(3) Maximum initial term of the Contract, and the fact the maximum approvable term, including renewals, will be determined in accordance with the standards of § 1276.103(f) (2).

(4) The requirement that management, ordinary and extraordinary maintenance, utilities (except where paid directly by tenants), taxes, and insurance are to be the responsibility of the owner, except that where the owner can demonstrate that adequate management, maintenance, or operation services are not otherwise available in the locality, he may contract with the LHA as provided in § 1276.103 (p).

and

(5) The specific management maintenance services required to be provided by the owner. Such services shall include all services typically provided in the locality for the type of housing contemplated.

(6) The requirement that the owner submit evidence of capability of providing the required management and maintenance services, or if the proposal is for 15 or more units, evidence of management capability and a proposed management program in accordance with the requirements of Appendix V of this Part.

(7) Maximum gross rents (including all utilities, range and refrigerator), by number of bedrooms per unit, that the LHA will consider, and a statement to the effect that, if families are to pay directly for some or all utilities, the maximum rents will be adjusted downward by a HUD approved utility allowance covering such utilities, such utility allowance to be based on a specified type of utility and method of distribution (utility combination).

(8) The requirement that the rents requested by the owner must be determined to be reasonable in relation to the quality, location, amenities, and management and maintenance services of the proposed housing, and taking into account the fact that the rents which may be paid for substantially rehabilitated units will be expected to fall below those that may be paid for new units except in the case of particularly well located units with little or no functional obsolesence which provide physical facilities and services comparable to those offered by newly constructed units.

(9) The requirement that the LHA shall be responsible only for the housing assistance payment to the owner and only for those units under lease by eligible families.

(10) The requirement that, if the developer intends to utilize HUD mortgage insurance, as permitted in § 1276.103(n), he must submit an application for such insurance to the appropriate Insuring Office in accordance with all normal requirements, and that review of his proposal under the section 23 program by the LHA and approval by HUD in no way substitute for required processing procedures under the applicable HUD mortgage insurance program.

(c) Call attention to and supply detailed information concerning:

(1) Applicability of the HUD Minimum Design Standards for Rehabilitation for Residential Properties. These standards specify minimum acceptability and constitute a floor for design and planning. They do not prohibit utilizing higher standards. Proposed rehabilitation should also comply with special requirements due to local climatic, topographic or environmental conditions.

(2) HUD relocation requirements.

(3) Equal opportunity requirements, which include the submission of an Affirmative Fair Housing Marketing Plan (if the proposal is for 5 or more units), a signed assurance of compliance with Title VI of the Civil Rights Act of 1964, and compliance with Executive Order 11063, Title VIII of the Civil Rights Act of 1968, including regulations and guidelines pursuant thereto, and, in bid condition areas, certifications required pursuant to Executive Order 11246.

(4) HUD regulations and other requirements implementing section 3 of the Housing and Urban Development Act of 1968 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.

(5) HUD requirements implementing the National Environmental Policy Act.

(6) The prescribed form of Agreement to Enter Into Housing Assistance Payments Contract and the prescribed form of such Contract (see Appendices XI and XII respectively).

(7) The number of copies of the proposal to be submitted to the LHA.

(8) The latest date by which Preliminary Proposals must be received by the LHA and that there exists no obligation to select any of the proposals received.

(a) Authorization to publish. Upon approval of the Rehabilitation Program Packet by HUD, the HUD field office shall transmit to the LHA a Public Notice which shall conform to Appendix IV. The LHA is authorized to publish the Notice immediately upon receipt.

(b) Publication of notice. The LHA shall publish the Notice at least once a week for two consecutive weeks in a newspaper of general circulation within the locality. The LHA shall also notify appropriate business concerns included in HUD's registry of section 3 businesses for the applicable political jurisdiction. The LHA shall also utilize other nonminority and minority media, publish the Notice in trade association journals, and/ or send copies of the Notice to active developers and builders.

(c) Deadline date for receipt of preliminary proposals. The deadline date for receipt of Preliminary Proposals shall be no earlier than 14 days after the date of the last publication in the newspaper of general circulation and it shall allow sufficient time for the preparation and submission of Preliminary Proposals for all the units authorized by HUD.

(d) Copies of published notice. Prior to the dealine date for the receipt of Preliminary Proposals, the LHA shall provide HUD with two certified copies of each published Public Notice and a statement of other publicity methods used. One copy of the Public Notice shall be available in the LHA's office for public inspection.

(e) Periodic evaluation of preliminary proposals. The LHA need not wait until after the deadline date to begin evaluation of Preliminary Proposals. The LHA may review and evaluate the Preliminary Proposals as received but shall not request preparation of any Final Proposals until it has reviewed and evaluated all the Preliminary Proposals received by the deadline date.

(f) Nondisclosure of information. In order to provide all interested owners/ rehabilitators with an equal opportunity to prepare Preliminary Proposals, the contents of the Public Notice or requirements to be included in the Rehabilitation Program Packet shall not be disclosed prior to publication.

(g) Assistance after publication of notice. Although the information in the Rehabilitation Program Packet should be sufficient to enable an owner/rehabilita

tor to prepare a Preliminary Proposal, an owner/rehabilitator may request clarification from the LHA of the information contained in the Packet.

§ 1276.207 Preliminary proposals.

(a) Submission and contents. Any interested owner/rehabilitator may respond to the Public Notice by submitting a Preliminary Proposal to the LHA. Such Preliminary Proposals shall be of sufficient detail to enable the LHA to make the following determinations:

(1) That the site and neighborhood standards and requirements will be met;

(2) That the size and type of units will be in accord with the requirements of the Public Notice and the Rehabilitation Program Packet;

(3) That the proposed rehabilitation will be adequate in order for the units to satisfy the standards set forth in § 1276.102(a) and the HUD Minimum Design Standards. (A statement shall be inIcluded as to whether or not the services of a registered architect will be utilized for the preparation of final working drawings and specifications.)

(4) That the maximum gross rents will not exceed the HUD established fair market rents, except where approved in accord with § 1276.103 (e);

(5) That the rents to the owner will be reasonable in relation to the quality, location, amenities and management and maintenance services of the proposed housing and taking into account the fact that the rents which may be paid for substantially rehabilitated units will be expected to fall below those that may be paid for new units except in the case of particularly well located units with little or no functional obsolescence which provide physical facilities and services comparabe to those offered by newly constructed units.

(6) That the requested term of the Contract is approvable in accordance with § 1276.103 (f) (2);

(7) That the owner/rehabilitator will be prepared to meet all the obligations of the prescribed Agreement and Contract;

(8) That there is no identity of interest between the owner/rehabilitator and the LHA. Any Preliminary 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 § 1276.103(p)).

(9) That all applicable Equal Opportunity requirements, including section 3 of the Housing and Urban Development Act of 1968 and the regulations issued pursuant thereto, can be satisfied.

(b) Selection. (1) After the deadline date, the LHA shall select from the Preliminary Proposals those on which it has made affirmative findings in accordance with paragraph (a) of this section and which in its judgment can be developed into Final Proposals meeting the requirements of the Rehabilitation Program Packet. If the nature and extent of the rehabilitation are such that, in the judgment of the LHA, the services of a registered architect should be utilized, and the Preliminary Proposal has not indicated an intention to utilize such services, the LHA's selection of such proposal should be made subject to compliance with this requirement.

(2) If the number of units covered by the Preliminary Proposal (s) that have been selected in accordance with paragraph (b)(1) of this section is equal to or less than the number of units approved in the LHA's Application, the LHA shall request all the owners/rehabilitators concerned to prepare Final Proposals in accordance with § 1276.208. When there is a need for more Preliminary Proposals, the LHA may issue another Public Notice for the remaining number of units but otherwise on the same terms and conditions, but this shall not delay the further processing of those Preliminary Proposals that have been selected as a result of the prior Public Notice.

(3) If the number of units covered by the Preliminary Proposal (s) that have been selected in accordance with paragraph (b) (1) of this section exceeds the number of units approved in the LHA's Application, the LHA shall determine which Preliminary Proposal (s) should be excluded based upon a comparative evaluation of all relevant factors; provided, however, that the LHA shall not exclude a Preliminary Proposal with lower gross rents than the others without specific justification for doing so.

(4) In the event any selected Preliminary Proposal (s) fails, for any reason, to result in an executed Agreement, the LHA may request the preparation of a Final Proposal (s) with respect to any Preliminary Proposal that was excluded under paragraph (b)(3) of this section or issue another Public Notice for the remaining number of units but otherwise on the same terms and conditions.

(5) For every Preliminary Proposal which is rejected or excluded for any reason, the LHA shall prepare a written analysis and statement of reasons which shall be held available for public inspection in the LHA office for at least three years following the deadline date for receipt of Preliminary Proposals.

(6) Owner/rehabilitators whose Preliminary Proposals were not accepted by the LHA shall be sent a letter notifying them of such fact and shall be provided with a copy of the appropriate analysis. § 1276.208 Final proposals.

(a) Notification. With respect to those Preliminary Proposals which have been selected in accordance with § 1276.207 (b), the LHA shall give written notification to the owners/rehabilitators requesting them to submit to the LHA within a reasonable time (to be specified by the LHA in the notification) a Final Proposal in accordance with the requirements of the Rehabilitation Program Packet and the following provisions of this § 1276.208.

(b) Content. Each Final Proposal shall indicate or include:

(1) The number of units, by unit size (number of bedrooms) proposed to be rehabilitated and made available for leasing by eligible families;

(2) The address(es) of the housing proposed to be rehabilitated; photos of exterior(s) and interior(s); and a neighborhood map showing the location (s) of the housing and the racial composition of the neighborhood(s);

(3) A copy of evidence of ownership or other effective control of the property to be rehabilitated;

(4) Sketches showing present layout and interior dimensions of the unit or of different size units and, if changes are proposed, floor plans showing layout and interior dimensions after rehabilitation;

(5) A description of the rehabilitation proposed, in sufficient detail (including plans, drawings and specifications to the extent necessary) to provide sufficient basis for: (i) a determination by the LHA and HUD that the proposal meets the requirements of the § 1276.102(a) and HUD Minimum Design Standards and (ii) a determination by the LHA and HUD that after completion of the rehabilitation the rehabilitated housing will meet those requirements.

(6) A completed HUD Environmental Information Form.

(7) A statement as to whether the proposed rehabilitation is expected to displace families, individuals, or business concerns who were occupants on the date of the LHA's notification pursuant to paragraph (a) of this section; the number of such occupants to be displaced (identified by race or minority group status); an estimate of relocation payments; and a statement that (i) the owner/rehabilitator recognizes the relocation requirements that apply if the proposed rehabilitation will cause displacement, will assume full responsibility for the funding of all relocation payments to displaced occupants pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and will comply with all relocation requirements pursuant to that Act, or (ii) other commitments, which the owner believes to be satisfactory to HUD, have been made for the funding of such relocation payments. In the latter case, the owner shall specify such other commitments.

(8) Submission of an Affirmative Fair Housing Marketing Plan (if the proposal is for the rehabilitation of 5 or more units); 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.

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

(10) Submission of evidence of capability of providing the required management and maintenance services and a list of those services; or if the proposal is for 15 or more units, 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 § 1276.103 (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.

(11) A statement that none of the types of financing prohibited in § 1276.103 (n) (2) will be utilized.

(12) Who the rehabilitator and the owner/lessor will be; the qualifications and experience of each; and the names

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of officials and principal members, shareholders and investors, and other parties having substantial interest, using the prescribed form.

(13) That the proposed rehabilitation will be permissible under applicable zoning, building, housing or other codes, ordinances or regulations.

(14) 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.

(15) The term of the Contract and justification for such term in accordance with § 1276.103 (f) (2).

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

(17) A statement as to whether or not the services of a registered architect will be utilized for preparation of final working drawings and specifications; and, if not, a justification if the LHA had previously determined that such services be utilized.

§ 1276.209 Site and neighborhood standards.

(a) Proposed sites for substantially rehabilitated housing must be approved by HUD meeting the following standards:

as

(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 subject to serious adverse environmental conditions, or, if such conditions exist, there is evidence that they will be corrected by the time the rehabilitation is completed.

(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 housing.)

(d) If the housing to be rehabilitated has occupants the owner and/or rehabilitator must voluntarily undertake liability for and provide for the funding of all relocation payments (see section 1.7 of the Agreement) unless other commitments, satisfactory to HUD, are made for the funding of such payments.

(e) Housing may not be rehabilitated 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 housing is covered by flood insurance as required by the Flood Disaster Protection Act of 1973.

§ 1276.210 Prohibition of use of preselected properties.

With the exception of properties in Urban Renewal areas, the use of preselected properies, i.e., properties designated by the LHA for rehabilitation and held under options transferable to a selected owner/rehabilitator, 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.

§ 1276.211 Evaluation of final proposals.

(a) Identity of interest. Any Final Proposal from an owner/rehabilitator having an identity of interest with the LHA shall not be eligible for consideration. Any Final 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 § 1276.103(p)).

(b) LHA evaluation of final proposals. (1) The LHA shall evaluate each Final

Proposal utilizing the LHA Review Checklist for section 23 Substantial Rehabilitation Final Proposals (shown as Appendix VI) on the basis of all pertinent factors, including but not limited to: Location; potential for rehabilitation; rents to owners; capability and responsibility of the owner/rehabilitator; management capability of the 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, training and business opportunities in the project area.

(2) The LHA shall submit to the appropriate HUD field office each Final Proposal which it determines to be acceptable together with its evaluation. If a Final Proposal involves relocation of occupants, the LHA shall furnish data on relocation housing resources and other required submissions. Advice and assistance on matters related to relocation may be obtained from the field office.

(c) HUD evaluation of final proposals. Upon receipt HUD shall evaluate the submitted proposal (s) and send a copy of the owner/rehabilitator completed HUD Environmental Information Form to the appropriate A-95 Clearinghouse for review, if applicable.

(d) HUD determination. HUD shall notify the LHA as to whether the proposal is:

(1) Approved.

(2) Approvable only if the proposed rents are reduced to specified amounts without reducing the quality of the rehabilitation; that HUD will approve the proposal if it receives within a specified time evidence that the rents have been so reduced and that the quality of the rehabilitation will not be reduced; and that the LHA may notify the owner/rehabilitator in accordance with such determination.

(3) Approvable only if specified deficiencies are corrected; that HUD will approve the proposal if it receives within a specified time evidence of such necessary corrections; and that the LHA may notify the owner/rehabilitator in accordance with such HUD determination.

(4) Not approved. If a proposal is not approved or if the conditions for approval under paragraphs (d) (2) and (d) (3) of this section are not met, the LHA shall notify the owner/rehabilitator of