[Federal Register Volume 59, Number 56 (Wednesday, March 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6754]


[[Page Unknown]]

[Federal Register: March 23, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner

24 CFR Parts 880, 881, 883, 884, 886

[Docket No. R-94-1664; FR-3413-F-02]
RIN 2502-AF41

 

Income Eligibility for Tenancy in New Construction Units

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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SUMMARY: This final rule amends the section 8 Housing Assistance 
Payments program regulations for new construction and substantial 
rehabilitation to comply with section 151 of the Housing and Community 
Development Act of 1992. Section 151 requires that the Secretary 
promulgate regulations to implement section 555 of the National 
Affordable Housing Act of 1990, which requires that section 8 new 
construction and substantial rehabilitation projects assisted under 
section 8(b)(2) as it existed before October 1, 1983, and with a 
contract for assistance under such section, be reserved for occupancy 
by low-income and very low-income families.

EFFECTIVE DATE: April 22, 1994.

FOR FURTHER INFORMATION CONTACT: James J. Tahash, Director, Planning 
and Procedures Division, Office of Multifamily Housing Management, room 
6182, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410, telephone (202) 708-3944. Hearing or speech-
impaired individuals may call HUD's TDD number (202) 708-4594. (These 
telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

    Section 151 of the Housing and Community Development Act of 1992 
(1992 HCD Act) requires that the Secretary promulgate regulations 
implementing section 555 of the Cranston-Gonzalez National Affordable 
Housing Act of 1990 (NAHA). Section 555 of NAHA provides that any 
dwelling unit in any housing constructed or substantially rehabilitated 
pursuant to assistance provided under section 8(b)(2) of the U.S. 
Housing Act of 1937, as that section existed before October 1, 1983, 
and with a contract for assistance under that section, be reserved for 
occupancy by low-income and very low-income families.
    As we stated in the proposed rule published on July 1, 1993 (58 FR 
35416), the Department administers six section 8 programs that involve 
newly constructed or substantially rehabilitated housing: (1) The 
section 8 New Construction Program, 24 CFR part 880; (2) the Section 8 
Substantial Rehabilitation Program, 24 CFR part 881; (3) the State 
Housing Agencies program (insofar as it involves new construction and 
substantial rehabilitation), 24 CFR part 883; (4) the New Construction 
Set-Aside for Section 515 Rural Rental Housing Projects Program, 24 CFR 
part 884; (5) the Section 202 Loans for Housing for the Elderly or 
Handicapped Program, 24 CFR part 885; and (6) the Section 8 Housing 
Assistance Program for the Disposition of HUD-Owned Projects (insofar 
as it involves substantial rehabilitation), 24 CFR part 886.
    Before 1981, owners could rent up to 10 percent (20 percent in the 
Set-Aside Program for Rural Rental Housing Projects) of assisted units 
to ineligible families. Moreover, before 1984, and except in the 
section 202 loan program, the Department's regulations did not require 
a reduction in assisted units under the contract until rental to 
ineligibles exceeded 10 percent (20 percent in the Set-Aside Program 
for Rural Rental Housing Projects).
    Section 325(l) of the Housing and Community Development Amendments 
of 1981 amended section 8(b)(2) of the U.S. Housing Act of 1937 by 
adding the following provision:

    Each contract to make assistance payments for newly constructed 
or substantially rehabilitated housing assisted under this section 
entered into after the date of enactment of the Housing and 
Community Development Amendments of 1981 shall provide that during 
the term of the contract the owner shall make available for 
occupancy by families which are eligible for assistance under this 
section, at the time of their initial occupancy, the number of units 
for which assistance is committed under the contract.

    As a result of the Housing and Community Development Amendments of 
1981, the Department implemented the existing regulations governing 
section 8 substantial rehabilitation or new construction (except 24 CFR 
part 885) which require that owners make available all assisted units 
for eligible families for Housing Assistance Payment (HAP) Contracts 
entered into pursuant to an Agreement to enter into a HAP Contract 
(AHAP) executed on or after October 1, 1981. The existing regulations, 
however, exempt owners who entered into an AHAP prior to October 1, 
1981, from the statutory requirement that owners make all assisted 
units available for leasing by eligible families.
    The Department believes that the purpose of section 555 of NAHA was 
to remove the exemption for owners who entered into an AHAP prior to 
October 1, 1981. Accordingly, this final rule change requires that 
owners make available all assisted units for eligible families for all 
HAP Contracts, regardless of when the Owner entered into the AHAP.
    The Section 8 Housing Assistance Program for the Disposition of 
HUD-owned Projects (24 CFR part 886, subpart C) involves existing 
housing in addition to substantially rehabilitated housing. The 
Additional Assistance Program for Projects with HUD-Insured and HUD-
Held Mortgages (24 CFR part 886, subpart A) involves only existing 
housing. Under both subparts, the assistance is project based.
    In implementing the existing regulations, the Department previously 
determined administratively that project-based assistance should be 
treated similarly to new construction and substantial rehabilitation 
for the purposes of this rule. As such, any contracts entered into 
after October 3, 1984 (the effective date of the current regulations) 
already are subject to the requirement that Owners make available all 
assisted units for eligible families. Since application of this final 
rule to an owner of existing housing is not mandated by section 555 of 
NAHA, this rule would not affect the obligation of a section 8 project 
owner of existing housing assisted under part 886 who executed a 
Contract before October 3, 1984.
    Finally, this rule does not change the section 202 loan program 
regulations. The changes in this rule are consistent with the current 
regulations for the section 202 handicapped housing program, and so no 
changes are necessary for that program. Moreover, no regulations 
currently exist on this matter for the Section 202 elderly housing loan 
program. However, the Department is preparing a separate regulation 
amending part 885 which, among other matters, will incorporate this 
amendment into that part.

II. Discussion of Public Comments

    The Department received one public comment from a housing 
development authority in response to the proposed rule published on 
July 1, 1993 (58 FR 35416). The commenter suggested that the Department 
exempt rural housing developments from the 100% occupancy by income 
eligible families requirement since there is a limited number of 50-80% 
of median income eligible tenants to fill the units.
    The Department appreciates the difficulty that some rural housing 
developments may experience with regard to filling projects with income 
eligible families. However, section 555 of NAHA does not provide for an 
exemption for rural housing developments, and so the Department does 
not have the discretion to create such an exemption. Moreover, the 
regulations which allow an owner to rent to an ineligible family if the 
owner is temporarily unable to fill all units with eligible families 
remain unchanged by this final rule. Finally, the regulations continue 
to allow formerly eligible tenants who are currently income ineligible 
to continue to remain in their units subject to paying the market rent.

III. Other Matters

A. Environmental Impact

    At the time of publication of the proposed rule, a finding of no 
significant impact with respect to the environment was made in 
accordance with HUD regulations in 24 CFR part 50 that implement 
section 102(2)(C) of the National Environmental Policy Act of 1969 (42 
U.S.C. 4332). The proposed rule is adopted by this final rule without 
change. Accordingly, the initial finding of no significant impact 
remains applicable, and is available for public inspection between 7:30 
a.m. and 5:30 p.m. weekdays in the office of the Rules Docket Clerk at 
the above address.

B. Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
states or their political subdivisions, or the relationship between the 
Federal government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Specifically, 
the rule is directed to owners of multifamily housing projects, and 
will not impinge upon the relationship between the Federal Government 
and State and local governments. As a result, the rule is not subject 
to review under the order.

C. Executive Order 12606, the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule does not have 
potential for significant impact on family formation, maintenance, and 
general well-being, and, thus, is not subject to review under the 
order. No significant change in existing HUD policies or programs will 
result from promulgation of this rule, as those policies and programs 
relate to family concerns.

D. Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. This rule reflects a statutory 
requirement which applies to all section 8 newly constructed or 
substantially rehabilitated housing without regard to the size of 
entities involved.

E. Regulatory Agenda

    This final rule was listed as sequence number 1543 in the 
Department's Semiannual Agenda of Regulations published on October 25, 
1993 (58 FR 56402, 56431) in accordance with Executive Order 12291 and 
the Regulatory Flexibility Act.

F. The Catalog of Federal Domestic Assistance Program Number is 14.156

List of Subjects

24 CFR Part 880

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 881

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 883

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 884

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements, Rural areas.

24 CFR Part 886

    Grant programs--housing and community development, Lead poisoning, 
Rent subsidies, Reporting and recordkeeping requirements.

    Accordingly, 24 CFR parts 880, 881, 883, 884, and 886 are amended 
as follows:

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 
CONSTRUCTION

    1. The authority citation for 24 CFR part 880 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437f note, and 
3535(d).

    2. Section 880.504(d) is revised to read as follows:


Sec. 880.504  Leasing to eligible families.

* * * * *
    (d) Applicability. In accordance with section 555 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and 
(b) of this section apply to all Contracts. An owner who had leased an 
assisted unit to an ineligible family consistent with the regulations 
in effect at the time will continue to lease the unit to that family. 
However, the owner must make the unit available for occupancy by an 
eligible family when the ineligible family vacates the unit.

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR 
SUBSTANTIAL REHABILITATION

    3. The authority citation for 24 CFR part 881 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437f note, and 
3535(d).

    4. Section 881.504(d) is revised to read as follows:


Sec. 881.504  Leasing to eligible families.

* * * * *
    (d) Applicability. In accordance with section 555 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and 
(b) of this section apply to all contracts. An owner who had leased an 
assisted unit to an ineligible family consistent with the regulations 
in effect at the time will continue to lease the unit to that family. 
However, the owner must make the unit available for occupancy by an 
eligible family when the ineligible family vacates the unit.

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE 
HOUSING AGENCIES

    5. The authority citation for 24 CFR part 883 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437f note, and 
3535(d).

    6. Section 883.605(d) is revised to read as follows:


Sec. 883.605  Leasing to eligible families.

* * * * *
    (d) Applicability. In accordance with section 555 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and 
(b) of this section apply to all contracts. An owner who had leased an 
assisted unit to an ineligible family consistent with the regulations 
in effect at the time will continue to lease the unit to that family. 
However, the owner must make the unit available for occupancy by an 
eligible family when the ineligible family vacates the unit.

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW 
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING 
PROJECTS

    7. The authority citation for 24 CFR part 884 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437f note, and 
3535(d).

    8. Section 884.223(d) is revised to read as follows:


Sec. 884.223  Leasing to eligible families.

* * * * *
    (d) Applicability. In accordance with section 555 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and 
(b) of this section apply to all contracts. An owner who had leased an 
assisted unit to an ineligible family consistent with the regulations 
in effect at the time will continue to lease the unit to that family. 
However, the owner must make the unit available for occupancy by an 
eligible family when the ineligible family vacates the unit.

PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL 
ALLOCATIONS

    9. The authority citation for 24 CFR part 886 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437f note, and 
3535(d).

    10. Section 886.329(d) is revised to read as follows:


Sec. 886.329  Leasing to eligible families.

* * * * *
    (d) Applicability. In accordance with section 555 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and 
(b) of this section apply to all contracts involving substantial 
rehabilitation. These paragraphs apply to all other Contracts executed 
on or after October, 3, 1984. An owner who had leased an assisted unit 
to an ineligible family consistent with the regulations in effect at 
the time will continue to lease the unit to that family. However, the 
Borrower must make the unit available for occupancy by an eligible 
family when the ineligible family vacates the unit.

    Dated: March 15, 1994.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 94-6754 Filed 3-22-94; 8:45 am]
BILLING CODE 4210-27-P