[Federal Register Volume 59, Number 84 (Tuesday, May 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10519]


[[Page Unknown]]

[Federal Register: May 3, 1994]


_______________________________________________________________________

Part V





Department of Housing and Urban Development





_______________________________________________________________________



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



_______________________________________________________________________



24 CFR Part 880, et al.



Preferences for Elderly Families in Certain Section 8 Housing; and 
Reservation of Units for Disabled Families; Interim Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

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

[Docket No. R-94-1719; FR-3465-I-01]
RIN 2502-AG05

 

Preference for Elderly Families in Certain Section 8 Housing; and 
Reservation of Units for Disabled Families

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

ACTION: Interim rule.

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SUMMARY: This interim rule amends the Department's section 8 
regulations for newly constructed and substantially rehabilitated 
housing projects to provide for the system of occupancy preferences in 
certain section 8 assisted housing authorized by subtitle D of title VI 
of the Housing and Community Development Act of 1992. Subtitle D allow 
owners of section 8 projects originally designed primarily for 
occupancy by elderly families to provide preferences to elderly 
families in selecting tenants for available units in those projects. 
Owners that elect to provide preferences to elderly families as 
authorized by subtitle D also must reserve no less than a statutorily 
determined number of units for disabled families who are not elderly or 
near-elderly families.
    The Supplementary Information section of this document provides 
further information on the specific amendments to be made to the 
section 8 regulations in parts 880, 881, 883, 884 and 886, and explains 
the Department's reasons for issuing this rule as an interim rule.

DATES: Effective date: June 2, 1994 through May 3, 1995.
    Comments due date: July 5, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Rules Docket Clerk, room 10276, Office of 
General Counsel, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Comments should refer 
to the above docket number and title. A copy of each comment submitted 
will be available for public inspection and copying between 7:30 a.m. 
and 5:30 p.m. weekdays at the above address. Facsimile (FAX) comments 
are not acceptable.

FOR FURTHER INFORMATION CONTACT: Margaret Milner, Acting Director of 
the Office of Elderly and Assisted Housing, Office of Housing, 
Department of Housing and Urban Development, room 6130, or Albert 
Sullivan, Director of the Office of Multifamily Management, room 6160, 
451 Seventh Street, SW., Washington, DC 20410. Telephone number (202) 
708-4542 (voice) for Ms. Milner: (202) 708-3730 for Mr. Sullivan; or 
(202) 708-4594 (TDD). (These telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

    Subtitle D (sections 651-661; codified at 42 U.S.C. 13611-13620) of 
title VI of the Housing and Community Development Act of 1992 (Pub. L. 
102-550, approved October 28, 1992) (hereafter, ``1992 HCD Act'') is 
entitled ``Authority to Provide Preferences for Elderly Residents and 
Units for Disabled Residents1 in Certain Section 8 Assisted 
Housing,'' and allows an owner of a covered section 8 housing project 
to elect to provide preferences to elderly families in selecting 
tenants for available units in the project, subject to certain 
statutory requirements. An owner who elects to provide preferences to 
elderly families must also reserve a percentage of units, not to be 
less than the percentage determined according to a formula set out in 
the statute, for disabled families who are not elderly or near-
elderly.2
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    \1\Definitions for ``elderly families'' and ``disabled 
families'' are codified in section 3(b) of the U.S. Housing Act of 
1937 (1937 Act). Section 3(b) was amended by section 621 of the 1992 
HCD Act. Where the definition for ``elderly families'' has, since 
1974, encompassed disabled families, the amended section 3(b) now 
defines ``elderly families'' as families whose heads (or their 
spouses) or sole members are persons at least 62 years old. Thus, 
under the revised definition, a disabled person does not qualify as 
an elderly family solely because of the person's disability.
    Section 3(b) defines ``disabled families'' to mean families 
whose heads (or their spouses) or sole members are persons with 
disabilities. ``Person with disabilities'' is defined to mean a 
person who: (1) has a disability as defined in section 223 of the 
Social Security Act; (2) is determined pursuant to regulations 
issued by the Secretary of HUD, to have a physical, mental or 
emotional impairment which is expected to be of long-continued and 
indefinite duration, substantially impedes his or her ability to 
live independently, and is of such a nature that such ability could 
be improved by more suitable housing conditions; or (3) has a 
developmental disability as defined in section 102 of the 
Developmental Disabilities Assistance and Bill of Rights Act.
    The Department's regulations for the terms defined in section 
3(b) of the 1937 Act for the assisted housing programs are published 
at 24 CFR part 812. While the 1992 HCD Act amendments to section 
3(b) of the 1937 Act require changes to 24 CFR part 812, this rule 
does not amend 24 CFR part 812. The Department will modify 24 CFR 
part 812 by separate rulemaking. Also, unless the context indicates 
otherwise, reference to the terms elderly families, disabled 
families, and near-elderly families in this preamble is reference to 
these terms as defined in section 3(b) of the 1937 Act, as amended 
by section 621 of the 1992 HCD Act.
    \2\Under section 3(b) of the 1937 Act, as revised by section 621 
of the 1992 HCD Act, the term ``near-elderly families'' is defined 
as families whose heads (or their spouses) or sole members are 
persons who are 50-61 years old.
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    This interim rule adopts in regulation the system of preferences 
for occupancy provided by subtitle D, and sets forth the standards for 
determining whether a project is eligible to elect the preferences for 
occupancy provided by subtitle D, and explains the effect of such 
preferences on administration of project waiting lists.

II. Eligibility To Provide Preferences for Elderly Residents

    Section 651 of the 1992 HCD Act provides in relevant part, 
``[n]otwithstanding any other provision of law, an owner of a covered 
section 8 housing project designed primarily for occupancy by elderly 
families, may in selecting tenants for units in the project that become 
available for occupancy, give preference to elderly families who have 
applied for occupancy in the housing * * *.'' (Emphasis added.)
    With regard to the phrase ``designed primarily for occupancy by 
elderly families,'' the Department believes that in using the term 
``primarily,'' the Congress intended to limit the applicability of 
subtitle D to either the section 8 units in those covered projects in 
which a majority of the section 8 units were designed for elderly 
families (i.e., seniors3), or to the section 8 units in covered 
projects where a distinct portion of the project (e.g., a tower or a 
wing of a project, but not just a floor) exists in which the majority 
of section 8 units were restricted to seniors only. Thus, section 651 
may apply to the section 8 units in an entire project originally 
designed primarily for occupancy by elderly families (``covered section 
8 housing project''), or section 651 may apply to the section 8 units 
in a portion of such project, but only where the section 8 units in 
this project or portion of the project were designed primarily for 
seniors. The preamble frequently uses the term ``covered section 8 
units'' to recognize that there are partially assisted projects whose 
section 8 units will be covered by this interim rule .
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    \3\As used in this preamble, the term ``seniors'' refers to 
families whose heads of household, their spouses or sole members are 
62 years or older.
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    It is important to note that the statutory system of preferences 
provided by subtitle D is only available to projects which qualify as 
``covered section 8 housing projects designed primarily for occupancy 
by elderly families.'' The Department points out that many projects 
which have section 8 assistance are not ``covered section 8 housing 
projects designed primarily for occupancy by elderly families'' (as 
defined in Section I.A. of the preamble, which follows), and may not 
elect the subtitle D statutory system of preferences.

A. Covered Section 8 Housing Project: Section 659

    Subtitle D and these regulations define ``covered section 8 
housing'' to mean housing that:
    (1) was constructed or substantially rehabilitated pursuant to 
assistance provided under section 8(b)(2) of the United States Housing 
Act of 1937 (1937 Act), as in effect before October 1, 1983;
    (2) is assisted under a contract for assistance under such section; 
and
    (3) was originally designed primarily for occupancy by elderly 
families.
    1. Projects That are Newly Constructed or Substantially 
Rehabilitated Pursuant to Assistance Provided Under Section 8(b)(2) of 
the 1937 Act, as in Effect Before October 1, 1983.
    The Department administers six section 8 programs that involve 
newly constructed or substantially rehabilitated housing. However, the 
system of preferences under subtitle D does not apply to all these 
programs.
    The programs to which subtitle D applies are:
    (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; and
    (5) The Section 8 Housing Assistance Program for the Disposition of 
HUD-Owned Projects (insofar as it involves substantial rehabilitation), 
24 CFR part 886.4
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    \4\The ``Additional Assistance Program for Projects with HUD-
Insured and HUD-Held Mortgages'' (see 24 CFR part 886, subpart A) 
involves only existing housing. However, the ``Section 8 Housing 
Assistance Program for the Disposition of HUD-owned Projects'' (see 
24 CFR part 886, subpart C) involves substantially rehabilitated 
housing, in addition to existing housing. Accordingly, this rule 
would amend subpart C of 24 CFR part 886, but only for projects 
involving substantially rehabilitated housing.
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    Other programs which may involve section 8 new construction or 
substantial rehabilitation assistance, but which are not covered by the 
preferences in subtitle D are identified in section 658 of the 1992 HCD 
Act. Under section 658 of the 1992 HCD Act, an owner of a project (or 
portion of a project) that was originally designed for occupancy by 
elderly families, and assisted under the Section 221(d)(3) Below Market 
Interest Rate (BMIR) program, the Section 236 Mortgage Insurance and 
Interest Reduction Payment for Rental Projects program, or Section 202 
Loans for Housing for the Elderly or Handicapped Program, may continue 
to restrict occupancy in such projects (or portion of such projects) to 
elderly families in accordance with the rules, standards and agreements 
in effect when the housing project was developed. Accordingly, under 
this interim rule, the subtitle D statutory system of preferences does 
not apply to newly constructed or substantially rehabilitated section 8 
projects with HUD insurance or assistance under any of these three 
programs.5 The Department emphasizes that it is critical that a 
project owner understand the type of assistance a project receives to 
determine eligibility under subtitle D and these regulations.
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    \5\Although in this regard, the Department is aware of no 
Section 221(d)(3) BMIR projects or Section 236 projects with Section 
8 new construction or substantial rehabilitation assistance. As 
such, by its terms, ``covered section 8 housing'' does not seem to 
encompass the Section 236 Mortgage Insurance and Interest Reduction 
Payment for Rental Projects program or the Section 221(d)(3) BMIR 
program.
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    Project owners should note that the following types of projects or 
assistance would NOT be covered by this interim rule:

--Section 202 housing projects,
--Section 221(d)(3) BMIR housing projects,
--Section 221(d)(4) retirement service centers (because such projects 
have FHA mortgage insurance but no section 8 assistance),
--Section 236 housing projects,
--Housing projects with contracts for section 8 loan management set 
aside (unless the projects also have contracts for section 8 assistance 
involving new construction or substantial rehabilitation, in which case 
the units could be covered),
--Housing projects with project-based section 8 rental certificates, 
and
--Section 8 tenant-based assistance programs (rental vouchers and 
certificates).
2. Assisted Under a Contract for Assistance Under Section 8(b)(2)
    Some newly constructed or substantially rehabilitated projects have 
unassisted units and assisted units. These projects are often referred 
to as ``partially assisted projects.'' Because the statutory definition 
of ``covered section 8 housing'' only applies to housing that is under 
a contract for assistance, the subtitle D system of preferences would 
not apply to unassisted units in a partially assisted project. 
Additionally, nothing in this regulation establishes a cap on the 
number of unassisted units for disabled families in a partially 
assisted project.
    While this regulation does not apply to the unassisted units in a 
partially assisted project, this regulation also does not relieve any 
owner of any project, including the owner of a partially assisted 
project from complying with the Fair Housing Amendments Act of 1988, 
section 504 of the Rehabilitation Act of 1973, the implementing 
regulations for these statutes, or any other applicable statutory or 
regulatory requirement, including the requirements of the National 
Housing Act, with respect to the assisted or unassisted units. However, 
notwithstanding the foregoing, owners may provide the preferences in 
accordance with this interim rule, with respect to the assisted units.
3. Originally Designed Primarily for Occupancy by Elderly Families
    The final statutory requirement for qualification as a ``covered 
section 8 housing project'' is that the project must have been 
originally designed for occupancy by elderly families. The statute does 
not define the term ``originally'' or define the phrase ``originally 
designed for occupancy by elderly families.'' However, the House Report 
offers some insight on this subject. The House Report suggests that to 
qualify as housing originally designed for occupancy by elderly 
families, the owner of the project must have expressed an intent to 
create housing for elderly tenants when the developer negotiated with 
the Department for Federal financial assistance. (H.R. Rept. No. 760, 
102d Cong. 2d Sess. at 141 (1992).)
    Because the various types of housing projects covered by this 
interim rule were developed under several different programs, and over 
a period of time which spans almost two decades, there is no uniform 
documentation at the Department which evidences the population group to 
be served by a project. In many instances, the application in response 
to a notice of funding availability (NOFA) shows that a project was 
designed as an elderly housing project. However, an indication of the 
population group to be served by the housing project does not always 
appear in any one document.
    In addition, because one of the previous definitions of ``elderly 
families'' in section 3(b) of the 1937 Act included disabled families, 
it is not always clear from documents that indicate a project was 
developed for ``elderly families'' whether the project for elderly 
families was intended to mean housing for the broader eligible category 
of families (i.e., elderly families and disabled families) or for 
families who qualified by virtue of age alone. Further confusion may be 
added by the fact that for most of the period when this housing was 
being developed, the Department policy required all housing for the 
elderly (defined by age) to incorporate certain accessible features and 
to design a certain percentage of the units to be accessible for 
persons with physical disabilities. Typically, these units were made 
available to eligible families with physical disabilities, regardless 
of age.
    Thus, in establishing whether a project was originally designed 
primarily for occupancy by elderly families within the meaning of 
subtitle D, two distinctions must be drawn: (1) The project was 
designed primarily for elderly families (as opposed to non-elderly 
families); and (2) the project was designed for elderly families (i.e., 
seniors), and not designed for elderly families under the broader 
meaning of this term, which formerly included elderly families and 
disabled families.
    Recognizing all these factors, the interim rule provides for 
supporting documentation to be drawn from a variety of sources. These 
sources are identified as being either ``primary'' sources, or 
``secondary'' sources. The interim rule provides that if at least one 
of the primary sources clearly establishes that a project was 
originally designed for elderly families (seniors), the owner of this 
project may elect the system of preferences provided by subtitle D. 
However, if another primary source establishes a design contrary to the 
primary source upon which the owner would base support that the project 
is a covered section 8 housing project, the owner cannot make the 
election of preferences provided by subtitle D without finding support 
in secondary sources. Secondary sources may then, as discussed in this 
interim rule, be used to establish the use for which the project was 
originally designed.
    If there are no primary sources clearly establishing the original 
design of the project, then original design may still be established 
through secondary sources. At least two secondary sources must support 
that the project was designed as elderly (seniors) housing in the 
absence of primary documentation in order to establish such intention 
for elderly housing. Additionally, in the case of conflict between 
primary sources, and the owner chooses to rely on secondary sources, 
then at least two secondary sources must support that the project was 
designed as elderly (seniors) housing.
    Primary sources. Primary sources that would evidence that a project 
was originally designed for occupancy by elderly families (seniors) 
include any of the following: the application in response to the notice 
of funding availability (NOFA); the terms of the NOFA under which the 
application was solicited; the regulatory agreement, the loan 
commitment, the bid invitation, the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing. If any one of these project documents clearly evidence that 
the project was originally designed primarily for elderly families 
(seniors), the owner would be eligible to elect to apply the system of 
preferences provided under these regulations so long as the primary 
documents do not conflict.
    Secondary sources. As discussed above, if primary sources do not 
evidence that the population intended to be served by the project were 
elderly families (seniors), an owner may elect the system of 
preferences provided by subtitle D if the owner is able to produce 
evidence from two secondary sources that clearly evidence that the 
project was originally designed primarily for elderly families 
(seniors). Secondary sources include: (1) Lease records from the 
earliest two years of occupancy for which records are available showing 
that occupancy has been restricted primarily to households where the 
head, spouse, or sole member is 62 years of age or older; (2) evidence 
that services for elderly persons have been provided, such as services 
funded by the Older Americans Act, transportation to senior citizen 
centers, or programs coordinated with the Area Agency on Aging; (3) 
project unit mix with a higher percentage of efficiency and one-bedroom 
units [a secondary source particularly relevant to distinguishing 
elderly projects under the previous section 3(b) definition (in which 
disabled families were included in the definition of ``elderly 
families'') from non-elderly projects and which in combination with 
other factors (such as the number of accessible units) may be useful in 
distinguishing projects for seniors from those serving the broader 
definition of ``elderly families'' which includes disabled families]; 
or (4) any other relevant type of historical data unless clearly 
contradicted by other comparable evidence.
    As discussed above, the lack of uniform documentation, and the 
possible lack of distinction between: (1) Elderly projects which are 
seniors housing, and (2) elderly projects which planned to serve 
disabled families equally with seniors, make the determination of 
whether a project is a ``covered section 8 housing project'' a 
difficult one.
    The Department is specifically interested in public comment on this 
issue, particularly with respect to the existence (or lack thereof) of 
documentation that would show the original population group intended to 
be served by the project, other types of evidence that might be 
considered, and how to distinguish between: (1) Projects for elderly 
families, which included, and intended to include, disabled families, 
from (2) projects for elderly families which served disabled families 
only incidentally.

B. Projects That Do Not Elect Subtitle D System of Preferences: Section 
657

    The Department emphasizes that the system of preferences provided 
by subtitle D and these regulations is not mandatory, and is available 
at the election of the multifamily housing owner. In accordance with 
section 657 of the 1992 HCD Act, an owner of a covered section 8 
housing project that does not elect to implement the system of 
preferences provided by subtitle D would continue to provide housing 
for elderly families without incurring any obligation (beyond that 
mandated by the specific authorizing statutes and any other applicable 
statutory requirements) to provide housing for elderly families and/or 
non-elderly and disabled families.
    For covered section 8 projects for which the owner does not elect 
the subtitle D system of preferences, the new definition of ``elderly 
families'' established by section 621 of the 1992 HCD Act would not 
apply. Rather the former definition in section 3(b) of the 1937 Act, 
which includes the non-elderly disabled families in the meaning of 
``elderly families,'' would be applicable, and elderly families under 
this broader definition (i.e., elderly families and disabled families) 
would be eligible for units in these projects for which the election of 
preferences was not taken to the same extent that such families were 
eligible before enactment of the 1992 HCD Act.
    The non-election of the subtitle D system of preferences does not 
override any occupancy requirements affecting covered section 8 housing 
designed primarily for occupancy by elderly families based on the 
authority of regulatory agreements or statutory provisions governing 
the FHA mortgage insurance programs. By way of example, the enabling 
statute for the Section 231 Program (``Housing Mortgage Insurance for 
the Elderly'') mandates that not less than 50 percent of the units in a 
Section 231 project must be designed for the use of elderly persons, 
meaning any person, married or single, who is 62 years of age or over. 
Accordingly, not all members of the entire population group encompassed 
by the pre-1992 HCD Act definition of ``elderly families'' (i.e., 
elderly families and non-elderly disabled families), are eligible for 
elderly units in Section 231 projects.
    Application of the pre-1992 HCD Act definition could make it 
impossible to meet the statutory percentage requirement of the Section 
231 Program or a higher percentage that may have been specified in the 
regulatory agreement or in other authority. Therefore, owners of 
Section 231 projects (where the projects are also covered section 8 
housing designed primarily for occupancy by elderly families) who do 
not make an election to be covered by the subtitle D system of 
preferences will continue to follow the standards of Section 231 of the 
National Housing Act and the terms of their regulatory agreement or 
other controlling documentation in determining the eligibility of 
elderly families for occupancy in their projects. This position is 
consistent with section 657 of subtitle D which provides that where the 
owner does not elect the preference scheme, ``elderly families'' as 
defined by the pre-1992 HCD Act definition, shall be eligible for 
occupancy ``to the same extent that such families were eligible before 
the date of enactment [of the 1992 HCD Act.] (emphasis added.)''

III. Implementation of Preferences for Elderly Families

    An owner who elects to provide preferences for elderly families in 
accordance with section 651, and who can compile and, on request, 
produce the required documentation to support a determination that the 
project was designed primarily for occupancy by elderly families 
(seniors), may, in selecting tenants for units in the project that 
become available for occupancy after the effective date of this 
regulation, give preference to elderly families who have applied for 
occupancy in the housing.
    An owner of a covered section 8 project is not required to solicit 
or obtain the approval of HUD before exercising the election of 
preference for elderly families provided by subtitle D. The owner, if 
challenged on the issue of the ``coverage'' of the project, must be 
able to support the project's coverage, and the owner's eligibility to 
make the election of preference through the production of the 
supporting evidence discussed earlier in this preamble. (The owner may 
be challenged by, among others, existing tenants, applicants for 
tenancy or HUD on this issue.) Additionally, the Department reserves 
the right at any time to review and make determinations regarding the 
accuracy of the determination of the project as an eligible project. 
The Department can make such determinations as a result of its ongoing 
monitoring of activities, or the conduct of complaint investigations 
and compliance reviews required under the Fair Housing Act (42 U.S.C. 
3601-19), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) 
and other applicable statutes.
    When establishing the preference for elderly families, an owner 
also must reserve units for occupancy by disabled families who are not 
elderly or near-elderly, as explained below. In no case, may an owner 
evict, without good cause, a family that is lawfully residing in a unit 
in a covered section 8 housing project to achieve the occupancy level 
that has been determined under the system of preferences or the 
reservation of units set forth in this interim rule. (Good cause would 
not exist where the eviction stemmed from the system of preferences or 
the reservation of units, or because of any action taken by the 
Secretary or owner pursuant to subtitle D.)

A. Reservation of Units for Disabled Families Who Are Neither Elderly 
Nor Near-Elderly: Section 652

    If an owner elects to provide preferences for elderly families for 
admission to a project or a portion of a project that is determined to 
be ``covered section 8 housing project'' in accordance with section 
651, then section 652 requires the owner also to reserve covered 
section 8 units in the project for occupancy by disabled families who 
are not elderly or near-elderly. The number of units to be reserved for 
disabled families who are not elderly or near-elderly is based on a 
calculation prescribed in section 652(b).
    Under section 652(b), an owner who elects to provide preferences 
for elderly families must determine the percentage of covered section 8 
units occupied by disabled families who are not elderly or near-elderly 
on October 28, 1992, which is the date of enactment of the 1992 HCD Act 
(the October 28, 1992 percentage). The next step is for the owner to 
compare the October 28, 1992 percentage to the percentage of covered 
section 8 units occupied by disabled families who are not elderly or 
near-elderly on January 1, 1992 (the January 1, 1992 percentage), in 
order to determine the highest occupancy percentage of disabled 
families who are not elderly or near-elderly in 1992. The owner must 
reserve the highest occupancy percentage (either the October 28, 1992 
percentage or the January 1, 1992 percentage), up to a maximum of 10 
percent of the covered section 8 units, for disabled families who are 
not elderly or near-elderly.
    Under the statute and these regulations, an owner may, but is never 
obligated to, admit disabled families who are not elderly or near-
elderly to more than 10 percent of the covered section 8 units. The 
actual percentage required is the highest percentage in occupancy on 
the two ``snapshot'' dates in 1992 (again October 28, 1992 or January 
1, 1992), unless that number exceeds 10 percent, in which case the 
requirement is set at 10 percent. Thus, under the statutory formula and 
this interim rule, if a project did not have any disabled families who 
are not elderly or near-elderly residing in the covered section 8 units 
on both January 1, 1992 and October 28, 1992, the owner would not be 
required to reserve any covered section 8 units for such families. The 
Department believes that few, if any, projects will fall into this 
category.
    While the percentage of covered section 8 units required to be 
reserved may vary between 10 percent and zero, the Department 
reiterates that the required percentage is not a ceiling, and owners 
are encouraged to reserve (or permit admission to) a higher percentage 
of covered section 8 units for disabled families who are not elderly or 
near-elderly where the need exists. Owners who choose to reserve (or 
permit admission to) a greater percentage of covered section 8 units 
than the percentage which is statutorily required for disabled families 
who are not elderly or near-elderly would not incur any obligation to 
continue maintaining the higher percentage (than statutorily required 
by subtitle D) as vacancies arise.
    In calculating actual utilization of units reserved for disabled 
families who are not elderly or near-elderly, units occupied by elderly 
families where a member of the family is disabled do not count as part 
of the required percentage. Another factor to be considered is that the 
percentage of units which are reserved under subtitle D for disabled 
families who are not elderly or near-elderly is not linked to specific 
units.
    Since most elderly projects, even when designed for occupancy by 
seniors, have a portion of the units designed to be accessible and 
usable by persons with physical disabilities, there may be a tendency 
to assume that these ``accessible'' units will be designated to fulfill 
the required percentage of units reserved for disabled families who are 
not elderly or near-elderly. This is not the case. Disabled families 
who are not elderly or near-elderly and therefore qualify for the units 
reserved under subtitle D may have any one of a variety of 
disabilities, many of which will not require an accessible unit. Thus, 
in determining whether a project has met its obligation under subtitle 
D, the relevant factor is the number of disabled families who are not 
elderly or near-elderly in occupancy, not the units in which they 
reside. The accessible units may be occupied by elderly families, or by 
a mixture of elderly families and disabled families who are not elderly 
or near-elderly. Similarly, a project may have reached its required 
percentage of occupancy by disabled families who are not elderly or 
near-elderly, and have vacant accessible units. In such case, an owner 
is under no obligation to offer these units to disabled families before 
offering such units to elderly families. However, the owner must offer 
such vacant accessible units to current tenants who need any of the 
accessible features of the unit before offering it to the first elderly 
or non-elderly family on the waiting list. In selecting from the 
waiting list, the owner can give elderly disabled families who need the 
accessible unit a preference over elderly non-disabled families.
    The Department emphasizes that when a vacancy occurs and it is a 
disabled family's turn to be placed in a project pursuant to the 
preference system, the fact that the vacant unit may not be accessible, 
does not entitle the housing provider to skip over the disabled family. 
Where the available unit is not accessible and the disabled family 
needs an accessible unit, the housing provider is to accommodate the 
family, either by (1) making that unit accessible, or (2) by 
transferring a tenant who is living in an accessible unit but does not 
need an accessible unit to the inaccessible unit and offering the 
disabled family an accessible unit.

B. Secondary System of Preferences: Section 653.

    Under the statutory system of preferences, if there are an 
insufficient number of elderly families to fill vacant covered section 
8 units, an owner may give a secondary preference to disabled families 
who are near-elderly. Similarly, if there are an insufficient number of 
disabled families who are not elderly or near-elderly to fill vacant 
covered section 8 units reserved for such disabled families, an owner 
may give a secondary preference to disabled families who are near-
elderly to fill those units. However, in the event that there are an 
insufficient number of elderly families, disabled families who are not 
elderly or near-elderly, or near-elderly disabled families to fill 
vacancies that occur, the owner must make vacant covered section 8 
units generally available to eligible families who apply for housing, 
without regard to the statutory system of preferences or reservation of 
units.
    The statute looks to the Department to establish a standard for 
determining whether there are an insufficient number of families to 
fill vacant units subject to the preferences or reservations 
established in this interim rule. These standards are already in place 
in the existing section 8 regulations. The interim rule provides that 
before an owner can determine that there are an insufficient number of 
families to fill vacant covered section 8 units, an owner must conduct 
marketing to attract applicants qualifying for the preferences 
(including outreach to such applicants) in accordance with 
Secs. 880.601(a), 881.601(a), 883.702(a), 884.226, or 886.321(a), as 
applicable. Additionally, the owner must make a good faith effort to 
lease to applicants qualifying for the preferences (which must include 
taking all feasible actions to fill vacancies by renting to such 
families), and not reject any such applicant family except for reasons 
acceptable to the Department or the contract administrator (in 
accordance with HUD guidelines).

C. Waiting Lists

    Owners of covered section 8 housing projects designed primarily for 
occupancy by elderly families, which are required to have a percentage 
of covered section 8 units reserved for disabled families who are not 
elderly or near-elderly pursuant to section 652, or which have other 
units available to disabled families pursuant to statutory and 
regulatory requirements (e.g., near-elderly disabled families admitted 
under the secondary preferences of section 653) would not be able to 
use this interim rule to remove applicants from a waiting list. 
Moreover, an owner would have to continue to select applicants for 
covered section 8 vacant units in accordance with current HUD 
procedures with the exception noted below.
    Procedures presently in effect provide that the applicant's place 
on the waiting list and the application of preferences determine the 
order of selection for admission. Section 655 provides that the 
existing Federal preferences apply within each group (i.e. elderly 
families, disabled families who are not elderly or near-elderly, and 
disabled families who are near-elderly) to the extent that they 
currently apply under each applicable multifamily housing 
program.6 Local preferences also are permitted under existing 
rules.
---------------------------------------------------------------------------

    \6\For example, an elderly family with a Federal preference 
would be selected for a vacant unit before an elderly family without 
a Federal preference.
---------------------------------------------------------------------------

    However, under this interim rule, if the applicants at the top of 
the waiting list are disabled families who are not elderly or near-
elderly, and such disabled families currently occupy the full 
percentage of covered section 8 units required to be reserved for them 
under subtitle D, the owner may, but is not required to, skip over the 
disabled applicants on the waiting list, and select elderly families 
for vacant covered section 8 units. The owner would only be required to 
select disabled families who are not elderly or near-elderly, and who 
are at the top of the waiting list for vacant covered section 8 units 
when: (1) The number of disabled families who are not elderly or near-
elderly in covered section 8 units drops below the minimum required 
percentage, (2) the owner has adopted a secondary preference under 
section 653(a) of the 1992 HCD Act, and there are not sufficient 
numbers of elderly families or near-elderly disabled families to fill 
the elderly units (in accordance with section 654 of the 1992 HCD Act), 
or (3) the owner has not adopted a secondary preference under section 
653(a), and there are not sufficient numbers of elderly families to 
fill the elderly units.
    It is important to note that some projects which do not have to 
reserve any units for non-elderly disabled families under subtitle D 
may have disabled families who are not elderly or near-elderly on their 
waiting lists. If a project originally designed primarily for occupancy 
by elderly families would not have to reserve any units for disabled 
families who are not elderly or near-elderly under subtitle D, the 
owner would not have to admit such disabled families on the waiting 
list to covered section 8 units, nor would any additional non-elderly 
families have to be added to the waiting list for covered section 8 
units. The owner would, of course, have to admit disabled families who 
are also elderly, and provide such families with the same preference 
for admission as non-disabled elderly families.
    Also, an owner who has adopted a secondary preference under section 
653(a) would admit, and give a preference to, near-elderly disabled 
families, if there are insufficient numbers of elderly families to fill 
the elderly units. An owner who has adopted a secondary preference 
under section 653(a) would also admit families without regard to age 
(including disabled families that are not elderly or near-elderly) if 
there are not sufficient numbers of elderly families or near-elderly 
disabled families to fill the elderly units (pursuant to section 654). 
An owner who has not adopted a secondary preference under section 
653(a) would admit applicants without regard to age (including disabled 
families that are not elderly or near-elderly) if there are not 
sufficient numbers of elderly families to fill the elderly units.
    Even where there are sufficient numbers of elderly families to fill 
the elderly units, an owner may elect to admit disabled families who 
are not elderly or near-elderly to covered section 8 units, and the 
Department encourages this voluntary policy, particularly where the 
need exists and the units are available. Owners who choose to admit 
such disabled families in excess of the statutorily-mandated minimum 
may do so without incurring any continuing obligation as such disabled 
families voluntarily move out, and without losing their project's 
identification as a project designed primarily for occupancy by elderly 
families.
    In any case, when an owner's decision to provide preferences to 
elderly families under subtitle D would have an adverse effect on non-
elderly families on the waiting list, the owner would be required to 
notify those families of the new policy and how this policy may affect 
them. The notification requirement would be triggered if the current 
percentage of disabled families who are neither elderly nor near-
elderly exceeds the minimum required percentage, and non-elderly 
families on the waiting list (including those with disabilities) may be 
passed over for covered section 8 units for the elderly, or if the 
project is one of the few which will have no units set aside for such 
disabled families under subtitle D.

Justification for Interim Rulemaking

    It is the Department's general policy to publish a rule for notice 
and comment before issuing a rule for effect in accordance with the 
Department's own rule on rulemaking, codified at 24 CFR part 10. 
However, part 10 provides for exceptions from that general rule where 
the agency finds good cause to omit advance notice and public 
participation. The good cause requirement is satisfied when prior 
public procedure is determined to be ``impracticable, unnecessary, or 
contrary to the public interest.'' (See 24 CFR 10.1)
    The Department finds that good cause exists to publish this interim 
rule for effect without notice and prior public comment because the 
Department has determined that, with the exception of possible 
clarifying changes at the final rule stage, public comment will not 
alter the standards set forth in this interim rule for making the 
election of preferences provided by subtitle D, and is therefore 
unnecessary. The interim rule adopts the standards for the election of 
preferences for elderly families and reservation of units for disabled 
families as set forth in the statute.
    Subtitle D establishes which section 8 housing projects are 
eligible for the election of preferences provided by subtitle D. 
Subtitle D establishes that the ``elderly families'' eligible to reside 
in covered section 8 housing projects for which the owner has made the 
election of preferences provided by subtitle D are those families who 
meet the definition of ``elderly families'' as set forth in section 
3(b) of the 1937 Act, as amended by section 621 of the 1992 HCD Act. 
Subtitle D establishes the formula by which an owner will determine the 
number of units in the covered section 8 housing project that must be 
reserved for occupancy by disabled families who are not elderly or 
near-elderly. Subtitle D establishes the secondary system of 
preferences available to owners if there are insufficient numbers of 
elderly families to occupy all the units reserved for elderly families. 
Subtitle D also establishes the procedures to be followed if units 
remain vacant after the owner has elected to provide the secondary 
system of preferences, and the procedures to be followed concerning the 
order of selection within groups to whom a preference has been given. 
The interim rule adopts all these statutory provisions without 
substantive change.
    The interim rule departs from the statute in providing the types of 
documents that an owner must be able to produce in the event the owner 
is challenged on the issue of whether the owner's project is eligible 
for the election of preferences provided by subtitle D. The statute 
does not provide how the owner may support that the owner's section 8 
housing project was originally designed primarily for occupancy by 
elderly families (i.e., seniors). The interim rule provides a list of 
documents which the owner may rely upon as support for determining 
project eligibility to make the election of preferences provided by 
subtitle D.
    The Department carefully considered which documents may evidence 
project eligibility for the subtitle D system of preferences. As 
discussed earlier in the preamble, because of the various types of 
housing projects covered by subtitle D and this interim rule, and 
because these housing projects were developed under several different 
programs and over a period of time which spans almost two decades, 
there is no uniform documentation at the Department which identifies 
the population group to be served by the project. Additionally, and 
again as discussed earlier in the preamble, the difficulty in 
identifying the population group to be served is added by the fact that 
the previous definition of ``elderly families'' in the 1937 Act 
included disabled families, and the Department's policy required all 
housing for the elderly (defined by age) to incorporate certain 
accessible features and to design a certain percentage of units to be 
accessible for persons with physical disabilities. The Department 
specifically requests comments from the public on the list of 
supporting documents provided in the interim rule, and this provision 
may change following public comment.
    The Department recognizes that there may be questions concerning 
the Department's use of interim rulemaking for subtitle D of title VI, 
but not for subtitle B of the title VI. Subtitle B provides public 
housing agencies (PHAs) with the option, subject to certain 
requirements, to designate public housing projects, or portions of 
these projects, for occupancy by elderly families, by disabled 
families, or elderly families and disabled families. Under subtitle B, 
to elect this option, a PHA must submit an allocation plan to the 
Department for review and approval before designating a project for 
occupancy by one of the three categories of families listed in the 
statute. Additionally, for projects to be designated for occupancy by 
disabled families, the statute requires the PHA also must submit, and 
receive approval of, a supportive service plan. The Department added 
requirements, by regulation, to the allocation plan and supportive 
service plan to supplement those set forth in the statute. For this 
reason, it was necessary to provide the public with advance notice and 
public comment before making those regulatory requirements effective.
    Additionally, to the extent that this subtitle D rule, which 
concerns section 8 housing, and the subtitle B rule, which concerns 
public housing, address similar issues, the public comments on the 
subtitle B rule are applicable to this interim rule. Both statutes 
(subtitle D and subtitle B), which permit housing to be reserved for 
occupancy by elderly families, may have the affect of reducing housing 
assistance for non-elderly disabled persons. Subtitle D attempts to 
minimize the reduction of housing assistance for non-elderly disabled 
families by limiting the preference for elderly families to covered 
section 8 housing that was originally designed primarily for occupancy 
by elderly families. Subtitle D also requires owners of these covered 
projects to reserve units in the covered project for disabled families 
who are neither elderly nor near-elderly, and the number of units to be 
reserved is determined in accordance with the formula established by 
the statute.
    Subtitle B attempts to minimize the reduction of housing assistance 
for non-elderly disabled families by requiring housing authorities that 
designate projects for elderly families to submit a plan for securing 
sufficient additional resources that the agency owns, controls, or has 
received preliminary notification that it will obtain, or for which the 
agency plans to apply that will be sufficient to provide assistance to 
not less than the number of non-elderly disabled families that would 
have been housed but for the designation of the project for elderly 
families. Further, both statutes prohibit the eviction of any tenant 
lawfully residing in a section 8 covered project or a public housing 
project because the project is to be reserved for elderly families or 
to be designated for elderly families.
    Persons with disabilities commenting on the subtitle B rule were 
concerned about the possible reduction of public housing assistance for 
non-elderly disabled families as a result of projects designated for 
elderly families, and several requested that the Department not permit 
designated housing. The Department anticipates that persons with 
disabilities will have the same concerns about the subtitle D rule, and 
perhaps make similar comments. However, in both cases, the statute 
permits the reservation or designation for projects for occupancy by 
elderly families, and the Department cannot preclude this an as option 
for project owners or housing authorities.
    Persons with disabilities commenting on the subtitle B rule 
requested that the Department carefully monitor the statutory 
protections provided for non-elderly disabled families. The Department 
anticipates that persons with disabilities commenting on the subtitle D 
rule will make similar comments. The Department will monitor both the 
subtitle D reservation, and the subtitle B designation, to ensure, to 
the extent possible, that there is minimum adverse impact on non-
elderly disabled families.
    Persons with disabilities commenting on the subtitle B rule stated 
that their concern about loss of access to projects designated for 
elderly families should be construed to mean a concern about reduction 
of housing assistance generally, and not concern about loss of access 
to ``elderly'' projects. These commenters stated that an integrated 
housing setting is not a project that houses only elderly families and 
disabled families. The commenters asked the Department to make 
available section 8 assistance to non-elderly disabled families so that 
they could live in housing with ``mainstream'' populations. The 
Department anticipates that similar comments will be made by persons 
with disabilities on the subtitle D rule. The Department will make 
every effort to increase section 8 housing assistance for non-elderly 
disabled persons.
    Given the statutory framework of the system of preferences for 
elderly families authorized by the subtitle D rule, the Department 
reiterates that, except for the types of documentation a project owner 
should be able to produce to support a determination of eligibility to 
make the election of preferences, there is very little that will change 
at the final rule stage as a result of public comments. Given the 
similarity of certain issues addressed by subtitle D and subtitle B, 
the Department also reiterates that those comments received on the 
subtitle B rule and that are applicable to this rule were taken into 
consideration in developing this interim rule.
    Although this interim rule is being published for effect within 30 
days from the date of publication, the Department requests comments 
from the public on this interim rule, and the public comments will be 
considered by the Department in development of the final rule.
    Additionally, in accordance with the Department's policy on interim 
rules, the amendments made by this interim rule to parts 880, 881, 883, 
884, and 886 will expire on the twelve-month anniversary date of 
publication of this interim rule unless extended by notice published in 
the Federal Register or adopted by a final rule published on or before 
the twelve-month anniversary date of publication of this interim rule.

Other Matters

Executive Order 12866

    This interim rule was reviewed by the Office of Management and 
Budget (OMB) under Executive Order 12866 on Regulatory Planning and 
Review. Any changes made in this interim rule as a result of that 
review are clearly identified in the docket file, which is available 
for public inspection in the Office of the Department's Rule's Docket 
Clerk, room 10276, 451 Seventh St. SW., Washington, DC.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The finding is available for public inspection during 
regular business hours in the Office of General Counsel, the Rules 
Docket Clerk room 10276, 451 Seventh Street, SW., Washington, DC 20410.

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 interim 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 interim 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 interim rule is not subject to review under the order.

Executive Order 12606, the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this interim rule does not 
have potential for significant impact on family formation, maintenance, 
and general well-being within the meaning of the order. This interim 
rule implements the system of preferences authorized by subtitle D of 
title VI of the 1992 HCD Act, which provides that owners of certain 
section 8 covered projects that were originally designed primarily for 
occupancy by elderly families (i.e., families whose heads, spouses or 
sole members are 62 years or older) may elect to give preference in 
occupancy to vacant units in the project to elderly families. Although 
subtitle D provides for preferences for elderly families in projects 
meeting the conditions established by subtitle D, subtitle D also 
requires that owners of such projects must reserve no less than a 
minimum number of units in these projects for disabled families who are 
not elderly or near-elderly. The minimum number is determined in 
accordance with the formula established by statute.
    Since the subtitle D preference system provides a primary 
preference for elderly families, and a secondary preference for 
disabled families who are near-elderly, there is the possibility that 
this statutory system of preferences would limit the availability of 
certain section 8 housing for: (1) Disabled families who are not 
elderly or near-elderly (if an owner gives preference to elderly 
families for units), and (2) such families with children, and thus 
adversely impact the maintenance and well-being of these families. 
(Although owners can apply the same preferences and reservation of 
units to families with children as to families without children, owners 
cannot restrict admission to any units solely because of familial 
status as long as the family qualifies for the unit on the basis of the 
relevant age or disability criterion for admission.) The Department 
believes that the number of projects that would be eligible for the 
preferences provided by subtitle D is limited, and thus, the impact on 
family maintenance and well being would not be significant within the 
meaning of the order.

Regulatory Flexibility Act

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

Regulatory Agenda

    This interim rule was listed as sequence no. 1580 in the 
Department's Semiannual Agenda of Regulations published on April 25, 
1994 (59 FR 20424, 20446) in accordance with Executive Order 12866 and 
the Regulatory Flexibility Act.

    Catalog of Federal Domestic Assistance Programs. 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, 3535(d), and 13611-
13619.

    2. A new Sec. 880.612a is added to read as follows:


Sec. 880.612a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families--(1) 
Election by owners of eligible projects. (i) An owner of a project 
assisted under this part (including a partially assisted project) that 
was originally designed primarily for occupancy by elderly families (an 
``eligible project'') may elect to give preference to elderly families 
in selecting tenants for assisted, vacant units in the project, subject 
to the requirements of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of supporting evidence as provided 
in paragraph (b) of this section.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations and compliance reviews required 
under the Fair Housing Act (42 U.S.C. 3601 through 19), section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable 
statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families--(1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing; or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with a higher percentage of 
efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where the primary sources do not provide clear 
evidence of original design of the project for occupancy primarily by 
elderly families, including those cases where primary documents 
conflict, secondary sources may be used to establish the use for which 
the project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by disabled families who are not 
elderly or near-elderly families (hereafter, collectively referred to 
``non-elderly disabled families'').
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of;
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
If the owner of an elderly project who has elected to adopt the 
secondary preferences in paragraph (d) of this section determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to otherwise eligible families who apply for 
housing, without regard to the preferences and reservation of units 
provided in this section.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 880.601(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 880.613.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).
    (i) Expiration date of section. This section will expire on May 3, 
1995.

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, 3535(d), 12701, and 
13611-13619.

    4. A new Sec. 881.612a is added to read as follows:


Sec. 881.612a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families--(1) 
Election by owners of eligible projects. (i) An owner of a project 
assisted under this part (including a partially assisted project) that 
was originally designed primarily for occupancy by elderly families (an 
``eligible project'') may elect to give preference to elderly families 
in selecting tenants for assisted, vacant units in the project, subject 
to the requirements of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of supporting evidence as provided 
in paragraph (b) of this section.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations and compliance reviews required 
under the Fair Housing Act (42 U.S.C. 3601 through 19), section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable 
statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families--(1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: The application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing; or
    (ii) Secondary sources. Two or more sources of evidence such as: 
Lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with a higher percentage of 
efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where the primary sources do not provide clear 
evidence of original design of the project for occupancy primarily by 
elderly families, including those cases where primary documents 
conflict, secondary sources may be used to establish the use for which 
the project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by disabled families who are not 
elderly or near-elderly families (hereafter, collectively referred to 
``non-elderly disabled families'').
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of;
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
If the owner of an elderly project who has elected to adopt the 
secondary preferences in paragraph (d) of this section determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to otherwise eligible families who apply for 
housing, without regard to the preferences and reservation of units 
provided in this section.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 881.601(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 881.613.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).
    (i) Expiration date of section. This section will expire on May 3, 
1995.

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, 3535(d), and 13611-
13619.

    6. A new Sec. 883.704a is added to read as follows:


Sec. 883.704a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families--(1) 
Election by owners of eligible projects. (i) An owner of a project 
assisted under this part (including a partially assisted project) that 
was originally designed primarily for occupancy by elderly families (an 
``eligible project'') may elect to give preference to elderly families 
in selecting tenants for assisted, vacant units in the project, subject 
to the requirements of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of supporting evidence as provided 
in paragraph (b) of this section.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations and compliance reviews required 
under the Fair Housing Act (42 U.S.C. 3601 through 19), section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable 
statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families--(1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing; or
    (ii) Secondary sources. Two or more sources of evidence such as: 
Lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with a higher percentage of 
efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where the primary sources do not provide clear 
evidence of original design of the project for occupancy primarily by 
elderly families, including those cases where primary documents 
conflict, secondary sources may be used to establish the use for which 
the project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by disabled families who are not 
elderly or near-elderly families (hereafter, collectively referred to 
``non-elderly disabled families'').
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of;
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
If the owner of an elderly project who has elected to adopt the 
secondary preferences in paragraph (d) of this section determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to otherwise eligible families who apply for 
housing, without regard to the preferences and reservation of units 
provided in this section.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 883.702(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 883.714.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).
    (i) Expiration date of section. This section will expire on May 3, 
1995.

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, 3535(d), and 13611-
13619.

    8. A new Sec. 884.223a is added to read as follows:


Sec. 884.223a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families--(1) 
Election by owners of eligible projects. (i) An owner of a project 
assisted under this part (including a partially assisted project) that 
was originally designed primarily for occupancy by elderly families (an 
``eligible project'') may elect to give preference to elderly families 
in selecting tenants for assisted, vacant units in the project, subject 
to the requirements of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of supporting evidence as provided 
in paragraph (b) of this section.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations and compliance reviews required 
under the Fair Housing Act (42 U.S.C. 3601 through 19), section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable 
statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families--(1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: The application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing; or
    (ii) Secondary sources. Two or more sources of evidence such as: 
Lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with a higher percentage of 
efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where the primary sources do not provide clear 
evidence of original design of the project for occupancy primarily by 
elderly families, including those cases where primary documents 
conflict, secondary sources may be used to establish the use for which 
the project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by disabled families who are not 
elderly or near-elderly families (hereafter, collectively referred to 
``non-elderly disabled families'').
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of;
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
If the owner of an elderly project who has elected to adopt the 
secondary preferences in paragraph (d) of this section determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to eligible families who apply for housing, 
without regard to the preferences and reservation of units provided in 
this section.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 884.214(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 884.226.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).
    (i) Expiration date of section. This section will expire on May 3, 
1995.

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

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

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

    12. A new Sec. 886.329a is added to read as follows:


Sec. 886.329a  Preferences for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families--(1) 
Election by owners of eligible projects. (i) An owner of a project 
involving substantial rehabilitation and assisted under this part 
(including a partially assisted project) that was originally designed 
primarily for occupancy by elderly families (an ``eligible project'') 
may elect to give preference to elderly families in selecting tenants 
for assisted, vacant units in the project, subject to the requirements 
of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of supporting evidence as provided 
in paragraph (b) of this section.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations and compliance reviews required 
under the Fair Housing Act (42 U.S.C. 3601 through 19), section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable 
statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families--(1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
other underwriting or financial document collected at or before loan 
closing; or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with a higher percentage of 
efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where the primary sources do not provide clear 
evidence of original design of the project for occupancy primarily by 
elderly families, including those cases where primary documents 
conflict, secondary sources may be used to establish the use for which 
the project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by disabled families who are not 
elderly or near-elderly families (hereafter, collectively referred to 
``non-elderly disabled families'').
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of;
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
If the owner of an elderly project who has elected to adopt the 
secondary preferences in paragraph (d) of this section determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to otherwise eligible families who apply for 
housing, without regard to the preferences and reservation of units 
provided in this section.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 886.321(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 886.337.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).
    (i) Expiration date of section. This section will expire on May 3, 
1995.

    Dated: April 26, 1994.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 94-10519 Filed 5-2-94; 8:45 am]
BILLING CODE 4210-27-P