HUD of any applicable Allowance for Utilities and Other Services in accordance with HUD-established schedules and criteria; and

(9) Compliance with equal opportunity requirements.

Subject to HUD approval, any private Owner may contract with any private or public entity to perform such services for a prescribed fee, provided that such contract shall not shift any of the Owner's responsibilities or obligations. However, no entity which is responsible for administration of the Contract (for example, a PHA in the case of a PrivateOwner/PHA Project) may contract to perform management and maintenance of the project. (See, however, Sec. 1273.103(y) which permits conversion of a Private-Owner/PHA Project to a Pri

vate-Owner Project.)

(v) Responsibility for administration of contract. (1) In the case of a PrivateOwner Project or a PHA-Owner Project, HUD is responsible for administration of the Contract. HUD may contract with another entity for the performance of some or all of its Contract administration functions.

(2) In the case of a Private-Owner/ PHA Project, the PHA is primarily responsible for administration of the Contract. However, if the PHA is the lender, the following shall apply:

(i) HUD shall have the right to make independent audits, reviews, and determinations as to compliance by the Owner with any or all of his obligations under the Contract; and

(ii) In the event HUD determines that the Owner is in default with respect to any or all of his obligations, HUD shall have the right to take direct action (as if HUD were the party to the Contract primarily responsible for its administration) to enforce any or al available remedies, including, but not limited to, abatement of housing assistance payments,

collection of payments previously made in violation of the Contract, and termination of the Contract in whole or in part.

(w) Separate project requirement. (1) In the case of a Private-Owner Project or a PHA-Owner Project, each Agreement and Contract shall constitute a separate project.

(2) In the case of a Private-Owner/ PHA Project, such project may not include any other type of section 8 assistance, shall be processed with a separate ACC List and ACC Part I and shall be assigned a separate project number. All new construction units to be placed under a single Contract shall comprise a separate project. However, the field office director may designate as a single project the units to be covered by two or more such Contracts for new construction projects where:

(i) The units are placed under ACC on the same date; and

(ii) Such consolidation is necessary in the interest of administrative efficiency.

(x) Conversion of private-owner project to private-owner/PHA project. HUD may request the Owner of a PrivateOwner Project and an appropriate PHA to agree, if they are willing, to a conversion of any such project to a PrivateOwner/PHA Project if HUD determines that such conversion would promote efficient project administration.

(y) Conversion of private-owner/ PHA project to private-owner project. The private Owner and the PHA, in the case of a Private-Owner/PHA Project, may request HUD to agree to a conversion of any such project to a PrivateOwner Project. HUD shall agree to such conversion if it determines it to be in the best interest of the project.

Subpart B-Project Development and
Operation

§ 1273.201 Allocations of contract authority to field offices.

HUD will allocate to field offices contract authority for the Section 8 Housing Assistance Payments Program for metropolitan areas and for nonmetropolitan areas in conformance with section 213 (d) of the HCD Act.

(a) Publication. The HUD field office shall initiate implementation of its program with respect to new construction by publishing Invitations for Preliminary Proposals-New Construction in accordance with the schedule established by the field office. Such publications shall be at least once a week on the same day or days of each of two consecutive weeks in a newspaper (s) of general circulation serving the area(s) for which proposals are desired. As promptly as possible, HUD will also notify minority media, business concerns included in HUD's registry of Section 3 businesses for the applicable political jurisdictions, minority organizations involved in housing and community development, and fair housing groups. In addition, to the extent feasible, HUD may notify appropriate PHAS, the chief executive officer of the appropriate unit(s) of general local government, trade journals, and other nonminority media. Copies of each Invitation shall be available in the HUD field office.

(b) Contents of invitation. The Invitation shall state the geographic area or areas in which the housing is to be constructed; the number of units in each area; the deadline for receipt of Preliminary Proposals by HUD; such other basic information as the field office may wish to specify; and the fact that detailed information, guidelines, standards and procedures are contained in a Developer's Packet which may be obtained by interested parties from the field office. The Invitation shall also state that Preliminary Proposals may be submitted by private Owners or PHA Owners for direct contracting with HUD, or by PHAS on behalf of private Owners with whom the PHA proposes to contract pursuant to an ACC with HUD.

(c) Deadline for receipt of preliminary proposals. The deadline (date and time) for receipt of Preliminary Proposals by

The Developer's Packet shall:

(a) Include a copy of the applicable regulations, required HUD forms, and HUD standards. Where the field office determines that mobile homes are appropriate or that there is an interest on the part of developers to utilize mobile homes, the Developer's Packet shall include the appropriate HUD standards and guidelines and shall indicate any modifications of the HUD requirements and procedures under this Part, including those relating to the site and site improvments, the type or types of units, and the special Fair Market Rents published for the area involved.

(b) Include the following information for each geographic area specified in the Invitation.

(1) The number of units for elderly and nonelderly occupancy and the number to be specially designed for elderly (including handicapped) occupancy.

(2) The number of units by unit size (bedrooms per unit) and the fact that a proposal my be for any number of units up to that amount.

(3) The type of housing, if any, which is unacceptable (e.g., high-rise elevator structures for Families with children, mobile homes where HUD has determined that such housing is inappropriate).

(4) Special requirements, if any, as to location, density, and site planning; in the case of New Communities, identification of the proposed site, including location map, dimensions, unusual site features, if any, zoning, and the minimum price for the site.

(5) Any special requirements for housing for the elderly (including the handicapped) pursuant to section 209 of the HCD Act, and any special requirements for the handicapped pursuant to the standards established by HUD under Pub. L. 90-480.

(6) Any special requirements or restrictions that may be necessary for compliance with provisions of the Local Housing Assistance Plan, if any, and the name, address, and title of the official of the unit of general local government to whom inquiries may be made concerning such Plan.

(7) The specific type(s) of utility and method(s) of distribution (utility combination) required.

(8) The specific management and maintenance services required to be provided by the Owner. Such services shall include all services typically provided in the area for the type of housing contemplated.

(9) The Fair Market Rents for newly constructed rental housing applicable to the structure types and unit sizes requested.

(10) Initial term of the Contract, and number of renewal options, if any. (c) Include statements as to:

(1) Equal opportunity requirements, which include the submission of an Affirmative Fair Housing Marketing Plan (if the proposal is for five or more units); an assurance of compliance with Title VI of the Civil Rights Act of 1964; compliance with Executive Order 11063 and Title VIII of the Civil Rights Act of 1968, including regulations and guidelines pursuant thereto; and certifications required pursuant to Executive Order 11246.

(2) HUD regulations and other requirements implementing section 3 of the Housing and Urban Development Act of 1968, requiring that, to the greatest extent feasible, opportunities for training and employment be given to lower-income residents of the project area and contracts for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the area of the project.

(3) HUD relocation requirements. (4) HUD requirements implementing the National Environmental Policy Act. (5) Governmental requirements implementing the Clean Air Act and the Federal Water Pollution Control Act.

(6) HUD requirements implementing the Flood Disaster Protection Act of 1973. (7) The requirement, if a project will contain nine or more Contract units, that all laborers and mechanics employed in the development of the project shall be paid not less than the wages prevailing in the locality as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act.

(8) The prescribed HUD form showing the identity of the Owner, the developer, the builder, the architect, and the managing agent (if any); the qualifications and experience of each; and the names of officials and principal mem

bers, shareholders and investors, and other parties having substantial interest.

(9) The requirement that the Owner submit evidence of capability to provide the required management and maintenance services or, if the proposal is for 15 or more units, evidence of management capability and a proposed management plan and a certification by the Owner and the management agent, if any, in a format acceptable to HUD.

(10) The fact that if the Owner intends to pledge, or offer as security for any loan or obligation, an Agreement or Contract, he is responsible for submitting to HUD a request for such approval in sufficient time before he needs the financing to permit review of the method and terms of the financing and the instrument of pledge, offer or other assignment; and that if the request is made after approval of the Final Proposal, the Contract Rents may be reduced where the methods and terms of financing require. (See § 1273.103 (q).)

(11) Other requirements which the HUD field office determines to be necessary.

(12) Where copies of HUD Minimum Property Standards and any other applicable standards, guidelines and criteria may be obtained.

(13) The number of copies of the Preliminary Proposal to be submitted to HUD.

(14) The fact that HUD may determine not to select or approve any or all Preliminary Proposals submitted.

Each Preliminary Proposal shall include or indicate the following:

(a) Identification of the proposed site, including a map showing the location of the site and the racial composition of the neighborhood, sketch of site plan, dimensions, unusual site features, if any, and zoning (however, only a sketch of the site plan is required for a New Communities project).

(b) A copy of the site option agreement(s), contract(s) of sale, or other document(s) which evidence (s) the proposer's effective control of the site(s) (however, only the proposed price is required for a New Communities project).

(c) A description of the proposed housing including number and type of structures, number of stories, structural system, exterior finish, heating-air conditioning system, number of units by

size (number of bedrooms), living area and composition for each size of unit, and special amenities or features, if any; and sketches of the buildings and unit plans.

(d) The Contract Rent per unit, by size and structure type.

(e) The equipment to be included in the Contract Rent.

(f) The utilities and services to be included in the Contract Rent and those utilities and services not so included. For each utility and service not included in the Contract Rent, an estimate of the average monthly cost (for the first year of occupancy) to the occupants by unit size and structure type.

(g) A showing that the proposal meets any special requirements or restrictions necessary for compliance with the provisions of the Local Housing Assistance Plan, if any.

(h) Whether the proposed project will displace site occupants. If so the proposal shall state the number of families, individuals, and business concerns to be displaced (identified by race or minority group status, and whether they are owners or renters), and shall show that there is a feasible plan for relocation and how necessary relocation payments, if any, will be funded.

(i) Equal Employment Opportunity Certification, using the prescribed form. (j) The identity of the Owner, developer, builder (if known), and architect (if known); the qualifications and experience of each; and the names of officials and principal members, shareholders and investors, and other parties having substantial interest, and the prior participation of each in HUD programs, using the prescribed form.

(k) Whether the Owner intends to provide management services or to contract with a managing agent. In the latter case, provide the identity of the managing agent, if known, and the other information as specified in paragraph (j) of this section.

(1) The proposed method of financing and whether the Owner intends to pledge or offer the Agreement and/or Contract as security for any loan or obligation (see § 1273.103 (q)). If the Owner proposes to utilize FHA mortgage insurance, the prescribed FHA form should be completed and submitted with the Preliminary Proposal.

(m) Whether the Owner proposes to limit the number of assisted units to 20

percent of the dwelling units in the project.

§ 1273.206 Submission of preliminary proposals.

(a) Preliminary Proposals shall be submitted to HUD on or before the published deadline date and time for opening, in the number of copies specified in the Developer's Packet. Proposal documents shall be sealed in an inner envelope marked "Sealed Proposal-Open on [date and time specified in the Invitation]." This sealed proposal shall be submitted in an outer envelope or package which shall show the name of the locality, be addressed to the HUD field office, and be clearly and distinctively marked "Section 8 Housing Assistance Payments Program-New Construction Preliminary Proposal."

(b) Submission of Preliminary Proposals shall be by hand delivery or certified mail. Any Preliminary Proposal received by HUD after the deadline date and time shall not be accepted but shall be returned unopened. No Preliminary Proposal shall be opened by HUD until the deadline.

§ 1273.207

Proposals involving HUDFHA mortgage insurance.

(a) Advance mortgage insurance processing. This paragraph (a) applies to Owners who apply for HUD-FHA mortgage insurance prior to the submission of a Preliminary Proposal under this Part. Such an Owner may apply for a Site Appraisal and Market Analysis Letter (SAMA Letter), a Conditional Commitment, or a Firm Commitment for mortgage insurance by submitting an application on the prescribed form with supporting exhibits and the required fee. Such an application will have to meet the marketability test without reliance upon housing assistance payments under this Part, or, in the alternative, approval for mortgage insurance shall be conditioned upon subsequent approval of a section 8 proposal for the same project. If a SAMA Letter, Conditional Commitment, or Firm Commitment, whichever is applicable, is issued, and if prior to expiration thereof the Owner submits a Preliminary Proposal under this Part which is consistent with the proposal as approved for mortgage insurance, such proposal will nevertheless be subject to review and evaluation in accordance with the procedures under this Part; however, if the Preliminary Proposal is selected in accord

ance with the procedures under this Part, further processing will be coordinated in accordance with paragraph (b) of this section to the extent applicable, and the rents which were approved for mortgage insurance purposes will be accepted for purposes of such Preliminary Proposal provided that they are otherwise approvable in accordance with this Part.

(b) Concurrent processing. The provisions of this paragraph (b) apply where the Preliminary Proposal indicates an intention to finance a project with a HUD-FHA insured mortgage. Such a Preliminary Proposal will not be selected under this Part unless it meets the market and site acceptability criteria of the applicable mortgage insurance program except as modified by this paragraph. The processing of such a proposal for mortgage insurance will be integrated with the Section 8 review and evaluation process. Selection by HUD of such a Preliminary Proposal for preparation of a Final Proposal will be made only where HUD has also determined that the proposal will qualify for mortgage insurance subject to a satisfactory demonstration by the Owner of his capability to complete the project, and subject to subsequent determinations of site value, the loan amount and credit approval.

(1) A section 8/HUD-FHA mortgage insurance project will be required to meet the marketability test of the applicable mortgage insurance program; provided, however, that the number of units in the proposal for which housing assistance payments are to be made available will be considered as an addition to the effective demand for unassisted rental units. As in the case of any other market analysis for market rate unassisted mortgage insurance programs, the supply of suitable vacant existing units, units under construction, and units in process must be subtracted from the estimate of total effective demand. Consequently, section 8/HUD-FHA insured units could be added to a market in which supply and demand are in equilibrium or in which there is an undersupply of rental units, but could not be added to a market in which there is an oversupply of rental units in the same competitive range of market rents as the proposed section 8/HUD-FHA insured project.

(2) After selection of a Preliminary Proposal which involves HUD-FHA mortgage insurance the Owner will be required to submit, with the Final Proposal, an application for 'HUD-FHA