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must be subtracted from the estimate of proposal rejected for HUD-FHA morttotal effective demand. Consequently, gage insurance and (2) having lower section 8/HUD-FHA insured units could rents approved under the mortgage inbe added to a market in which supply surance program than the rents set forth and demand are in equilibrium or in in the approved proposal under this Part. which there is an undersupply of rental units, but could not be added to a market

§ 1277.208 Screening and evaluation of

preliminary proposals. in which there is an oversupply of rental units in the same competitive range of (a) Initial Screening. Promptly after market rents as the proposed section 8/ the deadline date for receipt of PrelimiHUD-FHA insured project.

nary Proposals, HUD will screen all the (2) After selection of a Preliminary proposals to determine which are comProposal which involves HUD-FHA plete and responsive and eligible for furmortgage insurance the Owner will be ther processing. Where a proposal lacks required to submit, with the Final Pro- one or more of the required elements posal, an application for HUD-FHA Con- (see Sec. 1277.205), or is clearly not reditional Commitment with fee (two dol- sponsive to the conditions of the Invitalars per thousand dollars of mortgage tion and the Rehabilitation Program requested) under the applicable mort- Packet, the HUD field office shall give gage insurance program. Such Final Pro- the Owner the shortest reasonable time posals will not be approved under Section (generally not to exceed 10 days) to 8 unless they also qualify for isssuance of remedy the deficiency. a HUD-FHA Conditional Commitment (b) A-95 Clearance: Notice to Unit of under the applicable mortgage insurance General Local Government. (1) Promptprogram. The HUD notification of ap- ly after the deadline date for receipt of proval of the Final Proposal will be ac- proposals (or after the appropriate later companied by a HUD_FHA Conditional date for proposals completed pursuant to Commitment for HUD-FHA mortgage in- paragraph (a) of this section), the HUD surance. The Owner's acceptance of field office will, for each complete and reHUD's notification of approval of the sponsive Preliminary Proposal which is Final Proposal will constitute concurrent subject to A-95 clearance, send a copy acceptance of the conditions and terms of the proposal to the appropriate A-95 of the HUD_FHA Conditional Commit- Clearinghouse for review, inviting a rement for mortgage insurance.

sponse within 34 days from the date of (3) The rents of those units scheduled the letter of transmittal. for assisted occupancy, when projected (2) Within 10 working days after the for purpose of determining a mortgage deadline date for receipt of proposals (or limitation based on the debt service cri- after the appropriate later date for proterion, shall be the Contract Rents set posals completed pursuant to paragraph forth in the approved Final Proposal. (a) of this section), the HUD field of

(4) Prior to the execution of the Agree- fice will forward, under cover of a letter ment, the Owner will be required to ob- on the appropriate prescribed form, a tain a Firm Commitment for HUD-FHA copy of each complete and responsive mortgage insurance. This will require Preliminary Proposal to the chief executhe submission of an application for a tive officer (or such designee as such ofFirm Commitment, with an additional ficer may designate in writing to the HUD fee (one dollar per thousand dollars of field office) of the unit of general local the mortgage requested), upon accept- government in which the proposed housance of HUD's notification of approval or ing is to be located. The cover letter will the submission of the architect's certifi- invite a response within 30 days from cation accompanying the working draw

the date the letter and copy of the proings and specifications in accord with

posal are received. § 1277.211.

(c) Evaluation of preliminary pro(c) Delayed Mortgage Insurance Proc

posals by HUD. HUD may begin its evalessing. Where an Owner does not in

uation promptly after the deadline date,

but no selection or ranking may be comdicate in his Preliminary Proposal that

pleted until the response periods referred he intends to utilize HUD-FHA mortgage

to in paragraph (b) of this section have insurance and applies for HUD-FHA

ended. Each Preliminary Proposal will mortgage insurance after HUD approval be evaluated and ranked by HUD on the of the Preliminary Proposal under this basis of all pertinent factors under this Part, he risks (1) having his approved Part including, the best combination of

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rent, site, design and previous experi- tative selections from both listings would ence of the proposed Owner and on the exceed the number and sizes of units basis of comments, if any, received dur- called for in the Invitation. If so, the ing the response periods from the appro- field office shall make such revisions in priate A-95 Clearinghouse and the unit the tentative selections as it may deterof general local government.

mine to be necessary. (d) Selection (where approvable pro- (f) Use of residual units. For any reposals do not exceed number by size) sidual number of units, HUD may pubof units advertised. For each geographic lish another Invitation for Proposals, but area HUD will determine which Prelimi- this shall not delay the further processnary Proposals, in its judgment, can be ing of those Preliminary Proposals subdeveloped into Final Proposals meeting mitted in response to the prior Invitation the requirements of the Rehabilitation that have been selected as a result of the Program Packet. If the units covered by prior Invitation. such Preliminary Proposals could all be (g) Notification of selection. (1) With accommodated in the number of units respect to those Preliminary Proposals (by unit size) specified in the Invita- which have been selected in accordance tion, HUD will request all Owners of with this section, HUD will notify the acceptable Preliminary Proposals to Owners, on a prescribed form, and reprepare Final Proposals in accordance quest them to submit within a reasonable with $ 1277.209.

time (to be specified in the notification) (e) Selection where approviable pro- a Final Proposal in accordance with posals exceed number (by size) of units

the requirements of the provisions of advertised. If the units covered by ac- § 1277.209. The notification shall specify: ceptable Preliminary Proposals cannot

(i) The Contract Rents that will be acall be accommodated by the number of ceptable to HUD where these are lower units (by unit size) specified in the In- than the Contract Rents proposed by vitation, HUD will proceed as follows: the Owrer, and the reason for the reduc

(1) Proposals consisting of projects to tion; be developed entirely or predominantly (ii) The term of the Contract that will for the elderly shall be listed in rank

be acceptable to HUD where it is shorter order and a second rank listing shall be

than the term proposed by the Owner, established for projects to be developed

and the reason for the shorter term; entirely or predominantly for family

(iii) That the services of a registered housing.

architect must be utilized where HUD (2) With respect to the listing of pro

has determined that the nature and exposals for elderly housing, the HUD field

tent of the rehabilitation requires the office will identify for selection the high

utilization of such services; est ranking proposals in descending order

(iv) The estimate of the amount of rewhich will most nearly provide the num

location payments, where applicable; ber of units of elderly housing called for

and in the Invitation.

(v) Other special conditions or re(3) With respect to the listing of pro

quirements, if any. posals for family housing, the HUD field

(2) The notification will request the office will identify for selection the

Owner to return a copy of the notificahighest ranking proposals in descending

tion with an indication of his acceptance order which collectively will most near

thereof by a specified date. If the Owner ly provide the number and sizes of units

does not accept the notification by the of family housing called for in the In

date specified, HUD may rescind the vitation; provided however that if there

notification and select another approvis a Preliminary Proposal for the reha

able proposal. bilitation of more than 50 units of family housing which indicates that assist

(h) Notification of nonselection. Ownance will be limited to 20 percent or less

ers whose Preliminary Proposals were of the units to be rehabilitated, this pro

not selected by HUD shall be sent a letposal shall be given priority over the low- ter notifying them of such determina. est ranking proposal(s) identified for tion. selection which is for more than 50 units

§ 1277.209 Final proposals. and which is for generally the same number and sizes of units.

(a) Contents of Final Proposal. Each (4) The field office shall determine Final Proposal shall indicate or include whether the combined results of the ten- the following:

(1) A copy of the site option agree- (9) Submissions as required by HUD ment(s), contract(s) of sale, or other regulations and other requirements purdocument(s) which evidence(s) the pro- suant to section 3 of the Housing and poser's effective control of the property Urban Development Act of 1968. to be rehabilitated (however, only the (10) The identity of the Owner, reproposed price is required for a New habilitator, architect (if applicable) and Communities project).

managing agent (if known); the quali(2) A description of the proposed re- fications and experience of each; and habilitation covering each basic element the names of officials and principal (e.g., roof, exterior walls, porches and members, shareholders and investors, steps; interior walls, ceilings, and floors; and other parties having substantial inkitchen and bathroom facilities and terest, and the prior participation of equipment; plumbing, heating and elec- each in HUD programs, using the pretrical equipment; landscaping; etc.) in- scribed form. dicating the nature of the work to be (11) Submission of evidence of mandone on each element and the grade and agement capability and a proposed quality of the work, materials and equip- management plan and a certification by ment. If alteration, renovation or re- the Owner and the management agent, modeling are indicated, preliminary if any, in a format acceptable to HUD; drawings and plans and outline speci- or, if the proposal is for less than 15 fications on the prescribed form.

units, evidence of capability of provid(3) The Contract Rent per unit, by ing the required management and mainsize and structure type.

tenance services. If the Owner proposes (4) The equipment to be included in to contract with another entity, includthe Contract Rent.

ing a PHA, for management and/or (5) The utilities and services to be maintenance services for the project, he included in the Contract Rent and those shall include a copy of the proposed utilities and services not so included. For contract(s). each utility and service not so included, (12) Submission of the form of Lease an estimate of the average monthly cost the Owner proposes to use, which shall (for the first year of occupancy) to the be in accordance with $ 1277.218(c). occupants by unit size and structure type. (13) The proposed method of financ

(6) In the case of a PHA-Owner Proj- ing and whether the Owner intends to ect, a statement that (i) the PHA will pledge or offer the Agreement and/or undertake liability for and provide the Contract as security for any loan or obfunding of all relocation payments under ligation (see Sec. 1277.103(q)). If the sections 202, 203, and 204 of the Uniform Owner intends to utilize FHA mortgage Relocation Assistance and Real Property insurance, an application for a CondiAcquisition Policies Act of 1970, or (ii) tional Commitment on the prescribed other commitments, which the Owner form shall be completed and submitted believes to be satisfactory to HUD, have with the prescribed fee with the Final been made for the funding of such pay- Proposal. ments. In the latter case, the PHA shall (14) Evidence that the proposed respecify such other commitments. (In the habilitation is permissible under the apcase of a Private-Owner Project or a plicable zoning, building, housing and Private-Owner/PHA Project, the Uni- other codes, ordinances or regulations; form Relocation Assistance and Real or a statement of the proposed action to Property Acquisition Policies Act of 1970 make the rehabilitation permissible and is inapplicable.)

that such action will be successfully (7) The proposed term of the Contract completed prior to the Owner's accept(including all renewals) and justification ance or the architect's certification (if for such term in accordance with § 1277.- required) pursuant to § 1277.211(b). 103(g).

(15) The anticipated time required for (8) Submission of an Affirmative Fair completion of the rehabilitation after Housing Marketing Plan (if the pro- the Agreement is signed (if the project posal is for five or more units), a signed is to be completed in stages, identificaassurance of compliance with Title VI tion of the units comprising each stage of the Civil Rights Act of 1964, Title and the estimated dates for commenceVIII of the Civil Rights Act of 1968, ment and completion of each stage). Executive Order 11063, and certifications (b) Consistency with preliminary prorequired pursuant to Executive Order posal. The Final Proposal shall be con11246.

sistent with the Preliminary Proposal. Any material deviations from the Pre- ACC and an Agreement) until after the liminary Proposal in the Final Proposal Owner has submitted to HUD the arwill cause reconsideration by HUD of chitect's certification on the prescribed such Final Proposal and may result in its form. Such certification shall be made rejection

by the architect responsible for the

preparation of the working drawings and $ 1277.210 Evaluation of final pro

specifications. posals.

(2) The architect's certification shall (a) Evaluation of final proposals by state that, to the best of the architect's HUD. Each Final Proposal will be eval- knowledge, belief, and professional judguated by HUD to determine that the ment, (i) the working drawings and specprovisions of this part have been com- ifications are consistent with the applied with and that such Final Proposal proved Final Proposal (including any is consistent with the Preliminary modifications required by HUD in its reProposal.

view of the Final Proposal), and (ii) the (b) Clarifications or modifications.

proposed rehabilitation in accordance HUD may request clarification of indi

with these plans and specifications is vidual items, additional information, or permissible under the applicable zoning, modifications of the Final Proposal. building, housing, and other codes, ordi

(c) HUD determination. HUD shall nances or regulations, as modified by notify the Owner (and the PHA, if ap- any waivers obtained from the appropriplicable) as to whether the Final Pro- ate officials. This certification shall also posal is:

cover compliance with the appropriate (1) Approved.

HUD Minimum Designed Standards for (2) Approvable only if specified de- Rehabilitation for Residential Properties ficiencies are corrected and that HUD and other standards, guidelines and criwill approve the Final Proposal if it re- teria applicable under this Part. ceives within a specified time evidence (3) One copy of the certified working of such necessary corrections.

drawings and specifications shall be sub(3) Not approved. If a Final Proposal mitted with the architect's certification is not approved or if the conditions for to HUD, which shall retain it and any approval under paragraph (c) (2) of this changes approved by HUD for at least section are not met, HUD shall so advise three years from the date of acceptance the Owner and may request the prep- of the project; provided, however, that aration of a Final Proposal(s) with re- receipt and retention by HUD of these spect to the highest ranking Preliminary working drawings and specifications shall Proposal(s) not previously selected, or not denote or constitute HUD review or may issue another Invitation for Pre- approval of such drawings or specificaliminary Proposals.

tions. (d) Notification. The appropriate A-95 (4) If the Owner fails to submit the Clearinghouses and the unit of general certification by the date specified in the local government shall be notified by notification, HUD shall rescind the notiHUD of its final action.

fication (and may proceed in accordance § 1277.211 Owner's acceptance of noti.

with $ 1277.210(c) (3)) unless it deterfication and submission of architect's

mines that a reasonable extension of

time should be granted. certification. (a) Owner's acceptance. Upon receipt

$ 1277.212 Annual contributions conby the Owner of the notification of ap

tract and agreement (private-owner/ proval of the Final Proposal, the Owner

PHA projects). shall return to HUD a copy indicating (a) Preparation of ACC. After receipt his acceptance within the time pre- of the accepted notification (and, where scribed in such notification (copy to the required, the architect's certification PHA, if applicable). If the Owner does with the working drawings and specificanot accept the notification by the date tions), the HUD field office shall prepare specified, HUD may rescind the notifica- the ACC, shown as Appendix III. The tion and proceed in accordance with ACC shall be transmitted to the PHA for $ 1277.210(c) (3).

execution and returned to HUD. This (b) Architect's certification. (1) If transmittal shall advise the PHA that it the services of a registered architect are must simultaneously submit for HUD apto be used, HUD may not enter into an proval its Initial Estimate of Required Agreement (or, where applicable, an Annual Contributions (Preliminary

Costs) and an Estimate of Total Required Annual Contributions (see § 1277.213).

(b) Preparation of Agreement. The Agreement shall be prepared by the HUD field office at the time the ACC is prepared (see § 1277.214), and shall conform to the prescribed form shown as Appendix IV. The Agreement shall include all required information and required attachments.

(c) Execution of ACC and Agreement, After receipt of the PHA-executed ACC, accompanied by the Estimates of Required Annual Contributions, HUD shall review the Estimates and, if approved, execute the ACC, HUD shall then transmit a fully executed copy of the ACC to the PHA, together with four copies of the unexecuted Agreement. After execution of the Agreement by the PHA and the Owner, all copies shall be returned by the PHA to HUD for approval. HUD shall return three copies to the PHA, retaining one for its records. § 1277.213 Submission of estimates of

required annual contributions (pri

vate-owner/PHA projects). (a) Initial submission. An allowance may be provided for preliminary costs incurred by the PHA prior to the beginning of the first fiscal year. When the ACC is executed by the PHA, it shall submit an Initial Estimate of Required Annual Contributions (Preliminary Costs) together with an Estimate of Total Required Annual Contributions on the prescribed forms. This submission includes estimates of costs of administration and non-expendable equipment up to the beginning of the first fiscal year.

(b) First fiscal year submission. Not earlier than 150 and not later than 90 days prior to the estimated date of the beginning of the first fiscal year, the PHA shall submit an Estimate of Required Annual Contributions (Housing Assistance and Administration) covering the estimated amount required for the first fiscal year for housing assistance payments and for the fee for administration together with an Estimate of Total Required Annual Contributions.

(c) Subsequent fiscal year submissions. Not earlier than 150 and not later than 90 days prior to the beginning of each subsequent fiscal year, the PHA shall submit an Estimate of Required Annual Contributions (Housing Assistance and Administration) and an Estimate of Total Required Annual Contri

butions, with supporting documentation, for any requested changes in the amount of housing assistance payments and the fee for administration.

(d) Revisions of estimates. Any of the above Estimates may be revised to reflect changes in circumstances and available data.

(e) HUD approval. All Estimates of Required Annual Contributions and any revisions thereto submitted by the PHA shall be subject to HUD approval. $ 1277.214 Preparation and Execution

of agreement (private-owner and

PHA-owner projects). After receipt of a copy of the accepted notification (and, where required, the architect's certification and the working drawings and specifications), the HUD field office shall prepare the Agreement in the prescribed form shown as Appendix I. The Agreement shall include all required information and required attachments. HUD shall transmit to the Owner three copies of the unexecuted Agreement. After the Owner executes all copies of the Agreement, he shall return them to HUD. HUD shall execute the Agreement, returning ono copy to the Owner and retaining two for its records. $ 1277.215 Rehabilitation period.

(a) Timely performance of work. After execution of the Agreement, the Owner shall promptly proceed with the rehabilitation work as provided in the Agreement. In the event the work is not so commenced, diligently continued, and/ or completed, HUD (or the PHA with HUD approval, as appropriate) reserves the right to rescind the Agreement, or take other appropriate action.

(b) Delays. Although extensions of time may be granted for the reasons specified in the Agreement, no increases in Contract Rents may be granted on that account.

(c) Changes. The Owner shall submit for HUD approval any changes from the approved Final Proposal which will materially reduce or alter his obligations or any changes which alter the design or materially reduce the quality or amenities of the project. HUD may condition its approval of such changes on a reduction of Contract Rents. If such changes are made without prior HUD approval, HUD may determine that contract Rents shall be reduced or that the Owner shall remedy the deficiency as a

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