760 CMR 64.04 contains standards and procedures for the open and
competitive selection of a Designee by the Department, in accordance with M.G.L. c.
40T, § 3(b). 760 CMR 64.04 is intended to ensure that any Designee can
demonstrate its ability to own and operate Publicly-assisted Housing. Because of the
statutory timelines, time is of the essence relative to all deadlines set forth in
760 CMR 64.04.
(1)
Process. The Department shall select Designees through an
open and competitive process consistent with standards and procedures defined in
written guidelines to be issued by the Department.
(2)
Selection of
Designees.
(a) Factors to be
considered in the selection of a Designee shall include but not be limited to a
party's resources and capabilities, its demonstrated commitment to affordable
housing, its prior experience in successfully owning or operating Publicly-assisted
Housing, its record with respect to federal and state fair housing laws, and its
ability to proceed with the proposed transaction in a timely manner.
(b) The Department may, if it chooses:
1. grant preference in the selection process to
potential Designees who have been prequalified; or
2. limit submissions to such prequalified
candidates; or
3. make its selection
directly from the existing pool of prequalified candidates.
If an Affected Municipality requests designation under M.G.L. c.
40T, § 3(b), such Affected Municipality shall be required to demonstrate its
compliance with the Department's selection standards.
(3)
Agreements with
Designees. Upon selection, the Department shall immediately notify the
selected Designee in writing, and offer to enter into a written agreement with its
selected Designee. The agreement shall provide that the Designee shall Preserve the
Affordability of the Publicly-assisted Housing, in accordance with the standards set
forth in
760 CMR
64.02(2). If the selected
Designee fails to execute the agreement within three business days of its receipt,
the Department may let the selection lapse, notify the next qualified potential
Designee, and enter into an agreement with that party who shall thereupon be
considered the Designee. It shall be a condition of designation that the proposed
Designee disclose in writing to the Department all parties who currently hold
ownership and/or control interests in the Designee as of the date of designation,
and that it identify any reasonably anticipated future transfers of ownership or
control.
(4)
Successor
Designees; Revocation of Designation.
(a)
Assignments. A
Designee may not assign or otherwise convey its designation to another party without
the express written approval of the Department. The transfer of a greater than
de minimis ownership or controlling interest in a Designee shall be
deemed an assignment for the purposes of 760 CMR 64.04(4)(a). A transfer of the
property to a special-purpose real estate entity that is wholly owned or controlled
by the Designee shall not be considered an assignment for the purposes of 760 CMR
64.04(4)(a). For purposes of 760 CMR 64.04(4)(a), an assignment shall be deemed to
occur if there is:
1. any change of identity or
transfer of ownership in the managing body of the Designee (such as a general
partner in a general or limited partnership, or a joint venturer in a joint venture,
or a manager or managing member in an LLC, a trustee in a trust, or a controlling
shareholder in a corporation); or
2. any
transfer of ownership interest in the Designee (such as the limited partner interest
of a limited partnership, or the membership interest of an LLC, or any class of
voting stock of a corporation, or the beneficial interest in a passive trust) that
would cause the initial owners of the Designee, as they were disclosed to the
Department at the time of designation, to no longer own a greater than 50% share of
the ownership interest. The Department may, at the time of designation acting in its
sole discretion, identify certain reasonably anticipated future transfers of
ownership or control that would not constitute an assignment (such as the
anticipated admission of an investor limited partner).
(b)
Revocation. The
Department may revoke a designation:
1. if there is
an assignment as defined under 760 CMR 64.04(4)(a); or
2. if the Designee has been unable to demonstrate
reasonable progress toward completing the proposed purchase transaction;
or
3. for any other action or inaction
of the Designee that the Department deems in its reasonable judgment to be
inconsistent with the goals of M.G.L. c. 40T. A revocation shall be made upon three
business days' written notice and opportunity to cure. Following a revocation, the
Department may select another party (a Successor Designee) in accordance with the
applicable provisions of 760 CMR 64.04, including the standards for
selection.
(c)
Rights of Successor Designee. A Successor Designee shall
have the same rights under M.G.L. c. 40T and
760 CMR 64.00 as the original
Designee. In addition, if a designation has been revoked, the prior Designee shall
within three business days make available to the Successor Designee and the
Department all Due Diligence Materials that it has received from the Owner or
generated by itself or through its consultants and other agents. The Successor
Designee shall reimburse the prior Designee its out-of-pocket third party costs for
any Due Diligence Materials that it chooses to receive, on or before the Time For
Performance set forth in the Purchase Contract.
