[Federal Register Volume 59, Number 112 (Monday, June 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14281]
[[Page Unknown]]
[Federal Register: June 13, 1994]
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Part V
Department of Housing and Urban Development
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Office of the Assistant Secretary for Public and Indian Housing
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24 CFR Part 968
Vacancy Reduction Program; Final Rule and Notice
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Part 968
[Docket No. R-94-1659; FR-3398-F-02]
RIN 2577-AB26
Vacancy Reduction Program
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: The Department is issuing regulations to implement the Vacancy
Reduction Program. The Notice of Funding Availability (NOFA) for the
program is published elsewhere in today's Federal Register. Under this
program, certain Public Housing Agencies (PHAs) are required to develop
and submit a plan regarding vacancies in units owned or operated by the
PHA. Each plan will be required to include the elements specified in
the statute and this rule. In addition, assessment teams have conducted
on-site assessments of the vacancy situations of known eligible PHAs
and may provide assistance to PHAs in developing their plans. The
assistance available under this program is intended to supplement other
initiatives of the PHA that will reduce the rate of addressable
vacancies in a PHA's inventory.
EFFECTIVE DATE: July 13, 1994.
FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Director, Office of
Assisted Housing, Public and Indian Housing, room 4204, U.S. Department
of Housing and Urban Development, 451 Seventh Street SW., Washington DC
20410, telephone (202) 708-1380. Individuals with hearing or speech
impairments may call HUD's TDD number: (202) 708-0850. (These telephone
numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Statement
The information collection requirements contained in this final
rule have been approved by the Office of Management and Budget, under
section 3504(h) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-
3520), and assigned OMB control number 2577-0181.
Background
On May 21, 1993, the Department published a proposed rule to
implement the Vacancy Reduction Program (program). The program was
authorized when section 510 of the Cranston-Gonzales National
Affordable Housing Act added a new section 14(p) to the United States
Housing Act of 1937 (42 U.S.C. 14371) (1937 Act). Recently section
14(p) was amended by section 115 of the Housing and Community
Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992)
(1992 Act), and funding was made available for the first time for the
program.
Section 14(p) requires any public housing agency (PHA) to
participate in the program if the PHA has a vacancy rate that exceeds
twice the national average, is designated as troubled under section
6(j) of the 1937 Act, or has been placed under a receiver pursuant to
section 6(j)(3) of the 1937 Act. Each PHA participating in the program
will be required to develop a vacancy reduction plan that identifies
vacant dwelling units in its inventory and the reasons for the
vacancies, and describes actions to be taken by the PHA for the
following five years to eliminate the vacancies.
In addition, the vacancy situations of every participating PHA will
be reviewed on-site by assessment teams consisting of representatives
of the Department, independent experts knowledgeable about vacancy
problems and management issues relating to public housing, and PHA
officials. The assessment teams will submit recommendations to HUD and
the PHA, and, at the request of the PHA, may assist the PHA in
preparing its vacancy reduction plan.
The plans will be the basis for selecting those PHAs that will
receive assistance under the program. For troubled PHAs, funding of
vacancy reduction activities will be contingent upon the PHA either
making or providing reasonable assurances of substantial progress in
remedying any management deficiencies.
Use of Survey to Determine FY 1993 NOFA Threshold Factors
As discussed in the proposed rule, all PHAs where existing data
indicated the PHA met the statutory criteria for mandatory
participation in the program were surveyed. The results of the survey
have been used to define the threshold factors for the NOFA published
elsewhere in today's Federal Register and are discussed in greater
detail in that NOFA. In addition, the Department has conducted
assessments at PHAs that the Department believes meet the threshold
factors for the NOFA that is published elsewhere in today's Federal
Register. As explained in the NOFA, any PHA that meets the threshold
factors and has not already been assessed should immediately request an
assessment by contacting the Department.
Comments on Proposed Rule
Six sets of comments were submitted to the Department on the
proposed rule: two from public housing authority (PHA) industry groups
and four from local housing authorities. Comments were received from
the:
--Council of Large Public Housing Authorities (CLPHA);
--Public Housing Authorities Directors Association (PHADA);
--Chicago Housing Authority (CHA);
--Morgan County (Illinois) Housing Authority (MCHA);
--Los Angeles County Housing Authority (LACHA); and
--Atlanta (Georgia) Housing Authority (AHA).
Discussion of the comments is organized according to the following
topics: Eligibility requirements; development of the vacancy reduction
plan; assessments; funding of vacancy reduction activities; sanctions;
use of NOFAs to convey significant program information; the
relationship of the Vacancy Reduction Program to other HUD programs;
and miscellaneous comments.
Eligibility Requirements
(1) The rule states that a PHA must participate in the program if a
receiver has been appointed for the PHA. The term ``receiver'' should
be clarified, in that HUD has taken actions against PHAs that have
resulted in takeovers of programs or operations from PHAs without
necessarily having a court-appointed receiver. (CLPHA)
Response: The term is statutory and refers to a receiver appointed
by a Federal or State court under section 6(j)(3) of the United States
Housing Act of 1937; the term does not include other arrangements.
(2) Benefits of the program should be available to a PHA that does
not have a vacancy rate of twice the national average only if the PHA
fails the Public Housing Management Assessment Program (PHMAP) standard
for vacancies (see 24 CFR part 901). (PHADA) Similarly, program
participation should be optional for troubled authorities that do not
have a vacancy rate twice the national average. (CHA)
Response: As the commenter noted, using the PHMAP standard would
require congressional action because the current statute requires
participation by PHAs that are troubled or for which receivers have
been appointed.
(3) In defining the term ``vacant unit'', reference is made to an
effective lease, which is defined in terms of an eligible family being
charged rent. However, because of utility allowances or zero income,
many residents do not pay rent for the units they occupy. (CLPHA)
Response: The definition requires that the family have a right to
possession of the unit, in addition to being charged rent. The
calculation of the rent to be charged by a PHA takes into account
income and any utility allowance. As noted by the commenter, as a
result of this calculation of rent, the PHA might not actually collect
any money from the family having the right to possess a unit (e.g.,
when the utility allowance equals or exceeds the total tenant payment).
However, the lease still obligates the tenant and includes a rental
charge that, at least in part, is based on income. Therefore, the
elements of the definition are met, even though the actual amount
collected by the PHA from the tenant is $0.
(4) A PHA is required to participate in the program if it has a
vacancy rate that is twice the national average, regardless of the
number of units in the PHA's inventory. Because the vacancy problems of
small PHAs, especially, may be due to lack of demand, participation in
the program should be optional for PHAs with less than 250 units.
(PHADA) For the first year, program participation should be limited to
PHAs with 500 or more units. (CHA)
Response: The statute does not discriminate among the causes of
vacancies in establishing the participation requirements. However, the
extent of participation may be limited to providing documentation of
lack of demand or proposals to deprogram units. In awarding funding,
the Department will concentrate on PHAs where there is a demand for
housing, as reflected in the terms of the NOFA published elsewhere in
today's Federal Register. Furthermore, because smaller PHAs dependent
on CIAP funding often have fewer resources to solve a vacancy problem,
these PHAs could realize substantial improvement of their vacancy
statistics with a minimal increment of funding. Thus, their selection
for funding would serve the statutory purposes of the program, and
their exclusion from the initial round of funding could not be
justified.
(5) Program participation should be available to any PHA that needs
help in addressing its vacancy situation. (MCHA, CHA)
Response: Because current program funding is limited, the
Department is concentrating on PHAs that are required to participate.
(6) In the definition of ``vacant unit,'' the proposed rule does
not specify a timeframe for determining the existence of a vacancy.
Similarly, in calculating a PHA's vacancy rate for purposes of
determining program eligibility, the proposed rule does not recognize
any normal turnover time, such as the 20-day transition period allowed
under PHMAP Indicator 5. (LACHA)
Response: The Department recognizes that the vacancy rate of a PHA
is fluid. However, for the purpose of determining eligibility for the
program, the Department has decided to use a snapshot approach, i.e.,
the number of units vacant at the PHA on the appropriate date.
Development of the Vacancy Reduction Plan
(1) The proposed rule provides a number of examples of project-
specific activities to eliminate vacancies that a PHA might include in
its vacancy reduction plan. The number of examples should be expanded
to include such activities as unit redesign or conversion, site
reconfiguration, security improvements, and density reductions. These
additional examples will serve to give a better idea of the range of
acceptable activities. (CLPHA, CHA) Similarly, examples of specific
management improvements that should be encouraged include tenant
screening, evictions, and marketing and leasing efforts. (CHA)
Response: A number of these examples have been included in
Sec. 968.407(b)(3)(i) of the final rule.
(2) If demolition or disposition are selected activities, HUD's
review and approval process and replacement housing requirements will
make it very difficult for a PHA to provide the required schedule that
forecasts when the selected activities would be accomplished. (CLPHA,
PHADA (similar comment for other HUD actions)) In addition,
participating PHAs need to be able to change their schedules for
eliminating vacancies to reflect actual funding. (PHADA)
Response: Sections 968.407(b)(3)(ii) and 968.407(b)(8) have been
revised to include language providing that, in developing the required
schedule, PHAs should specify action within x days from HUD approval or
other action, when progress is dependent on HUD action. In addition, a
schedule may be revised to reflect the adequacy of funding for proposed
activities.
(3) If a PHA needs help in preparing the vacancy reduction plan,
the assessment team should be required to assist in the plan
development, if requested by the PHA. The proposed rule does not make
this assistance mandatory. (PHADA)
Response: Section 968.410(d) has been changed to clarify that, if
requested by the PHA, HUD will assist a PHA in preparing its vacancy
reduction plan.
(4) The final rule should clarify that participating PHAs do not
have to address each single vacant unit separately, but should be
permitted to group together vacant units by the cause of vacancy.
(PHADA)
Response: In accordance with the statutory requirements, each
vacant dwelling unit must be identified. However, vacant units may be
grouped together for purposes of explaining the reasons for the
vacancies and proposed actions for eliminating the vacancies.
(5) The vacancy reduction plan should include information on
turnover problems. (PHADA, AHA) The information should include the
number of units vacated and reoccupied during a defined period and any
indication of whether the turnover rate is changing. (CHA)
Response: A new paragraph has been added to Sec. 968.407(b) to
require that a vacancy reduction plan include certain information on a
PHA's turnover rate.
(6) A complete strategy needs to be developed that includes not
just rehabilitation work, but tenant screening, eviction, property
management, and security measures, as well. (CHA)
Response: The Department and the statute contemplate a complete
strategy. A PHA's vacancy reduction plan should include any action to
remove the unit from the PHA's inventory of vacant units, including
management improvements in each of the specific areas mentioned by the
commenter.
Assessments
(1) If funding will be on a ``first-come, first served'' basis, the
sequence of assessment team visits should be by public drawing in order
to avoid charges of favoritism. (PHADA)
Response: For the NOFA published today, the Department has decided
upon an approach that should provide some funding to all PHAs that meet
the eligibility criteria. Each eligible PHA that is a Comprehensive
Improvement Assistance Program (CIAP) agency will be funded fully for
all eligible units and approved activities, because smaller PHAs
dependent on CIAP funding often have fewer resources to solve a vacancy
problem. If sufficient funds are available, each PHA that is a
Comprehensive Grant Program (CGP) agency will be funded fully; however,
if there are not sufficient funds remaining, each CGP agency will be
awarded a pro rata share of the available funding. This pro rata share
will be calculated by a method, to be determined by HUD and announced
in the NOFA, that will provide funding equitably to those agencies.
(2) When the PHA already is required under PHMAP to have developed
a plan to address its vacancy problem, the primary purpose of the
Vacancy Reduction Program assessment team should be a validation or
critique of the PHA's existing plan, rather than an independent
assessment. The intent of the program is to encourage action, not
further studies. (PHADA)
Response: The statute requires an on-site assessment of the vacancy
situation of each participating PHA, and specifies what is to be
included in the PHA's vacancy reduction plan. To the extent that a PHA
is able, the Department encourages the PHA to use work that has been
done in accordance with PHMAP requirements to comply with the
requirements of this program.
(3) PHAs that lend a staff person to an assessment team should be
reimbursed for the staff person's salary and benefits during that
assignment. (PHADA)
Response: The Department agrees that the statutory provision
allowing program funds to be used for travel and administrative
expenses of assessment teams, extends to PHA staff. Therefore, PHAs
will be reimbursed for the salary and benefits for any staff person
that serves on an assessment team. However, this does not apply to
staff members of the PHA that is being assessed.
(4) Because the need for these funds is great, the Department
should speed up the scheduling of assessments. (MCHA, PHADA)
Response: The Department has assessed all known eligible PHAs.
Funding of Vacancy Reduction Activities
(1) HUD needs to clarify its position regarding the use of program
funds for security improvements. (CLPHA)
Response: Where units are vacant because of security problems, HUD
will provide funding for physical security improvements, such as
improved locks, security screens, additional lighting, and site
improvement. As part of management improvements, HUD also will provide
funding for security activities over a limited duration, if HUD
determines that such funding is likely to result in the reoccupancy and
continued occupancy of vacant units. Examples of security activities
that could be funded as part of management improvements include:
Hiring of additional staff to coordinate the provision, by
local government or other public and private entities, of appropriate
social services, such as drug education and treatment referral
programs;
Hiring of security guards, through individual employment
contracts, or guard services, using competitive proposal or small
purchase procurement procedures, or contracting with a local police
force for security that is in addition to that required under the
Cooperation Agreement. As a condition of employment, these security
personnel shall be required to meet all relevant State insurance,
training, licensing, and other similar requirements;
Development and implementation of improved screening
procedures for prospective residents;
Development of more timely and effective management
techniques for dealing with disruptive residents and drug-related
crime;
Organization and training of unarmed voluntary resident
patrols to work cooperatively with the local law enforcement agencies;
Development and implementation of improved communication
and coordination with local law enforcement agencies; and
Hiring of investigators to investigate drug-related crime
in and around the developments or to provide evidence relating to any
such crime in any administrative or judicial proceedings.
(2) The minimum housing standards that should be imposed for
capital improvements funded under this program are the modernization
standards, not the Housing Quality Standards (HQS). Units renovated to
the HQS often still need modernization. (CLPHA) In addition, the
minimum housing standards should be applied only to the inside of units
improved under the program, rather than to common areas and major
structural items. (CHA)
Response: Each work item funded under this program must be
performed in compliance with modernization standards. However, the
vacancy reduction program is an occupancy program, and HQS is a minimum
occupancy standard. The goal of the individual work items (performed to
modernization standards) is to bring the vacant units into an
occupiable condition. Section 968.435 of this rule requires
certification that affected vacant units will be brought into
compliance with the HQS. As applied in Section I.F(1)(b) of today's
NOFA, only aspects of the HQS that pertain to the vacant unit directly
are required.
(3) The decision on how to target the initial funding available
under this program should be based on the survey responses only and not
on any existing data mentioned in the preamble of the proposed rule.
(PHADA)
Response: The survey responses were used to determine which PHAs
surveyed have vacancy problems and the nature of their problems.
Eligibility and final decisions on funding will be based on submitted
applications, including the vacancy reduction plans, the number of
eligible units, and the assessments.
(4) Funding should not be on a ``first-come, first-served'' basis,
which rewards those able to act the quickest, but should be awarded
using a more traditional competitive approach. Criteria that should be
used to make awards include: PHA capacity and ability to use the funds
effectively and likelihood that additional funds will improve vacancy
situation. Severely distressed properties should not be a priority, and
funding should be targeted for entire developments, rather than
scattered units. (PHADA)
Response: Because the Department would like to fund all PHAs that
meet the requirements of the NOFA, it has decided not to include the
first-come, first-served limitation. The immediate goal of the
Department is to promote the occupancy of the greatest number of units;
the problems of severely distressed developments are targeted more
directly through other programs and are not priorities of the vacancy
reduction program. Similarly, because of funding limitations, the
Department believes the program purposes will be promoted best by
targeting the elimination of vacant units, rather than the upgrading of
entire developments that include occupied units.
(5) Under some circumstances, a PHA may be made eligible for
program funds, but restricted in spending the funds until an assessment
is performed. If this assessment is not done within 45 days of the fund
award, then the PHA should be allowed to expend the funds. (PHADA, CHA)
Response: The Department has already conducted assessments of known
eligible PHAs and will complete all assessments in advance of funding
decisions. In order to ensure fairness, in the NOFA published elsewhere
in today's Federal Register, the Department has provided that a PHA for
which an assessment has not been conducted but that considers itself
eligible under the NOFA, should notify the Department within 15 days of
its request for an immediate assessment. In addition, when an
approvable plan submitted in response to the NOFA needs improvement or
supplementation, the Department will assist the PHA in revising its
plan prior to the execution of the amendment to the Annual
Contributions Contract (ACC). Because very few, if any, eligible PHAs
will not have had assessments by today's publication of the NOFA, the
Department believes that all assessments will be completed on a timely
basis in this funding cycle.
(6) Activities that will decrease unit turnover in occupied units
(e.g., replacement of appliances) also should be considered eligible
for funding under this program. (CHA)
Response: Although the Department recognizes the relationship
between turnover and vacancy rates and is sympathetic to this
reasonable suggestion, current funding for the vacancy reduction
program is limited. Therefore, the Department intends to target funding
of unit improvements for currently vacant units or units to become
vacant for reconfiguration purposes, where reconfiguration is necessary
to reduce the current number of vacancies.
(7) Funding should be guaranteed for a minimum of a three-year
period following HUD approval of a five-year vacancy reduction plan,
subject to the PHA's continued progress on and adherence to its vacancy
reduction plan. (CHA, MCHA)
Response: The Department cannot guarantee funds that have not been
appropriated by Congress. Therefore, a PHA's five-year plan should
reflect a realistic projection of the actions that can be taken with
available or potential resources.
(8) If funded activities require compliance with Housing Quality
Standards, the amount of funds may not be sufficient to address
problems in areas outside the unit (e.g., hallways, stairways, fire
protection systems). HQS standards should apply only to unit interiors.
(CHA)
Response: The Department recognizes that current funding available
under the Vacancy Reduction Program will not be sufficient to address
all problems areas relating to excess vacancies, and it expects to be
guided in its funding decisions by the assessment team reports. The
vacancy reduction plans and the recommendations of the assessment teams
should include all work inside the units, in the hallways, in common
areas, on the site, and to the exterior of the buildings necessary to
make the units marketable; providing plans and funding for only the
interiors of vacant units may not make those units marketable.
Individual work items funded under this program must comply with
modernization standards and must result in the targeted unit meeting
the HQS.
(9) Program funds should not be directed at PHAs that have vacancy
problems due primarily to marketing problems or lack of demand. (CHA)
Response: The Department agrees that the limited program funds
should be focused on those PHAs whose vacancy situations can actually
be improved by additional funding. This factor is accounted for in
Sec. 968.413(d)(2) of the rule (``extent to which the proposed
activities will improve the PHA's vacancy problem'') and in the
definition of ``eligible unit'' set out in the NOFA published elsewhere
in today's Federal Register.
Sanctions
In the proposed rule, the Department reported that, at this time,
it does not intend to implement section 14(p)(3) of the statute, which
provides sanctions for the failure to make progress under a plan.
However, commenters were invited to submit suggestions on how this
portion of the statute could be implemented in the future. Several
commenters submitted remarks on this aspect of the current statutory
program, as follows: (1) If a withholding action seems likely after 18
months, an assessment team should be sent to the PHA to perform a
review and prepare a report. (PHADA) (2) If there is withholding,
consideration should be given to forcing a receiver to be used so that
the funds can be used. (PHADA, CHA) (3) Withholding of subsidy because
of a failure to make progress is contrary to the approach of rewarding
PHAs for solving problems. (MCHA)
Response: This final rule does not include provisions implementing
the sanctions mandated by section 14(p)(3) of the 1937 Act. However,
the Department is continuing to work on those provisions, and will take
into consideration the remarks provided by commenters in response to
the proposed rule. The Department will comply with the requirements
within the applicable statutory timeframe.
Use of NOFAs
(1) HUD is proposing to use NOFAs as the vehicle to convey
significant program information to interested PHAs, which defeats the
intent of notice-and-comment rulemaking. The proposed rule does not
provide sufficient detail on how program funds will be targeted, the
format of the vacancy reduction plans, and criteria for determining a
PHA's capacity to implement the plan in a timely and effective manner.
Use of NOFAs will lead PHAs to try to second-guess HUD on selection
criteria and lead to a hit or miss approach on solving the vacancy
problem. (CLPHA)
Response: The Department disagrees with this comment. The rule
provides the framework for the program and meets or exceeds the
requirements of the Administrative Procedure Act and the Department's
regulations. The preamble to the proposed rule elaborates on the
Department's expectations for targeting funds made available for the
program.
The Department views the program as a dynamic tool in the effort to
reduce unnecessary vacancies in public housing. Experience with the
program and elimination of certain root causes of vacancies will guide
the Department in selecting the optimal criteria for any subsequent
targeting of program funds. This targeting would be done in compliance
with the statutory parameters of the program.
The Department intends to undertake the vacancy reduction effort by
providing funding for those vacant units most likely to be turned
around quickly, targeting the majority of the funding for units
averaging a cost of $8,000 or less, with some funds targeted for units
for which a CGP agency can provide the additional funding necessary.
Furthermore, the report of the assessment team is expected to
address the capacity of a PHA to implement vacancy reduction activities
in a timely and efficient manner. The Department reiterates that the
intent of the requirement that participating PHAs submit vacancy
reduction plans is to assist in the development of a comprehensive
approach to vacancy reduction. As demonstrated by its efforts to
solicit the input of industry and PHA representatives during the
development of the proposed rule and the initial NOFA, the Department
is committed to implementing this program in a constructive way that
responds to the needs of PHAs with remediable vacancy problems.
(2) Before the NOFA is published, there should be a meeting with
industry groups. The meeting should be used to share survey results and
exchange viewpoints. (PHADA)
Response: The Department solicited the input of representatives of
the industry, PHAs, and resident organizations during the development
of the proposed rule and the initial NOFA. Meetings were held with
these representatives on January 28 and July 9, 1993. The Department
believes these meetings have been valuable in helping to develop the
program, but does not believe that it is necessary to schedule any
additional meetings at this time. The discussions at the previous
meetings, along with the written comments received in response to the
proposed rule, have provided the Department with a foundation for the
policy decisions it has made regarding how to operate this program
within the parameters established by Congress. Furthermore, in the NOFA
published elsewhere in today's Federal Register, the Department
discusses the results of the survey, in the context of both general
results and specific implications for the program decisionmaking
process.
(3) The proposed rule seems to imply that more than one NOFA might
be published in a single fiscal year. Only one NOFA should be issued
and it should coincide with the Comprehensive Grant Program planning
process. (PHADA, CHA)
Response: The language that referred to ``periodic'' NOFAs in the
proposed rule was intended simply to verify that separate NOFAs would
be published for any money that is appropriated for the program in
subsequent years. This is the common practice of the Department, as
established in the HUD Reform Act, but the actual timing of a
subsequent NOFA in any fiscal year cannot be predicted. The Department
appreciates the commenters' point about the coordination of capital
planning programs.
Relationship of the Vacancy Reduction Program to Other HUD Programs
(1) HUD should integrate the approach of the Vacancy Reduction
Program into an overall effort to draft a new vacancy rule. The Vacancy
Reduction Program itself is insufficient to address problems faced by
PHAs with expired Comprehensive Occupancy Plans (COPs); these PHAs
still need operating funds to keep vacant units in shape until money is
available to make necessary improvements. (CLPHA)
Response: Any new vacancy rule would require substantial time for
development and implementation. Meanwhile, the Department is committed
to providing assistance currently available under the vacancy reduction
program to PHAs with vacancy problems. Changes to the determination of
operating subsidy eligibility as proposed by the commentor are outside
the scope of this rule.
(2) The Vacancy Reduction Program may duplicate planning
requirements of other programs, such as PHMAP and the Comprehensive
Grant Program, that also address vacancy problems. (PHADA, CHA)
Response: As noted above, the Department appreciates the
commenters' point about the coordination of capital planning programs
and will endeavor to integrate the vacancy reduction program with other
related programs.
(3) The same format used for the vacancy reduction plan should be
used for developing an Improvement Plan under PHMAP if the PHA fails
the PHMAP vacancy standard. (PHADA)
Response: The Department intends to coordinate the formats of these
plans, to the extent possible.
(4) The restrictions placed on assistance to troubled authorities
(see Sec. 968.413(b)) should be made consistent with the language of
HOPE VI. (PHADA)
Response: The restrictions are prescribed by the authorizing
statute for the program. However, in recognition of the comments
requesting coordination of the Department's capital planning programs,
the final rule includes new language that cross-references PHMAP
indicators and clarifies the evaluation of the progress of troubled
PHAs.
(5) If a PHA presents a vacancy reduction plan that HUD approves,
the PHA should receive operating subsidy based on its actual occupancy
rate, rather than on the current formula rate. (CHA, AHA) How does the
Department view this program in the context of the Performance Funding
System (PFS) funding of vacant units? (PHADA)
Response: The vacancy reduction program is not intended as a
substitute for the vacancy rule or to provide relief for PHAs that do
not meet established goals under COPs. However, the vacancy reduction
program should improve the revenue situations of participating PHAs in
two ways: First, through direct funding of portions of the plans;
second, through the increased operating subsidies and rent collections
that will result from reoccupancy of those vacant units.
Miscellaneous
(1) The survey results and data developed from analyzing the
vacancy reduction plans should be released publicly. (PHADA)
Response: The Department is releasing data from the survey as part
of the NOFA published elsewhere in today's Federal Register. In
addition, the Department intends to develop a report based on data and
information provided by the assessment teams in their reports.
(2) The Vacancy Reduction Program should be separately funded,
instead of using amounts set aside from regular modernization funding.
(PHADA, CHA)
Response: As recognized by the commenters, Congress has authority
over the mechanism used for funding the program.
(3) Funding decisions under the program should recognize when a PHA
has used existing resources to address its vacancy problem. For
example, although a commitment to use a large portion of CGP funds to
address vacancies will reduce the need for additional vacancy reduction
funds, those CGP funds could have been used to fund other substantial
needs of the PHA. (AHA)
Response: When PHAs have other modernization needs that cannot be
met by current funding, Vacancy Reduction Program funds may be used
instead of CGP funding committed but not yet under contract for vacancy
reduction.
Section-by-Section Analysis
The Department is establishing the Vacancy Reduction Program as new
subpart D in 24 CFR part 968, with conforming amendments made as
necessary in other sections of title 24 of the Code of Federal
Regulations. The following discussion is a section-by-section
description of the rule.
Section 968.103 addresses the allocation of funds under section 14
of the 1937 Act. The Department is amending paragraph (c) to account
for the new set-aside for the Vacancy Reduction Program. The new
language repeats the statutory scheme for setting aside four percent of
the section 14 funds remaining after deducting amounts for emergencies
and natural and other disasters. Paragraph (c)(1) provides that 20
percent of these funds will be available for activities under section
6(j) of the 1937 Act, while the remaining 80 percent will be available
for the Vacancy Reduction Program, as implemented by this rule. Section
968.103 also is amended to clarify that the Vacancy Reduction Program
does not apply to Indian Housing Authorities (IHAs).
Subpart D of part 968, encompassing Secs. 968.401-968.425, is added
to implement the Vacancy Reduction Program.
Section 968.401 states the policy of the Department with respect to
achieving high occupancy rates in public housing, in order to ensure
maximum use of available housing resources.
Section 968.403 repeats the statutory definition of PHAs to which
the Vacancy Reduction Program is applicable, but clarifies that units
not eligible for funding under section 14 of the 1937 Act are excluded
from this set-aside program, as well.
Section 968.405 defines terms that are used in subpart D to the
extent these terms are not applicable to the remainder of part 968.
Section 968.407 establishes the requirement that eligible PHAs
submit a five-year vacancy reduction plan, and specifies the contents
of the plan. For purposes of identifying components of a plan that may
be identified as eligible for funding, within the limits of
appropriated amounts, each submitted plan must be organized in a manner
that facilitates review by the Department. For each action proposed to
eliminate vacancies, the plan must include a schedule that shows the
number of vacancies that the PHA expects to eliminate by the end of
each 12-month period during the five years of the plan.
When components of a plan involve capital improvements to dwelling
units, the PHA must ensure that, after the improvements, the units
themselves would meet or exceed the Housing Quality Standards set forth
in 24 CFR 882.109, as amended by regulatory requirements concerning
lead-based paint hazards.
Section 968.410 explains the requirement for an on-site assessment
of a participating PHA's vacancy situation, including the composition
and responsibilities of the assessment teams and the purpose of the
assessments.
Section 968.413 establishes eligible uses and limitations on the
use of funds available for the Vacancy Reduction Program. Paragraphs
(a), (b), and (c) echo the statute establishing the program, but
paragraph (b) includes clarifying language that cross-references PHMAP
indicators in measuring the progress required under the statute for
troubled PHAs. Paragraph (d) establishes that funding decisions would
be through a publicly announced process, on the basis of priorities to
be established by the Department.
Section 968.416 provides that the PHA must comply with HUD
requirements in requesting funds against the approved modernization
budget.
Section 968.419 requires the grantee to be responsible for assuring
the quality of work performed using program funds.
Section 968.422 establishes periodic reporting requirements for
grantees until activities funded under the vacancy reduction program
are completed. This section also specifies a schedule for completion of
funded activities.
Section 968.425 details the process for notifying a PHA of any
deficiencies in its compliance with program requirements and specifies
the nature of the changes and sanctions that may be pursued by HUD.
Section 968.428 establishes requirements to be applied in auditing
the grantee's use of funds upon completion of activities funded under
the program.
Section 968.435 lists program requirements that apply to the
Vacancy Reduction Program in addition to the requirements specified in
other sections of subpart D and Sec. 968.110.
Other Matters
Environmental Review
At the time of publication of the proposed rule, a finding of no
significant impact with respect to the environment was made in
accordance with HUD regulations in 24 CFR part 50 that implement
section 102(2)(C) of the National Environmental Policy Act of 1969 (42
U.S.C. 4332). The proposed rule is adopted by this final rule without
significant change. Accordingly, the initial finding of no significant
impact remains applicable, and is available for public inspection
between 7:30 a.m. and 5:30 p.m. weekdays in the office of the Rules
Docket Clerk at the above address.
Executive Order 12866
This rule has been reviewed by the Office of Management and Budget
under Executive Order 12866. Any changes made in the rule as a result
of this review are identified in the docket file of the rule maintained
by the Department and available for review at the above address.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities. The rule
implements a statutory program that provides funding to PHAs for
limited activities designed to reduce the number of vacant dwelling
units in their inventories.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule do 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. As a result,
the rule is not subject to review under the Order. The rule merely
implements a statutory program that provides funding to PHAs for
limited activities designed to reduce the number of vacant dwelling
units in their inventories.
Executive Order 12606, the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the
Order. No significant change in existing HUD policies or programs
result from promulgation of this rule, as those policies and programs
relate to family concerns.
Regulatory Agenda
This rule was listed as Item 1688 in the Department's Semiannual
Agenda of Regulations published on April 25, 1994 (59 FR 20424, 20470),
in accordance with Executive Order 12866 and the Regulatory Flexibility
Act.
List of Subjects in 24 CFR Part 968
Grant programs--housing and community development, Indians, Loan
programs--housing and community development, Public housing, Reporting
and recordkeeping requirements.
For the reasons set out in the preamble, part 968 of title 24 of
the Code of Federal Regulations is amended as follows.
PART 968--PUBLIC HOUSING MODERNIZATION
1. The authority citation for part 968 continues to read as
follows:
Authority: 42 U.S.C. 1437d, 14371 and 3535(d).
2. Section 968.103 is amended by revising paragraph (c) to read as
follows:
Sec. 968.103 Allocation of funds under section 14.
* * * * *
(c) Set-asides. After deducting amounts for the reserve for natural
and other disasters and for emergencies under paragraph (b) of this
section, HUD shall set aside from the funds remaining:
(1) Regarding vacancy reduction, an amount equal to 4 percent of
those funds, to be further allocated as follows:
(i) Twenty percent of this four percent shall be available only for
carrying out activities under section (6)(j) of the United States
Housing Act of 1937; and
(ii) Eighty percent of this four percent shall be available under
the vacancy reduction program (see subpart D of 24 CFR part 968).
(2) Regarding the comprehensive grant program, no more than five
percent for the purpose of providing credits to PHAs that were formerly
designated as mod troubled agencies under the Public Housing Management
Assessment Program (PHMAP) (see 24 CFR part 901). The purpose of this
set-aside is to compensate these PHAs for amounts not allocated by HUD
because of a PHA's prior designation as a mod troubled agency.
(3) Nonapplicability to IHAs. The Vacancy Reduction Program in
subpart D of this part does not apply to IHAs. In addition, because the
PHMAP performance indicators under 24 CFR part 901 do not apply to
IHAs, these agencies cannot be deemed ``mod troubled'' for purposes of
the CGP and are not eligible for funding under paragraph (c)(1)(i) of
this section. Hence, IHAs are not subject to any reduction in funding
under section 14(k)(5)(A) of the Act, and IHAs do not participate in
the set-aside credits established under paragraph (c)(2) of this
section.
* * * * *
3. A new subpart D, consisting of Secs. 968.401 through 968.425, is
added to read as follows:
Subpart D--Vacancy Reduction Program
Sec.
968.401 Purpose.
968.403 Applicability.
968.405 Definitions.
968.407 Vacancy reduction plan.
968.410 Assessments.
968.413 Funding.
968.416 Fund requisitions.
968.419 Grantee's oversight responsibilities.
968.422 Progress reports and completion schedule.
968.425 HUD review of grantee performance.
968.428 Program closeout.
968.425 Other program requirements.
Sec. 968.401 Purpose.
Section 14(p) of the United States Housing Act of 1937 establishes
the Vacancy Reduction Program, in conjunction with statutory provisions
on public and Indian housing modernization. It is the policy of the
Department that public housing agencies should maximize the use of
housing resources, using every reasonable means to achieve and maintain
high levels of occupancy by eligible families in PHA-owned or -operated
housing.
Sec. 968.403 Applicability.
(a) Participation. A PHA shall participate in the vacancy reduction
program under this subpart if:
(1) The PHA has a vacancy rate among dwelling units owned or
operated by the PHA that exceeds twice the average vacancy rate among
all public housing agencies;
(2) The PHA is designated as a troubled or mod troubled agency
under section 6(j) of the Act; or
(3) A receiver has been appointed for the PHA pursuant to section
6(j)(3) of the Act.
(b) Exclusions. Units owned or operated by a PHA that are not
eligible for funding under section 14 of the Act are excluded from
coverage under this subpart and shall not be used to calculate the
eligibility of a PHA under this subpart.
(c) Examples of eligibility. The following are specific examples of
eligibility under this program:
(1) All units in the Federal Low-Rent Public Housing Program are
eligible;
(2) In the Section 23 program, only those units that are in
projects that are bond-financed and for which the PHA would receive
clear title at the end of the lease term will be eligible; and
(3) Section 8 projects are not eligible.
Sec. 968.405 Definitions.
In addition to the definitions applicable under Sec. 968.105, the
following definitions apply to this subpart:
Average vacancy rate means the average vacancy rate for all public
housing agencies.
NOFA means Notice of Funding Availability. NOFAs announcing
available funding under the program will be published in the Federal
Register, and will set out the application requirements and applicable
selection criteria.
Operating subsidy means the annual contribution for operating
subsidy made to the PHA by HUD, which is determined in accordance with
part 990 of this chapter.
PHA means public housing agency. For purposes of this subpart, the
term excludes Indian Housing Authorities.
PHMAP means the Public Housing Management Assessment Program,
authorized in 42 U.S.C. 1437d(j) and implemented in 24 CFR part 901,
which is designed to allow HUD and the PHA to identify PHA management
capabilities and deficiencies and to lead to better overall management
of the public housing.
Receiver means a person or entity appointed by a court pursuant to
section 6(j)(3) of the United States Housing Act of 1937 to be
responsible for the day-to-day operation of a PHA.
Troubled PHA means a public housing agency that has been designated
as a troubled agency (including mod troubled) under section 6(j) of the
United States Housing Act of 1937.
Vacancy or vacant unit means a dwelling unit that is not under an
effective lease to an eligible family. An effective lease is a lease
under which an eligible family has a right to possession of the unit
and is being charged rent, even if the amount of any utility allowance
equals or exceeds the amount of a total tenant payment that is based on
income and, as a result, the amount paid by the family to the PHA is
zero.
Vacancy reduction plan means a plan developed and submitted by a
PHA to HUD, regarding vacancies in units owned or operated by the PHA.
The plan must meet the criteria established in Sec. 968.407.
Sec. 968.407 Vacancy Reduction Plan.
(a) Submission of plan. Each PHA to which this subpart applies, in
accordance with Sec. 968.403, shall submit a vacancy reduction plan.
The plan shall contain the elements identified in paragraph (b) of this
section, and shall be organized so that each of the elements can be
identified, reviewed, and funded separately.
(b) Contents of plan. The format of a plan submitted for funding
under this program will be defined in NOFAs to be published
periodically in the Federal Register. Each vacancy reduction plan
submitted by a PHA under paragraph (a) of this section shall include
statements:
(1) Identifying all vacant dwelling units administered by the PHA,
including unmarketable units, and explaining the reasons for the
vacancies. Units may be grouped together when explaining the reasons
for the vacancies;
(2) A description of the turnover rate of units for the past two
years, including the number of units vacated and reoccupied per
development per year and the average number of days required to return
a unit to occupancy. If the turnover rate is increasing, the plan
should identify each cause of the increase.
(3) Describing the actions to be taken by the PHA during the
following five years to eliminate the vacancies. The PHA shall:
(i) State project-specific actions that it is taking or intends to
take that will eliminate vacancies, such as modernization, demolition,
unit redesign or conversion, density reduction, disposition,
modification of occupancy policies, site and security improvements, and
other physical or management improvements; and
(ii) For each project identified, set out a schedule for completing
the actions identified in paragraph (b)(3)(i) of this section and
removing the dwelling units from the PHA's inventory of vacant units.
If the timing of any action is dependent upon a HUD approval or
decisionmaking process, the schedule for the PHA action may be
presented in terms of a specified time period following completion of
the HUD process. For each action, the schedule shall include the number
of vacancies that will be eliminated by the end of each 12-month period
after the PHA begins to receive assistance under this subpart.
(iii) When the PHA has been unable to return units vacated during
the last two years to occupancy within an average of 30 days, the plan
shall describe actions that the PHA will undertake to achieve at least
a 30-day turnover rate.
(4) Identifying any impediments that will prevent elimination of
the vacancies within the five-year period;
(5) Identifying any vacant units funded for modernization, major
reconstruction, demolition, or disposition activities;
(6) Identifying any vacant dwelling units that are eligible for
modernization, major reconstruction, demolition, or disposition, but
have not been funded or approved for these activities and are not
likely to be funded or approved for at least three years. The statement
shall include an estimate of the amount of assistance necessary to
complete the modernization, major reconstruction, demolition, or
disposition of these units;
(7) Identifying any vacant units not identified under paragraphs
(b)(5) and (b)(6) of this section. The statement shall include a
description of any appropriate activities relating to elimination of
the vacancies in these units and an estimate of the amount of
assistance necessary to carry out the activities identified under this
paragraph (b)(7);
(8) Setting forth an agenda for implementation of management
improvements during the first fiscal year beginning after submission of
the plan. If the timing of any improvement is dependent upon a HUD
approval or decisionmaking process, the schedule for the improvement
may be presented in terms of a specified time period following
completion of the HUD process. The agenda should include any management
improvements recommended by the assessment team pursuant to
Sec. 968.410 and an estimate of the amount of assistance necessary to
implement the management improvements; and
(9) Of any other information that the Secretary shall deem
appropriate, as provided in the applicable NOFA. Such information may
include budget documents, in the case of any PHA that is applying for
funds under a NOFA.
(c) Housing standards. To the extent that a plan involves
modernization, reconstruction, or rehabilitation activities that have
not been funded or approved previously and are not planned to be
undertaken using Comprehensive Grant Program funds, the plan must
reflect cost estimates that, at a minimum, are based on:
(1) For individual work items funded under the program, compliance
with modernization standards, as set forth in HUD Handbook 7485.2, as
revised; and
(2) For each vacant unit on which funds are expended, compliance of
the unit with the Housing Quality Standards, as set forth in 24 CFR
882.109 and as amended by the regulations concerning lead-based paint
in public housing in 24 CFR part 35.
(Approved by the Office of Management and Budget under control
number 2577-0181)
Sec. 968.410 Assessments.
(a) Requirement. Each PHA participating in the program under this
subpart shall cooperate with an onsite assessment of the vacancy
situation of the PHA by an assessment team, whose members will be
selected by the Secretary in accordance with paragraph (b) of this
section. The Secretary will schedule assessments in a priority order,
based on:
(1) The nature and extent of each PHA's vacancy problem, and HUD's
goal of achieving maximum reoccupancy using the funds available; and
(2) The availability of assessment teams and the expected level of
complexity of the assessments to be scheduled.
(b) Composition of assessment team. The assessment team shall
include representatives of HUD, an equal number of independent experts
knowledgeable with respect to vacancy problems and management issues
relating to public housing, and officials of the PHA.
(c) Scope of assessment. The assessment team shall assess the
vacancy situation of the PHA to determine the causes of the vacancies,
including any management deficiencies or modernization activities. At
least one member of the assessment team shall consult with residents of
the PHA's units regarding the vacancy situation of the PHA. The
assessment team shall also examine indicators of the management
performance of the PHA relating to vacancy, which shall include
consideration of the performance of the PHA as measured by the
indicators under paragraphs (A) and (E) of section 6(j)(1) of the Act
(implemented by 24 CFR 901.10(b)(1) and 901.10(b)(5)).
(d) Report of assessment team. The assessment team shall submit to
the PHA and the Secretary written recommendations for management
improvements to eliminate or alleviate management deficiencies and for
strategies to deal with vacant units. If requested by the PHA, HUD will
assist the PHA in preparing the vacancy reduction plan under
Sec. 968.407, including determining appropriate actions to eliminate
vacancies.
Sec. 968.413 Funding.
(a) Eligible activities. Except as provided in paragraph (b) of
this section, assistance may be provided under this subpart to PHAs
submitting vacancy reduction plans for reasonable costs of the
following activities:
(1) Implementing management improvements;
(2) Rehabilitating vacant dwelling units identified in the plan in
accordance with Sec. 968.407; and
(3) Carrying out vacancy reduction activities described in the plan
in accordance with Sec. 968.407.
(b) Assistance to troubled PHAs. Assistance may be provided to a
troubled PHA only if the PHA meets either of the conditions described
in paragraphs (b)(1) and (2) of this section:
(1) The PHA has demonstrated substantial progress on the following
vacancy related Public Housing Management Assessment Plan (PHMAP)
indicators: 2 (Modernization), 5 (Unit Turnaround), 6 (Outstanding Work
Orders), or 7 (Annual Inspection and Condition of Units and Systems),
as demonstrated by a PHMAP score of ``C'' or better. If the PHA does
not have a score of ``C'' or better on these indicators, substantial
progress may be demonstrated as follows:
(i) The PHA, based on current data would qualify for a score of
``C'' or better on the indicators.
(ii) A statement of alternative arrangements that have been made to
assure effective administration of the function covered by the
indicator, i.e. rehabilitation and modernization activities (in regard
to the units for which funding is requested) and the PHA-wide
administration of unit turnaround, work orders, and preventive
maintenance.
(2) The PHA has provided reasonable assurances that substantial
progress will be made to remedy any management deficiencies identified
by the assessment team or any vacancy-related deficiencies identified
in HUD reviews and audits, through activities that have already begun
or will be initiated.
(c) Costs of assessment teams. The Secretary may use amounts
appropriated for activities under this subpart for any travel,
administrative, and other necessary expenses of assessment teams under
Sec. 968.410.
(d) Determination of assistance amounts. (1) Whether a PHA is to
receive assistance, and the amount of any assistance, under this
subpart will be determined through a process to be described in detail
for each round of funding in Notices of Funding Availability to be
published in the Federal Register. A portion of a PHA's plan, rather
than the entire plan, may be funded, and the Secretary may establish
reasonable limits on the funding that will be available under a NOFA
for any category of eligible activities or for any PHA.
(2) Prior to determining the amount of any assistance to be awarded
to a PHA, HUD will review the PHA's plan and the extent to which it is
consistent with the assessment of the PHA, and any other factors that
the Secretary finds to be appropriate.
(e) Revisions. Funding is expected to be spent to carry out the
vacancy reduction activities funded under this program. Should a change
in circumstances make a revision necessary, HUD approval is required.
The grantee must submit a report that substantiates a need for the
revision, along with an account of how the revision affects the funded
plan.
Sec. 968.416 Fund requisitions.
To request funds against the total approved vacancy reduction
program budget, a PHA must submit a request to HUD in accordance with
HUD requirements.
Sec. 968.419 Grantee's oversight responsibilities.
Each grantee shall provide, by contract or otherwise, adequate and
competent supervisory and inspection personnel to assure work quality
and progress during modernization, whether work is performed by
contract or force account labor and with or without the services of an
architect/engineer.
Sec. 968.422 Progress reports and completion schedule.
(a) Reports required. Until completion of the activities funded
under the vacancy reduction program, the grantee shall submit to HUD,
in a form and at a time prescribed by HUD, the following:
(1) A report on modernization fund expenditures;
(2) A narrative report that includes an accounting of the grantee's
progress against the milestones established in its vacancy reduction
plan. The report shall include the number of both funded and regular
turn-over units that have been made ready for occupancy; and
(3) Any additional information as HUD may require.
(b) Completion schedule. HUD expects that most work items funded
under this program will be completed within one year. Work items must
be completed within two years from the date of funding, or by some
other time as may be specified in the Notice of Funding Availability,
unless prior approval is obtained from HUD.
(Approved by the Office of Management and Budget under control number
2577-0181)
Sec. 968.425 HUD review of grantee performance.
(a) Performance reviews. HUD shall carry out such reviews of the
performance of each funded PHA as may be necessary or appropriate to
determine compliance with the PHA's vacancy reduction plan and related
HUD requirements. In these reviews HUD will determine whether the PHA
has:
(1) Carried out its vacancy reduction activities in a timely manner
and in accordance with its vacancy reduction plan;
(2) Completed, or made reasonable progress toward completing, the
physical items funded under the vacancy reduction plan, and whether the
work items being carried out conform with the modernization and energy
standards in Sec. 968.115 of this chapter;
(3) Implemented, or made reasonable progress toward implementing,
the management improvements funded under the vacancy reduction program;
and
(4) Made reasonable progress in meeting the goals established in
its vacancy reduction plan.
(b) Notice of deficiency. If HUD finds any deficiency in a review
of a grantee's performance under this part, HUD may issue to the
grantee a notice of deficiency stating the specific program
requirements that the grantee has violated and requesting the grantee
to take corrective action.
(c) Corrective action order. (1) Issuance. If HUD finds any of the
deficiencies listed in paragraph (c)(3) of this section in its review
of the grantee's performance, HUD may issue to the grantee a corrective
action order, whether or not a notice of deficiency has previously been
issued on the specific deficiency. The corrective action order shall
notify the grantee of the specific program requirements that the
grantee has violated and shall specify the corrective action.
(2) Consultation with grantee. Before ordering corrective action,
HUD will give the grantee an opportunity to consult with HUD regarding
the proposed action.
(3) Bases for corrective action. HUD may order a grantee to take
corrective action only if HUD determines:
(i) The grantee has not submitted a performance report as required
by HUD;
(ii) The grantee has not carried out activities under its vacancy
reduction program in a timely manner and in accordance with HUD
requirements;
(iii) The grantee does not have continuing capacity to carry out
activities in its vacancy reduction plan; or
(iv) An audit conducted in accordance with 24 CFR part 44, or
pursuant to other HUD reviews, reveals deficiencies that HUD reasonably
believes require corrective action.
(d) Nature of corrective action. (1) HUD shall design corrective
action to prevent a continuation or recurrence of the same or a similar
deficiency or to mitigate to the greatest extent feasible any adverse
effects of the deficiency.
(2) HUD may order a grantee to take the corrective action that HUD
determines appropriate for carrying out the elements of the vacancy
reduction plan. Corrective action may include, but is not limited to,
suspension of grantee's authority to incur costs against the vacancy
reduction funding and reimbursement, from sources other than HUD funds,
of any amount spent improperly.
(e) Failure to take corrective action. In cases where HUD has
ordered corrective action and the grantee has failed to take the
required action within a reasonable time, as specified by HUD, HUD may
take one or more of the following steps:
(1) Withhold vacancy reduction funds from the grantee;
(2) Declare a breach of the ACC by the grantee; and
(3) Any other sanctions authorized by law or regulation.
Sec. 968.428 Program closeout.
(a) Requirements for grantees. Upon completion of the activities
funded in accordance with this part, the grantee shall submit to HUD,
and in a form prescribed by HUD, the actual modernization cost
certificate for HUD's review, audit verification, and approval. The
grantee shall immediately remit any excess funds provided by HUD. If
the audited modernization cost certificate discloses unauthorized
expenditures, the grantee shall take such corrective actions as HUD may
direct.
(b) Audit. The audit shall follow the guidelines prescribed in 24
CFR part 44, Non-Federal Government Audit Requirements.
(Approved by the Office of Management and Budget under control
number 2577-0181)
Sec. 968.435 Other program requirements.
In addition to the program requirements applicable to this subpart
under Sec. 968.110, each PHA participating in the vacancy reduction
program under this subpart shall:
(a) Certify that any modernization, reconstruction, or
rehabilitation activities that are funded under this subpart will be
undertaken in accordance with modernization standards, as set forth in
HUD Handbook 7485.2, as revised;
(b) Certify that activities undertaken within vacant units will
bring the affected vacant units into compliance with the Housing
Quality Standards, as set forth in 24 CFR 882.109 and amended by the
regulations concerning lead-based paint in public housing at 24 CFR
part 35; and
(c) Provide for resident involvement, in a manner to be determined
by the Secretary, in the process of applying for any funding available
under this part.
Dated: June 6, 1994.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-14281 Filed 6-10-94; 8:45 am]
BILLING CODE 4210-33-P