Department's Selection of Designee

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.