[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17838]
[[Page Unknown]]
[Federal Register: August 1, 1994]
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Part III
Department of Housing and Urban Development
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Assistant Secretary for Public and Indian Housing
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24 CFR Parts 905 and 950
Indian Housing Program; Proposed Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Assistant Secretary for Public and Indian Housing
24 CFR Parts 905 and 950
[Docket No. R-94-1742; FR-3646-P-01]
RIN 2577-AB43
Indian Housing Program: Proposed Amendments
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would add a new part 950 to HUD's
regulations. New part 950 would contain the Indian Housing Consolidated
regulations that are currently set forth in 24 CFR part 905. In
addition to moving the Indian Housing Consolidated regulations from
part 905 to part 950, the proposed rule would make a number of
amendments to the Indian Housing Consolidated regulations to simplify
program processes, reduce the number of regulatory requirements, and
provide more flexibility to local Tribal and Indian housing authority
officials in the administration of the Indian Housing program.
DATES: Comments due date: September 30, 1994.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Rules Docket Clerk, Office of the General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, S.W., Washington, D.C. 20410-0500. Communications
should refer to the above docket number and title. Facsimile (FAX)
comments are not acceptable. A copy of each communication submitted
will be available for public inspection and copying between 7:30 a.m.
to 5:30 p.m. weekdays at the above address.
FOR FURTHER INFORMATION CONTACT: Dominic Nessi, Director, Office of
Native American Programs, Public and Indian Housing, Room 4140,
Department of Housing and Urban Development, 451 Seventh Street SW,
Washington, DC 20410, telephone (202) 708-1015, or (202) 708-0850
(these are not toll-free numbers). Hearing- or speech-impaired persons
may use the TDD number by contacting the Federal Information Relay
Service on 1-800-877-TDDY (1-800-877-8339) (a toll-free number) or 202-
708-9300 (this is not a toll free number).
SUPPLEMENTARY INFORMATION:
I. Paperwork Burden
This proposed rule does not add to the information collection
requirements currently contained in 24 CFR part 905, and that already
have been approved and assigned OMB control numbers under the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501-3520). These numbers are shown
under the applicable sections.
II. Background
Title II of the United States Housing Act of 1937 (42 U.S.C.
1437aa) (``the Act''), as amended provides for the establishment of the
Indian Housing program. The Indian Housing program includes the Rental
program and the Mutual Help and Turnkey III Homeownership Opportunity
Programs. A number of regulatory revisions have been made to the Indian
Housing program in the past four years designed to provide IHAs with
more administrative flexibility. Most recently, a final rule for
``Indian Housing: Revised Consolidated Program Regulations'' was
published on June 24, 1992 (56 FR 28250) and became effective on
October 3, 1992. This proposed rule published today continues that
trend.
The move from part 905 to part 950 will allow HUD's Office of
Native American Programs to consolidate all Native American program
regulations in consecutive CFR parts. HUD's Community Development Block
Grant regulations that are applicable to Indian tribes and currently
codified in 24 CFR part 571 will eventually be moved to 24 CFR part
951.
III. Program Streamlining
A. Administrative Actions and Pre-Publication Comments
The primary goal in undertaking these revisions to the Indian
Housing Program regulations is to provide greater discretion and
responsibility to IHAs in carrying out their housing programs, thereby
returning them to local control. Since September 1993, the six Native
American Program Field Offices have been conducting an extensive
consultation with IHAs and Tribal officials. A significant number of
comments were submitted which constitute the basis for the revisions
contained in this proposed rule.
A consultation session to discuss these changes and to provide for
additional input was held in Washington, DC, with the National American
Indian Housing Council, eight regional IHA associations, as well as a
number of representatives from other IHAs. Additional verbal comments
were received from the Native American housing community at that time.
Each regional Indian housing association received a full set of the
comments submitted by other IHAs. Interested parties should contact
their respective regional associations for a copy of these comments.
Consistent with the principles of Executive Order 12866, HUD has
reviewed the existing Indian Housing regulations, and has proposed
modifications that are designed to make these regulations more
effective, consistent, understandable and sensible.
B. Proposed Amendments
The following describes the amendments proposed to be made to the
Indian Housing regulations. Unless otherwise indicated, the references
to regulatory sections and subparts are to those in the existing
regulations in 24 CFR part 905. Additionally, unless otherwise
indicated, the section numbers in new part 950 will remain the same as
currently set forth in part 905 (e.g., Sec. 905.105 will be renumbered
Sec. 950.150).
SUBPART A--GENERAL
905.105 Types of low income housing projects. The types of low
income housing projects contained in this section has been removed in
an effort to streamline the regulations. The definitions will be
included in the Indian Housing Management Handbook.
905.115 Applicability of civil rights. The civil rights
requirements contained in this section would be amended to include a
reference to title II of the Americans with Disabilities Act (42 U.S.C.
12131).
905.126 Establishment of IHAs by Tribal ordinance. The model
Tribal Ordinance contained in this section have been removed and will
be placed in a handbook for reference. The revised language will state,
``The form of Tribal ordinance shall be determined by the Tribe and
reviewed by the ONAP Administrator. The IHA must also demonstrate that
it has the legal capacity to develop, own and operate a public housing
project under the Act. A sample format will be provided by HUD.''
905.135 Administrative capability. Verbal, as well as written
comments, recommended that the system could be simplified to benefit
both HUD and the IHAs. No specific written comments were given.
Comments received during the Washington, D.C. consultation were mixed
as to the need for change. Based on the discussions during the meeting,
slight revisions have been made to the language in new Sec. 950.135(a)
which could provide flexibility in the future regarding determinations
of administrative capability. The appeal process contained in this
section also has been revised based on HUD's recent reorganization.
905.140 Certification of housing managers. The certification of
housing managers as a Federal requirement has been removed. HUD
encourages the Indian housing community to continue the effort to
professionalize the industry.
Subpart B--Procurement
General
In the current regulation, subparts B and C of part 905 contain
numerous references to approval by HUD for ``high risk'' IHAs. This
proposed rule provides for the assumption that procurement and
development processing will be completed by IHAs that are not
designated ``high risk''. Procedures addressing processing for ``high
risk'' IHAs are contained in Sec. 905.210. This modification has
resulted in significant editing of subparts B and C but has no other
impact on program requirements. Additionally, both subparts B and C
have been reorganized to more closely follow processing steps.
905.160 Procurement standards. This section has been reworded to
clarify that an IHA Board of Commissioners must assure that program
requirements have been satisfied before execution of contracts.
Previous wording required the Board to certify to compliance before a
contract is executed. The proposed language allows compliance with this
requirement if the IHA Board of Commissioners develops procurement
policies in accordance with this subpart and 24 CFR part 85 and reviews
compliance with these policies on a regular basis.
The requirement for submission of a bidding package or a
certification of compliance prior to the solicitation of bids/proposals
is proposed to be removed. Such certification is to be submitted after
award of contract (see new Sec. 950.260).
905.165 Indian preference requirements [Renumbered 950.175]. The
Indian Preference (IP) part has been completely re-written and
simplified. The re-written section closely follows the IP requirements
included in the Indian CDBG regulations in 24 CFR part 571. It is
anticipated that standardization of IP requirements between the Indian
Housing, CDBG and HOME programs will provide improved flexibility to
IHAs and tribes and will be simpler to understand and comply with for
both grantees and contractors/suppliers.
The proposed rule would remove HUD's involvement in the Indian
Preference complaint process. Complaint resolution, including appeals
and administrative hearings, is proposed to be contained at the IHA
level. HUD will continue to monitor IHA compliance with Indian
Preference requirements during periodic performance monitoring reviews.
This proposal is made to expedite the complaint process and to vest
full authority for compliance with Indian Preference with local
officials.
905.175 Methods of procurement [Renumbered 950.165]. The ``X''
factor method has been removed and will be addressed in the program
handbook. The section ``Methods of procurement'' was a continuation of
the IP requirements of the program. With the simplification of IP (see
new Sec. 950.160) this part has been modified to recite the provisions
of 24 CFR 85.36(d).
905.180 Training and employment requirements [Renumbered 950.175].
This section would be relocated to the Indian Preference section (noted
earlier in this preamble) and simplified to enable IHAs to develop
programs which can more adequately reflect local conditions and needs.
Subpart C--Development
905.210 Development priorities. The requirements for development
priorities were removed from U.S. Housing Act of 1937, as amended, by
the Housing and Community Development Act of 1992. Accordingly, the
requirements currently contained in existing Sec. 905.210 are not
contained in the proposed rule.
905.212 Authority for proceeding without HUD approval [Renumbered
950.210]. As part of the revisions to subparts B and C of part 905, to
remove specific requirements for ``high risk'' IHA processing, this
section had been modified to provide for HUD to require an IHA to
obtain approval for additional processing steps where it is determined
necessary. The section includes three circumstances where HUD may
impose additional requirements on an IHA during the development period.
905.215 Production methods and requirements [Retitled ``Production
methods'']. The explanations of the usual methods of development used
by IHAs have been abbreviated in the proposed rule and a clarification
has been made that an IHA can use whatever method of development it
chooses so long as the method is not counter to the requirements of 24
CFR part 85. HUD believes that this revision expands the opportunities
for IHAs to utilize new and innovative means of producing housing and
may result in lower cost housing developed in shorter time periods.
The listing of public advertisement requirements has been removed.
These requirements are more fully covered in 24 CFR part 85 and the
program handbooks.
905.220 Application procedures [Renumbered 950.225, and retitled
``Application'']. Timeframes for beginning review of applications;
initial review and request for supplemental information steps; and
other processing instructions have been removed from this section.
Processing steps such as these are more appropriately covered in the
program handbook and, if necessary, in the program NOFA.
The term ``ranked'' in existing paragraph (c) of this section has
been replaced with the correct term--``rated''. Projects are rated by
program type but ranked together to arrive at an ordered list for
funding determinations.
The proposed rule clarifies that project funds cannot be used for
expenses of another project except for comprehensive planning. This
requirement is in the current regulations but is not clear.
The limitation on planning funds of 3 percent of the program
reservation has been removed. Experience has shown that an arbitrary
percentage is impractical with the result being that many IHAs either
requesting a waiver of the 3 percent limitation or delaying payment of
incurred expenses. The proposed language specifies that IHAs must
justify the level of funding for planning regardless of the amount
requested.
The word ``cluster'' has been removed from examples contained in
the comprehensive housing plan section. The removal of this term
clarifies that comprehensive planning is not limited to cluster or
subdivision housing sites.
950.230 Project coordination [New section]. A new section has been
added to address project coordination. The new section specifies that
IHAs must plan for the development with the tribe, utility companies,
and other state or Federal agencies and schedule completion of these
activities. While IHAs have always participated in the coordination of
project planning, HUD frequently took a leadership role in the past.
With the removal of HUD from most aspects of planning coordination
relative to all projects unless otherwise specified (Sec. 905.210),
this section clarifies that the IHA is fully responsible for project
coordination. The section also requires that a project coordination
schedule be provided to HUD for monitoring purposes.
905.225 IHA development program [Renumbered 950.260]. A
clarification was made to this section to specify that the Development
Program is to be submitted in accordance with the project schedule.
This was added to emphasize that the IHA is responsible for planning
its project and implementing the plan.
905.230 Site selection criteria [Renumbered 950.235]. The
requirements contained in this section have been significantly modified
to reduced regulatory requirements. These changes include (1)
simplifying this section to state that all utilities needed for the
project will be committed before final site approval; (2) removing
requirements for topography, subsurface conditions and natural hazards,
flooding, and multi-unit and scattered sites (these items are either
addressed under other requirements of this part (flooding) or are more
appropriately addressed in the program handbook); and (3) changing
maximum site size from one acre to a local determination based on needs
of housing occupants.
905.235 Types of interest in land [Renumbered 950.240]. A
clarification was made to this section, to be consistent with the
statute, that all property included in the project must be exempt from
state or local real and personal property tax.
905.240 Appraisals [Renumbered 950.245]. This section was
simplified to require compliance with the Uniform Relocation and
Assistance Act. The part of this section which attempted to instruct
the IHA on how to perform an appraisal was removed.
Additionally, clarification was provided that an appraisal is not
required for any donated property that has a value of $1,500 or less,
regardless of the source of the donation.
The requirement for HUD approval of appraisals was removed. If a
Field Office determines that a project should be processed under the
``assisted'' method, review of appraisals can be required.
905.245 Site approval [Renumbered 950.250]. This section has been
restructured to clarify the site approval process. Revised provisions
include (1) clarification that the IHA may submit a site approval
certification with the development program in lieu of the supporting
documents; (2) clarification of the method to be followed by the IHA in
determining tentative site approval; and (3) clarification of the
environmental clearance process and how it will be conducted jointly by
HUD and the IHA; and, removal of the requirement that HUD inspect all
sites.
905.250 Design criteria [Renumbered 950.255]. This section was
modified to include (1) Model Energy Code requirements; (2) IHA Board
of Commissioners designation of applicable codes in the absence of
tribal adoption; (3) clarification that designs must be approved by
local or tribal regulatory agencies and the BIA and/or IHS, where
applicable. Additionally, the moderate housing design requirement was
moved to this section.
905.255 Total development cost standard [Renumbered 950.220 and
retitled ``Total development cost'']. HUD processing and procedure
requirements were removed from this section. These requirements are
more appropriately located in the program handbook or notices.
Wording was added to clarify that tenant training includes
homebuyers and tenants. This has been previously authorized under the
program with tenant counseling discussed here, and a parallel
authorization for homebuyers under subpart E of part 905.
Provisions have been added to allow for the escrow of insurance
premium funds to assist in closeout of development programs. Currently,
a development program must be held open until all expenses have been
incurred and paid. This change will allow for certain development
programs to be closed in a shorter period.
905.260 Construction and inspections [Renumbered 950.265]. The
submission requirements of plans, specifications, and other contract
documents have been listed to clarify when the submissions must be made
and what is to be included. Clarification also has been added that
submissions are not due to be provided to HUD until after award of a
contract by the IHA.
A new subsection has been added clarifying that the IHA has the
responsibility to coordinate construction inspections with other
agencies.
A new subsection, ``Construction completion and settlement,'' has
been added to distinguish between the construction period and the
closeout period of project development. Provisions from existing
Sec. 905.260 that address completion and settlement will be addressed
in this section. In addition the following has been modified to provide
clarification and structure to the process:
HUD's involvement in the final inspection process for standard
method IHAs has been removed. Other agencies who may be required to
attend the final inspection have been added to the participant list for
the final inspection.
This section also has been revised to clarify the procedures for
contract settlement to include an interim and final certificate of
completion, and to clarify that IHAs may make payment to contractors
without prior HUD approval.
Submittal requirements for completion documents to HUD have been
included in this section.
905.265 Warranty inspections and enforcement [Renumbered 950.275].
This section was revised to clarify that two inspections are the
minimum requirement during the warranty period; one within six months
of the start of the warranty period and one prior to the expiration of
the warranty. This is not a new requirement but the wording of this
section was modified to remove possible confusion.
905.270 Correcting deficiencies [Renumbered 950.280]. This section
was revised to clarify that modernization funds or IHA held funds may
be used to correct design or construction deficiencies. This is not a
new authority but serves to list in one place the potential funding
sources to address design or construction deficiencies (DCDs). This
section also was revised to clarify that HUD is under no obligation to
fund correction of DCDs.
Subpart D--Operation
General Changes
The subpart has been generally revised to provide for a clearer
organization of information.
Specific Changes
905.301 Admission policies. The ``broad range of incomes''
language in Sec. 950.301(a)(2)(ii) would include reference to the
statutory change in section 501 of National Affordable Housing Act
(NAHA) that now requires adherence to the requirement to attain a
tenant mix with a broad range of incomes ``to the maximum extent
feasible.''
Additionally, Sec. 950.301(a)(2)(iv) would include the increase
from 10 percent to 30 percent of non-Federal preference holders
eligible for admission to Indian housing programs as permitted under
section 501 of the NAHA.
905.335 Rent and homebuyer payment collection policy. This section
has been revised to include the phrase ``and homebuyer'' after the word
``rent'' to emphasize that collection payment policies apply to Mutual
Help (MH).
Subpart E--Mutual Help Homeownership Opportunity Program
General Changes
HUD recognized that changes were needed to the Indian program, such
as Mutual Help (MH), to assure that services provided to the Tribes and
the residents continue to be in their best interests. Accordingly, the
changes made to this subpart were directed to make the MH program more
efficient.
905.404 Program framework. In an effort to streamline the
regulation, this section has been removed. As commenters indicated, the
information outlined here is already located in subparts C and E of
part 905. This does not eliminate the necessity for an ACC, MHO
Agreement or Construction Contract, however.
905.407 Application. This section has been removed. (See new
Sec. 950.225, Application, discussed earlier in this preamble.)
905.410 HUD review of application. This section has been removed.
905.416 Selection of MH homebuyers. The provisions of
Sec. 905.301(a)(3)(vi) would be contained in Sec. 950.416(a)(3) and
revised to reflect changes made in this subpart regarding the
determination of purchase prices and the designation of a successor.
Paragraph (a)(3) of new Sec. 950.416 provides that the IHA's admission
policies for MH projects should be different from those for its rental
or Turnkey III projects. The policies for the MH program should provide
standards for determining a homebuyer's:
--Ability to provide maintenance for the unit;
-- Potential for maintaining at least the current income return--
successor to a unit at the time of an ``event.'' (``Event'' should also
be defined by the IHA in its policy); and
-- Initial purchase price and the purchase price for a subsequent
homebuyer.
Paragraph (e) of new Sec. 950.416 would be strengthened and
clarified to address the comments received. The following language has
been added to this section: ``Ownership or use of a decent, safe and
sanitary residence other than the MH home at the time of occupancy or
acquisition during occupancy would disqualify a family from the MH
program.''
905.419 MH Contribution. The requirement in existing
Sec. 905.419(3) for HUD approval has been removed in the new
Sec. 950.419(3).
905.425 Inspections, responsibility for items covered by warranty.
The language in paragraph (a) of this section has been revised in new
Sec. 950.425(a) to clarify that the homebuyer move-in inspection could
be the final inspection with the contractor, IHA, and homebuyer or a
separate inspection with the IHA and homebuyer.
Paragraph (c) of existing Sec. 905.425 has been removed since it is
contained in Sec. 950.428.
905.427 Homebuyer payments--post-1976 projects. This section has
been revised to eliminate HUD approval of the amount of monthly payment
for New MH program developments and HUD approval of the specific
percentage the IHA will use to determine the monthly payment in Mutual
Help.
905.431 Operating reserve. The language in this section that
requires HUD approval of unanticipated costs has been removed.
950.432 Operating budget submission and approval [New section]. A
new section has been added to this subpart to provide for the operating
budget submission for Mutual Help. Subpart J does not apply to the
Mutual Help program. Therefore, no guidance is given for IHAs
submitting budgets for this program.
905.434 Operating subsidy. HUD is proposing a revision to the
current method of determining subsidy for counseling and training. HUD
proposes the use of a formula for providing subsidy to IHAs in these
two areas, and seeks comment from the Indian housing community on the
specific formula to be used. The formula approach will eliminate the
need for IHAs to submit specific training and counseling budgets
annually.
Subject to appropriations, an additional category of subsidy
eligibility is also being added. Funding of up to $25 per unit per year
would be made available to an IHA with a duly elected resident
organization for resident participation activities. Of this amount, $15
per unit per year shall fund resident participation activities of the
resident organization. IHAs should refer to 905.965, Funding Resident
Participation and 905.967, Eligible TOP Activities.
905.437 Homebuyer reserves and accounts. The Voluntary Equity
Payments Account (VEPA) has been removed from this section since it was
not necessary and seldom used.
Substantial revision was made to the provision concerning reserves
in this section. Several requests were made to revise the section on
investment of equity funds to allow IHAs to utilize the homebuyer's
monthly equity payments account (MEPA), provided that a portion is
maintained as a reserve. It was suggested that a sufficient amount of
funds should be maintained in a secured investment for use if
homebuyers terminate the mutual help and occupancy agreement (MHOA) and
equity funds are to be disbursed. HUD agrees with the comment but also
believes that HUD local office approval should be a part of the process
to insure that the IHA has administrative capability prior to using the
equity funds. Proposed regulatory language is as follows:
Notwithstanding other provisions of this subpart and subject to
HUD Field Office approval, an IHA may use a portion of the
homebuyers' equity accounts for low-income housing purposes provided
that a reserve of homebuyers' MEPA is maintained. The reserve must
be at a percentage established by the IHA and approved by the HUD
Field Office.
905.440 Purchase of home. In paragraph (a) of this section, the
reference to 24 CFR 203.43(h) was removed. In new Sec. 950.440(b), the
details on determining the purchase price have been streamlined. The
proposed language is as follows: ``(1) Initial purchase price. The
initial purchase price of a home for a homebuyer shall be determined by
the IHA.''
In paragraph (b)(2) of this section, the reference to the
prevailing interest rate for VA guaranteed mortgage loans at the time
the schedule is established was removed because VA no longer sets this
amount.
Paragraph (d) of this section concerning notice of eligibility for
financing was removed. Section 905.443/950.443 already outlines the IHA
homeownership financing guidelines. The need to notify families at the
time of each reexamination is burdensome.
In paragraph (e)(7) of this section, the last sentence regarding
the relationship with the homebuyer has been removed. It is repeated in
Sec. 950.443.
In paragraph (e)(8) of this section, the following language has
been added, ``Notwithstanding the above requirements, an IHA may
complete emergency and statutorily or regulatorily required
modernization work on a unit which is paid off but not conveyed, during
the term of the repayment schedule.''
Paragraph (e)(9)(ii) has been revised to read, ``Upon repayment of
the total delinquency, the IHA may, in accordance with
Sec. 950.602(e)(2), complete non-emergency modernization work on a unit
prior to conveyance.''
905.443 IHA homeownership financing. The homeownership financing
requirements have been streamlined. Additional guidance on IHA
financing will be provided in a handbook.
905.449 Succession upon death or mental incapacity [Renamed
``Succession'']. Revisions to this section are as follows:
In paragraph (a), language has been revised as follows, ``''Event''
means the death, mental incapacity, or other conditions as determined
by the IHA, of all of the persons who have executed the MHO Agreement
as homebuyers.''
In paragraph (b), language was added as follows: ``A homebuyer may
designate a successor who, at the time of the ``event'' would assume
the status of homebuyer, provided that the successor meets the
conditions established by the IHA which shall include satisfying
program eligibility requirements.'' The designation may be made at the
time of execution of the MHO Agreement, and the homebuyer may change
the designation at any later time by written notice to the IHA.
Paragraph (c) was revised to read, ``Upon occurrence of an `event',
the person designated as the successor shall succeed to the former
homebuyer's rights and responsibilities under the MHO Agreement if the
designated successor meets the criteria established by the IHA which
shall include program eligibility requirements.''
Paragraphs (c)(i) through (iv) and (c)(2) of this section were
removed. These paragraphs address current regulatory conditions
applicable to HUD.
Paragraph (d) was revised. The clause ``or if any of the conditions
in paragraph (c) of this section are not met by the designated
successor'' has been removed.
905.453 Counseling of homebuyers. Funding of counseling has been
modified to eliminate the $500 maximum contained in the current
regulation for development. Counseling cost will now be determined by
the IHA with no minimum or maximum amount. The maximum amount will be a
factor of the IHA's needs and the availability of funds within the
development program.
Additionally, all portions of this section with the exception of
(1) the requirement to submit a counseling program to the HUD Field
Office for approval, (2) the requirement for an annual report and (3)
the termination process have been removed. The IHA will have the
flexibility to design a program to meet their needs.
Subpart F--Self-Help Development in the Mutual Help Homeownership
Opportunity Program
905.463 Basic requirements [renumbered 950.475] Section 950.463(d)
has been removed. A detailed discussion is already in the program
handbook.
Paragraph (d) of this section has been removed. Construction tasks
are more appropriately included in the program handbook.
Subpart G--Turnkey III Program
The revisions to this subpart are designed to streamline the
Turnkey III program regulations as appropriate to the present status of
the program, which is limited to the management, operation, conversion
and sale of the remaining unsold Turnkey III units only. Accordingly,
language concerning development and initial occupancy of new projects
was removed.
At the present time, there are only about 30 IHAs with active
Turnkey III programs, and the total inventory of Turnkey III homes
still in management nationwide amounts to 1,749 units. It is
anticipated that the remaining program inventory will be rapidly
reduced, and the rest of the Turnkey III homes will be sold or
converted to Mutual Help and the program completely closed out within
the next few years.
905.501 Introduction. This section was streamlined to provide only
essential elements of the Turnkey III program.
A new paragraph (5), ``Program Overview,'' was added to provide a
brief description of how the Turnkey III Program works. This paragraph
is added for the orientation of the reader who wants basic information
about the general nature of the program.
905.503 Conversions of Turnkey III units and transfer of occupants
[Retitled ``Conversion of Turnkey III developments'']. The requirements
of this section have been streamlined. The conversion procedures are
now similar to those in Secs. 950.455 and 950.458 which cover
conversions of rental and Mutual Help programs, and simplify the
process and provide consistency from one program to another.
905.505 Selection of Turnkey III homebuyers [Retitled
``Eligibility and selection of Turnkey III homebuyers'']. This section
was retitled to clarify basic provisions on homebuyer requirements.
Paragraph (a) of this section was retitled ``Applications'' to
clarify basic provisions on homebuyer requirements.
The ``Turnkey III waiting list'' provisions have been eliminated
from this section, and replaced with streamlined requirements in
paragraph (b) titled ``Selection and notification of homebuyers.''
905.507 Homebuyer Ownership Opportunity Agreements (HOOA).
Paragraph (c) of this section, ``New agreements'', has been removed
because the information is adequately covered in other sections of the
regulation.
905.511 Homebuyers' association and homeowners' association
[Retitled ``Homebuyers Association (HBA)'']. This section has been
retitled to reflect that this section only addresses information on the
HBA. Homeowners' associations are addressed in Sec. 950.512.
Additionally, the requirements in paragraph (a) of this section have
been streamlined.
950.512 Homeowners' association (HOA) [New section]. This section
has been added to discuss HOAs.
905.513 Break-even amount and application of monthly payments. The
requirements of this section have been streamlined and paragraph (d)
has been revised to insert limits on EHPA/NRMR credits in circumstances
specified.
905.515 Monthly operating expense. Paragraph (c) of this section
titled ``Provision for common property maintenance'' has been removed.
905.517 Earned Home Payments Account (EHPA). Paragraphs (c)(1)
(i), (ii), (iii) and (2) concerning exercise of option and required
amount in EHPA have been removed for the purpose of expediting sale to
subsequent homebuyers without their having to wait two years.
905.521 Operating reserve. Paragraph (b) of this section titled
``Nonroutine maintenance--common property (contribution to operating
reserve)'' has been revised to remove all references to maximum
operating reserve. Paragraph (c) of this section has been removed.
905.525 Achievement of Ownership [Retitled ``Purchase price and
methods of purchase'']. Revisions have been made to this section
regarding the terms of sale to original and subsequent homebuyers.
Based on comments received, the procedures for determining the purchase
price and the term of the purchase price schedule have been changed to
agree with the Mutual Help program.
A new subparagraph (c)(5) has been added to make clear that IHA
financing is allowed, without the need for HUD approval, just like in
the MH program (see Sec. 950.440, Purchase of Home).
905.527 Payment upon resale at profit. A new paragraph (c) titled
``Death of Homeowner'' has been added to respond to any questions
concerning the death of the homebuyer before the end of the five-year
period of the promissory note.
Subpart I--Modernization
The Comprehensive Grant Program (CGP) portion of this subpart has
been revised in an effort to simplify and streamline the CGP process.
The revised CGP regulation, which includes both the Indian housing and
public housing CGP regulations, was published as a proposed rule on
March 8, 1994 (59 FR 10876). The revisions were made in consultation
with the housing authorities and interest groups which included
representation from the National American Indian Housing Council
(NAIHC). Additional changes to the proposed version of the CGP
regulation are included in this proposed rule. Indian Housing
Authorities (IHAs) are encouraged to provide any additional comments
they may have on this program. Additionally, in this proposed part 950
rule, changes to the General Provisions and Comprehensive Improvement
Assistance Program (CIAP) sections of subpart I are also proposed to be
made.
A recommendation to remove the CIAP requirement that states that
each development for which work is proposed must be at least three
years old from the end of the initial operating period has been adopted
in the proposed revisions to the CIAP regulation.
905.602 Special requirements for TKIII and Mutual Help
developments. The requirements for TKIII homebuyers to be charged for
the cost of modernization work have been removed.
This section also has been revised to allow IHAs to modernize
Mutual Help units which are paid off but not conveyed.
Changes have been made to allow IHAs to do work necessary to meet
statutory or regulatory requirements in TKIII units which are paid off,
so long as the work is completed prior to conveyance
Comprehensive Improvement Assistance Program (CIAP)
905.618 Procedures for obtaining approval of a modernization
program. The following requirements have been removed from this
section: (1) that developments proposed for work must be at least three
years old from the date of EIOP; (2) that the submission of a fiscal
audit is an eligibility requirement; and (3) the use of a Declaration
of Trust as a requirement for Mutual Help units.
905.624 Resident and homebuyer participation. This section
consolidates homebuyer consultation requirements in one section by
removing special consultation requirements for TKIII homebuyers where
the cost of modernization work increased the amortization period of the
home.
905.633 Special requirements for section 23 leased housing bond-
financed development [Removed]. This section has been removed since
there is no longer any Section 23 housing management by IHAs.
905.635 Initiation of modernization activities. The requirement
for prior HUD approval of force account work has been removed from this
section.
Comprehensive Grant Program
Revisions have been made to make the $75 million set-aside for
emergencies and disasters available to CIAP housing authorities as well
as CGP housing authorities.
Also, changes were made to continue the rolling base concept of the
Five-Year Action Plan. The regulations now allow for full
interchangability of work items in any of the five years.
The following provisions have been removed from the CGP
requirements:
1. The annual Statement by making the level of detail for
describing work items the same for each year of the Five-Year Plan;
2. The concept of ``major changes'' has been eliminated since IHAs
would be able to move work items within any of the five years of the
plan; however, amendments to the Annual Work Statement would be
required where any work items are added which are not in the Five-Year
Action Plan;
3. The optional two-year Annual Statement;
4. The presumptive estimate by providing only a final formula
amount;
5. The requirement for an initial notice and specific notification
of democratically elected presidents of resident organizations but
public notice is required prior to the advance meeting and public
hearing;
6. The specified three week time frame for holding the advance
meeting before the public hearing;
7. The requirement for use of a Declaration of Trust for Mutual
help units;
8. The Executive Summary as a separate document; and
9. The requirement for prior approval of force account work.
The percentage limitation on management improvements from 10 to 20
percent has been increased for all IHAs. IHAs determined by the ONAP to
be ``high performing'' would have no percentage limitation on
management improvements.
The revisions proposed allow IHAs to hold the advance meeting for
residents and the public hearing earlier in the year by using the
formula amount for the current year as the planning level for the
coming year.
905.666 Eligible costs. The charge to TKIII homebuyers for the
cost of health and safety work items has been removed from this
section. Also removed from this section is the requirement for IHAs to
keep records by unit of the substantial rehabilitation of TKIII units,
and the requirement for IHAs to demonstrate that the proposed
substantial rehabilitation of vacant or non-homebuyer occupied TKIII
units will bring the units into full compliance with the homeownership
objectives of subpart G. Additionally, the proposed rule removes the
language requiring that to the ``maximum extent feasible'' IHAs should
use their management improvement funds to train residents.
Subpart J--Operating Subsidy
905.715 Computation of utilities expense level. Revisions have
been made to this section to extend, for a period not to exceed an
additional six (6) years, the existing arrangement under which an IHA
may share equally with HUD any cost reductions due to the differences
between projected and actual utility rates in the first year reductions
occur. Similar changes were made in Sec. 905/950.730, discussed below.
950.720 Other costs. Revisions were made to paragraph (b)(2) of
this section. The revisions include removing the need for a waiver
before operating subsidy may be paid for certain units approved for
nondwelling use to promote economic self-sufficiency and anti-drug
activities.
905.730 Adjustments. The 60 day deadline in this section for
requesting a revision of an IHA's Allowable Expense Level in
950.730(f)(3)) has been removed.
905.740 Operating reserves. The maximum operating reserve
requirement has been removed from this section. IHAs will be required
to maintain sufficient working capital for future nonroutine
maintenance requirements, insurance premiums and unanticipated project
requirements.
905.772 Operating subsidy eligibility for projects owned by IHAs
in Alaska [Renumbered 950.774]. In the proposed rule, the provisions of
this section are in Sec. 950.774. Additionally, the provisions of
subpart N have been incorporated into subpart J to address Alaska's non
PFS status and the need for them to comply with budget submission
requirements.
950.772 Financial management systems, monitoring and reporting. In
the existing regulations, these provisions are found in Sec. 905.950 of
subpart N. In the proposed rule, these provisions are in Sec. 950.772
and apply to all programs.
Subpart K--Energy Audits, Energy Conservation Measures and Utility
Allowances General Changes
In the majority of sections in this subpart, the examples of
methodologies of performing energy audits have removed. These examples
will be placed, more appropriately, in the Indian Housing Management
Handbook.
Descriptions of specific energy saving items, such as ceiling
insulation and timers for hot water heaters, have been removed from
this subpart and also will be addressed in the Handbook.
905.807 Energy conservation measures [Removed].This section will
be moved in its entirety to the Handbook.
905.810 Order of funding. Paragraphs (b) and (c) of this section
have been removed, and their provisions will be addressed in the
Handbook.
905.815 Energy conservation equipment (renamed Energy conservation
equipment and practices). The list of energy conservation equipment has
been removed and will be placed in the Handbook.
905.822 Compliance schedule, and 905.848 Compliance schedule. Both
sections have been revised to eliminate dates that have passed, and
therefore are no longer applicable.
905.842 Benefit/cost analysis. The methodology for performing a
benefit/cost analysis has been removed and will be addressed in the
Handbook.
905.870 Standards for allowances for utilities. This section has
been edited to remove duplicative language.
Subpart L--Operation of Projects After Expiration of Initial ACC
Term
No comments were received on this subpart from IHAs and Tribal
officials, and no changes are proposed. Therefore, this subpart is not
being published for comment.
Subpart M--Disposition or Demolition of Projects
General Changes
This subpart has been streamlined by removing sections and
subsections that are more appropriate in a handbook (those regulatory
provisions that merely provide examples). The removed provisions will
be incorporated in the Indian Housing Management Handbook.
Specific Changes
905.925 Relocation of displaced tenants [Removed]. This section
was removed by a technical amendment and replaced by Sec. 950.117.
950.925 Resident organization opportunity to purchase [New
section]. A new Sec. 950.925 which implements the new statutory
requirements on this subject contained in the Federal Register of
October 6, 1992 (57 FR 46074), has been added.
905.933 Use of Proceeds. Paragraph (a)(2) of this section titled
``Proceeds of a Disposition'' was revised to reflect the statutory
requirement for application of a proportional ratio in scattered site
housing when satisfying outstanding debt obligations of a project.
950.937 Reports and records [Removed]. This section was removed
and the subject matter of this section will be addressed in the
Handbook.
Subpart O--Resident Participation and Opportunities
General Changes
The proposed rule on Resident Participation and Opportunities in
Indian Housing, 24 CFR 905, subpart O, was published in the Federal
Register on April 19, 1994 (59 FR 18666). Comments were due May 19,
1994. HUD anticipates publishing a final rule on subpart O that takes
into consideration public comment in the summer of 1994. Because the
proposed rule on subpart O was recently published, this proposed rule
does not republish subpart O.
Subpart P--Section 5(h) Homeownership Program
HUD is currently preparing the final rule on section 5(h) for
publication. The interim rule was published September 20, 1991 (56 FR
47866), made effective October 21, 1991, and is codified at 24 CFR part
906, and part 905, subpart P. The final rule makes the following
changes:
1. It streamlines the rules for the Section 5(h) Program;
2. It allows more flexibility in the regulatory requirements of the
Section 5(h) Program; and
3. It requires only what is statutory according to the United
States Housing Act of 1937 and provides additional technical guidance
will be provided in a forthcoming handbook.
The major change to be made in the final rule is the clarification
that the section 5(h) program applies to the Mutual Help and Turnkey
III programs.
No comments were received from the Native American community during
the comment period of the interim rule, or during the recent
consultation with IHAs and Tribal officials. Accordingly, subpart P is
not republished in this proposed rule for further comment.
Subpart R--Indian Housing Family Self-Sufficiency (FSS) Program
HUD proposes to make very few changes to the regulation
implementing the FSS program because the current regulation reflects
the statutory provisions of section 23 of the U.S. Housing Act of 1937
(42 U.S.C. 1437u). However, the following minor changes have been made
to streamline the policies and procedures applicable to the FSS program
under HUD's Indian housing program.
905.3012 Program Coordinating Committee (PCC). In paragraph (b)(1)
of this section, the heading ``Required Membership'' has been removed
as the statutory provision does not contain language that directs IHAs
to have a required membership. In this paragraph, the word ``must'' in
the phrase ``The PCC must'' has been removed and the word ``may'' has
been substituted. The U.S. Housing Act of 1937 does not require IHA
representatives or residents of the IHA to be members of the PCC.
Paragraph (b)(2) states that ``the PCC should . . .''. The ``should
has been removed and word ``may'' substituted for the same reasons
stated above.
IV. Other Matters
Finding of No Significant 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 that
implement section 102(2)(C) of the National Environmental Policy Act of
1969 (42 U.S.C. 4332). The Finding of No Significant Impact is
available for public inspection and copying during regular business
hours (7:30 a.m. to 5:00 p.m. weekdays) in the Office of the Rules
Docket Clerk, Room 10272, 451 Seventh Street, S.W., Washington, D.C.
20410.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this proposed rule before publication and
by approving it certifies that this proposed rule does not have a
significant economic impact on a substantial number of small entities.
The proposed rule would make a number of amendments to the Indian
Housing Consolidated regulations to simplify program processes, reduce
the number of regulatory requirements, and to provide more flexibility
to local Tribal and Indian housing authority officials in the
administration of the Indian Housing program.
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 proposed 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.
As a result, the proposed 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 proposed rule does
not have potential for significant impact on family formation,
maintenance, and general well-being, and, thus, is not subject to
review under the order. No significant change in existing HUD policies
or programs will result from promulgation of this rule, as those
policies and programs relate to family concerns.
Regulatory Agenda
This proposed rule was listed as sequence number 1681 in the
Department's Semiannual Regulatory Agenda published on April 25, 1994
(59 FR 20424, 20468) in accordance with Executive Order 12866 and the
Regulatory Flexibility Act.
The Catalog of Domestic Assistance numbers for the programs
affected by this proposed rule are 14.146, 14.147, 14.850, 14.851,
14.852, and 15.141.
List of Subjects in 24 CFR Part 950
Aged, Grant programs--housing and community development, Grant
programs--Indians, Disability, Homeownership, Indians, Low and moderate
income housing, Public housing, Reporting and recordkeeping
requirements.
Accordingly, and under the authority of 42 U.S.C. 3535(d), title 24
of the Code of Federal Regulations would be amended by:
1. Redesignating part 905 as part 950;
2. Revising the table of contents for the newly designated part
950;
3. Revising subparts A--G, I, J, K, and M;
4. Reserving subpart Q; and
5. Adding a new subpart R, consisting of Secs. 950.3001 through
950.3030, as follows:
PART 950--INDIAN HOUSING PROGRAMS
Subpart A--General
Sec.
950.101 Applicability and scope.
950.102 Definitions.
950.110 Assistance from Indian Health Service and Bureau of Indian
Affairs.
950.115 Applicability of civil rights requirements.
950.117 Displacement, relocation, and acquisition.
950.120 Compliance with other Federal requirements.
950.125 Establishment of IHAs pursuant to State law.
950.126 Establishment of IHAs by Tribal ordinance.
950.130 IHA Commissioners who are tenants or homebuyers.
950.135 Administrative capability.
Subpart B--Procurement
950.160 Procurement standards.
950.165 Methods of procurement.
950.170 Other requirements applicable to development contracts.
950.172 Wage rates.
950.175 Indian preference requirements.
950.190 Insurance.
Subpart C--Development
950.200 Roles and responsibilities of Federal agencies.
950.205 Allocation.
950.210 Authority for proceeding without HUD approval.
950.215 Production methods.
950.220 Total development cost.
950.225 Application.
950.230 Project coordination.
950.235 Site selection criteria.
950.240 Types of interest in land.
950.245 Appraisals.
950.250 Site approval.
950.255 Design criteria.
950.260 IHA development program.
950.265 Construction and inspections.
950.270 Construction completion and settlement.
950.275 Warranty inspections and enforcement.
950.280 Correcting deficiencies.
950.285 Fiscal closeout.
Subpart D--Operation
950.301 Admission policies.
950.305 Federal selection preferences.
950.310 [Reserved].
950.315 Initial determination, verification, and reexamination of
family income and composition.
950.320 Determination of rents and homebuyer payments.
950.325 Total tenant payment--Rental and Turnkey III programs.
950.335 Rent and homebuyer payment collection policy.
950.340 Grievance procedures and leases.
950.345 Maintenance and improvements.
950.346 Fire safety.
950.360 IHA employment practices.
Subpart E--Mutual Help Homeownership Opportunity Program
950.401 Scope and applicability.
950.413 Special provisions for development of an MH project.
950.416 Selection of MH homebuyers.
950.419 MH contribution.
950.422 Commencement of occupancy.
950.425 Inspections, responsibility for items covered by warranty.
950.426 Homebuyer payments--pre-1976 projects.
950.427 Homebuyer payments--post-1976 projects.
950.428 Maintenance, utilities, and use of home.
950.431 Operating reserve.
950.432 Operating budget submission and approval.
950.434 Operating subsidy.
950.437 Homebuyer reserves and accounts.
950.440 Purchase of home.
950.443 IHA homeownership financing.
950.446 Termination of MHO agreement.
950.449 Succession.
950.452 Miscellaneous.
950.453 Counseling of homebuyers.
950.455 Conversion of rental projects.
950.458 Conversion of Mutual Help projects to Rental Program.
Subpart F--Self-Help Development in the Mutual Help Homeownership
Program
950.470 Purpose and applicability.
950.475 Basic requirements.
950.480 Self-Help agreement.
950.485 Application.
950.490 Development program.
950.495 Default of self-help agreement.
Subpart G--Turnkey III Program
950.501 Introduction.
950.503 Conversion of Turnkey III developments.
950.505 Eligibility and selection of Turnkey III homebuyers.
950.507 Homebuyer Ownership Opportunity Agreements (HOOA).
950.509 Responsibilities of homebuyer.
950.511 Homebuyers' association (HBA).
950.512 Homeowners' association (HOA).
950.513 Breakeven amount and application of monthly payments.
950.515 Monthly operating expense.
950.517 Earned Home Payments Account (EHPA).
950.519 Nonroutine Maintenance Reserve (NRMR).
950.521 Operating reserve.
950.523 Operating subsidy.
950.525 Purchase price and methods of purchase.
950.527 Payment upon resale at profit.
950.529 Termination of Homebuyer Ownership Opportunity Agreement.
Subpart H--Lead-Based Paint Poisoning Prevention
950.551 Purpose and applicability.
950.553 Testing and abatement applicable to development.
950.555 Testing and abatement applicable to modernization.
950.560 Notification.
950.565 Maintenance obligation; defective paint surfaces.
950.570 Procedures involving EBLs.
950.575 Compliance with Tribal, State and local laws.
950.580 Monitoring and enforcement.
Subpart I--Modernization Program
General Provisions
950.600 Purpose and applicability.
950.601 Allocation of funds under Section 14.
950.602 Special requirements for Turnkey III and Mutual Help
developments.
950.603 Modernization and energy conservation standards.
Comprehensive Improvement Assistance Program (for IHAs That Own or
Operate Fewer Than 250 Indian Housing Units
950.609 Purpose.
950.615 Eligible costs.
950.618 Procedures for obtaining approval of a modernization
program.
950.624 Resident and homebuyer participation.
950.635 Initiation of modernization activities.
950.639 Fund requisitions.
950.642 Contracting requirements.
950.645 On-site inspections.
950.648 Budget revisions.
950.651 Progress reports.
950.654 HUD review of IHA performance.
950.657 Fiscal closeout.
Comprehensive Grant Program (for IHAs That Own or Operate 250 or More
Indian Housing Units
950.660 Purpose.
950.666 Eligible costs.
950.667 Reserve for emergencies and disasters.
950.669 Allocation of assistance.
950.672 Comprehensive Plan (including Five-Year Action Plan).
950.675 HUD review and approval of Comprehensive Plan (including
action plan).
950.678 Annual Submission of activities and expenditures.
950.681 Conduct of modernization activities.
950.684 IHA Performance and Evaluation Report.
950.687 HUD review of IHA performance.
Subpart J--Operating Subsidy
950.701 Purpose and applicability.
950.705 Determination of amount of operating subsidy under PFS.
950.710 Computation of allowable expense level.
950.715 Computation of utilities expense level.
950.720 Other costs.
950.725 Projected operating income level.
950.730 Adjustments.
950.735 Transition funding for excessive high-cost IHAs.
950.740 Operating reserves.
950.745 Operating budget submission and approval.
950.750 Payment procedure for operating subsidy under PFS.
950.755 Payments of operating subsidy conditioned upon
reexamination of income of families in occupancy.
950.760 Determining actual occupancy percentage.
950.770 Comprehensive Occupancy Plan requirements.
950.772 Financial management systems, monitoring and reporting.
950.774 Operating subsidy eligibility for projects owned by IHAs in
Alaska.
Subpart K--Energy Audits, Energy Conservation Measures and Utility
Allowances
950.801 Purpose and applicability.
Energy Audits and Energy Conservation Measures
950.805 Requirements for energy audits.
950.810 Order of funding.
950.812 Funding.
950.815 Energy conservation equipment and practices.
950.822 Compliance schedule.
950.825 Energy performance contracts.
Individual Metering of Utilities
950.840 Individually metered utilities.
950.842 Benefit/cost analysis.
950.844 Funding.
950.845 Order of conversion.
950.846 Actions affecting residents.
950.849 Waivers for similar projects.
950.850 Reevaluations of mastermeter systems.
Resident Utility Allowances
950.860 Applicability.
950.865 Establishment of utility allowances by IHAs.
950.867 Categories for establishment of allowances.
950.869 Period for which allowances are established.
950.870 Standards for allowances for utilities.
950.872 Surcharges for excess consumption of IHA-furnished
utilities.
950.874 Review and revision of allowances.
950.876 Individual relief.
Subpart L--Operation of Projects After Expiration of Initial ACC Term
950.901 Purpose and applicability.
950.903 Continuing eligibility for operating subsidy; ACC
extension.
950.905 ACC extension in absence of current operating subsidy.
950.907 HUD approval of disposition or demolition.
Subpart M--Disposition or Demolition of Projects
950.921 Purpose and applicability.
950.923 General requirements for HUD approval of disposition or
demolition.
950.925 Resident organization opportunity to purchase.
950.927 Specific criteria for HUD approval of disposition requests.
950.928 Specific criteria for HUD approval of demolition requests.
950.931 IHA application for HUD approval.
950.933 Use of proceeds.
950.935 Replacement housing plan.
Subpart N--Miscellaneous
950.950 Operating subsidy eligibility for projects owned by IHAs in
Alaska.
Subpart O--Resident Management and Participation
950.960 Purpose.
950.961 Applicablity and scope.
950.962 Definitions.
950.963 HUD's role in activities under this subpart.
950.964 Resident participation requirements.
950.965 Resident managment requirements.
950.966 Continued IHA responsibility to HUD.
950.967 Management specialist.
950.969 Modernization assistance.
950.970 Operating subsidy, preparation of operating budget,
operating reserves and retention of excess revenues.
950.971 Waiver of HUD requirements.
950.972 Audit and administrative requirements.
950.973 Technical assistance.
Subpart P--Section 5(h) Homeownership Program
950.1001 Purpose.
950.1002 Applicability.
950.1003 General authority for sale.
950.1004 Fundamental criteria for HUD approval.
950.1005 Resident consultation and involvement.
950.1006 Property that may be sold.
950.1007 Methods of sale and ownership.
950.1008 Purchase eligibility and selection.
950.1009 Counseling, training, and technical assistance.
950.1010 Nonpurchasing residents.
950.1011 Maintenance reserve.
950.1012 Purchase prices and financing.
950.1013 Protection against fraud and abuse.
950.1014 Limitation of resale profit.
950.1015 Use of sale proceeds.
950.1016 Replacement housing.
950.1017 Records, reports, and audits.
950.1018 Submission and review of homeownership plan.
950.1019 HUD approval and IHA-HUD implementing agreement.
950.1020 Content of homeownership plan.
950.1021 Supporting documentation.
Subpart Q--[Reserved]
Subpart R--Family Self Sufficiency
950.3001 Purpose, scope and applicability.
950.3002 Program objectives.
950.3003 Definitions.
950.3004 Basic requirements of the FSS program.
950.3011 Action Plan.
950.3012 Program Coordinating Committee (PCC).
950.3013 FSS family selection procedures.
950.3014 On-site facilities.
950.3020 Program implementation.
950.3021 Administrative fees.
950.3022 Contract of participation.
950.3024 Total tenant payment and increases in family income.
950.3025 FSS account.
950.3030 Reporting.
Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa-1437ee and
3535(d).
Subpart A--General
Sec. 950.101 Applicability and scope.
(a) General. (1) Under title II of the United States Housing Act of
1937, as added by the Indian Housing Act of 1988 (42 U.S.C. 1437aa, et
seq.), the U.S. Department of Housing and Urban Development (HUD)
provides financial and technical assistance to Indian Housing
Authorities (IHAs), for the development and operation of low income
housing projects in Indian areas. This part is applicable to such
projects developed or operated by an IHA in an Indian area, as defined
in Sec. 950.102.
(2) If assistance under this part is not available to a low income
family because the family desires housing in an area within which no
IHA is authorized to provide housing, or if for any other reason a
family desires housing assistance other than under this part, a family
may seek housing assistance under other HUD programs: (See 24 CFR part
203, chapter VIII of this title, as well as the remainder of chapter IX
of this title.)
(b) Other HUD regulations and requirements. The provisions of this
part are a complete statement of HUD regulations affecting the
development and operation of low income housing by IHAs except as
supplemented by parts in other chapters of this title, which are
referenced in this part.
Sec. 950.102 Definitions.
ACC expiration date. The last day of the term during which a
particular Indian housing project is subject to all or any of the
provisions of the ACC.
Act. The United States Housing Act of 1937 (42 U.S.C. 1437-1440).
Action plan. A plan of the actions to be funded by an IHA over a
period of five years (including an IHA's proposed allocation of its
modernization funds to a reserve established under Sec. 950.666(a)(3))
to make the necessary physical and management improvements identified
in the IHA's comprehensive plan under subpart I of this part. The plan
shall be based upon HUD's and the IHA's best estimates of the funding
reasonably expected to become available over the next five-year period.
The action plan is updated annually to reflect a rolling five-year
base.
Adjusted income. Annual income less the following allowances,
determined in accordance with HUD instructions:
(1) $480 for each dependent;
(2) $400 for any elderly family;
(3) For any family that is not an elderly family but has a
handicapped or disabled member other than the head of household or
spouse, handicapped assistance expenses in excess of three percent of
annual income, but this allowance may not exceed the employment income
received by family members who are 18 years of age or older as a result
of the assistance to the handicapped or disabled person;
(4) For any elderly family--
(i) That has no handicapped assistance expenses (as defined in this
section), an allowance for medical expenses (as defined in this
section) equal to the amount by which the medical expenses exceed three
percent of annual income;
(ii) That has handicapped assistance expenses greater than or equal
to three percent of annual income, an allowance for handicapped
assistance expenses computed in accordance with paragraph (3) of this
definition, plus an allowance for medical expenses that is equal to the
family's medical expenses;
(iii) That has handicapped assistance expenses that are less than
three percent of annual income, an allowance for combined handicapped
assistance expenses and medical expenses that is equal to the amount by
which the sum of these expenses exceeds three percent of annual income;
and
(5) Child care expenses, as defined in this section; and
(6) Excessive travel expenses, not to exceed $25 per family per
week, for employment- or education-related travel.
Administration charge. In Mutual Help projects, the amount budgeted
per-unit per-month for operating expense, exclusive of the cost of HUD-
approved expenditures for which operating subsidy is being provided in
accordance with Sec. 950.434 (see Sec. 950.427(c)).
Administrative capability assessment (ACA). An annual evaluation of
the IHA's administrative capability to administer programs in
compliance with the Act and all applicable HUD regulations, contracts,
HUD handbooks, and other applicable requirements (see Sec. 950.135).
Allowable expense level. In rental projects, the per-unit per-month
dollar amount of expenses (excluding utilities, and expenses allowed
under Sec. 950.720) computed in accordance with Sec. 950.710, which is
used to compute the amount of operating subsidy.
Allowable utilities consumption level (AUCL). In rental projects,
the amount of utilities expected to be consumed per-unit per-month by
the IHA during the requested budget year, which is equal to the average
amount consumed per-unit per-month during the rolling base period.
After the end of the requested budget year, the AUCL of the utility
(ies) used for space heating will be adjusted by a change factor, which
is defined in this section.
Annual contributions contract (ACC). A contract under the Act
between HUD and the IHA containing the terms and conditions under which
HUD assists the IHA in providing decent, safe, and sanitary housing for
low income families. The ACC must be in a form prescribed by HUD under
which HUD agrees to provide assistance in the development,
modernization and/or operation of a low income housing project under
the Act, and the IHA agrees to develop, modernize and operate the
project in compliance with all provisions of the ACC and the Act, and
all HUD regulations and implementing requirements and procedures.
Annual income. Annual income is the anticipated total income from
all sources received by the family head and spouse (even if temporarily
absent) and by each additional member of the family, including all net
income derived from assets, for the 12-month period following the
effective date of the initial determination or reexamination of income,
exclusive of certain types of income as provided in paragraph (2) of
this definition.
(1) Annual income includes, but is not limited to:
(i) The full amount, before any payroll deductions, of wages and
salaries, overtime pay, commissions, fees, tips and bonuses, and other
compensation for personal services;
(ii) The net income from operation of a business or profession.
Expenditures for business expansion or amortization of capital
indebtedness shall not be used as deductions in determining net income.
An allowance for depreciation of assets used in a business or
profession may be deducted, based on straight line depreciation, as
provided in Internal Revenue Service regulations. Any withdrawal of
cash or assets from the operation of a business or profession will be
included in income, except to the extent the withdrawal is
reimbursement of cash or assets invested in the operation by the
family;
(iii) Interest, dividends, and other net income of any kind from
real or personal property. Expenditures for amortization of capital
indebtedness shall not be used as deductions in determining net income.
An allowance for depreciation is permitted only as authorized in
paragraph (1)(ii) of this definition. Any withdrawal of cash or assets
from an investment will be included in income, except to the extent the
withdrawal is reimbursement of cash or assets invested by the family.
Where the family has net family assets in excess of $5,000, annual
income shall include the greater of the actual income derived from all
net family assets or a percentage of the value of such assets based on
the current passbook savings rate as determined by HUD;
(iv) The full amount of periodic payments received from social
security, annuities, insurance policies, retirement funds, pensions,
disability or death benefits and other similar types of periodic
receipts, including a lump-sum payment for the delayed start of a
periodic payment;
(v) Payments in lieu of earnings, such as unemployment and
disability compensation, worker's compensation and severance pay (but
see paragraph (2) (iii) of this definition);
(vi) Welfare assistance. If the welfare assistance payment includes
an amount specifically designated for shelter and utilities that is
subject to adjustment by the welfare assistance agency in accordance
with the actual cost of shelter and utilities, the amount of welfare
assistance income to be included as income shall consist of:
(A) The amount of the allowance or grant exclusive of the amount
specifically designated for shelter or utilities, plus
(B) The maximum amount that the welfare assistance agency could, in
fact, allow the family for shelter and utilities. If the family's
welfare assistance is ratably reduced from the standard of need by
applying a percentage, the amount calculated under paragraph (1)(vi)(B)
of this definition shall be the amount resulting from one application
of the percentage;
(vii) Periodic and determinable allowances, such as alimony and
child support payments, and regular contributions or gifts received
from persons not residing in the dwelling; and
(viii) All regular pay, special pay and allowances of a member of
the Armed Forces (but see paragraph (2)(vii) of this section).
(2) Annual income does not include the following:
(i) Income from employment of children (including foster children)
under the age of 18 years;
(ii) Payments received for the care of foster children;
(iii) Lump-sum additions to family assets, such as inheritances,
insurance payments (including payments under health and accident
insurance and worker's compensation), capital gains and settlement for
personal or property losses (but see paragraph (1)(v) of this
definition);
(iv) Amounts received by the family that are specifically for, or
in reimbursement of, the cost of medical expenses for any family
member;
(v) Income of a live-in aide;
(vi) Amounts of educational scholarships paid directly to the
student or to the educational institution, and amounts paid by the
Government to a veteran, for use in meeting the costs of tuition, fees,
books, equipment, materials, supplies, transportation and miscellaneous
personal expenses of the student. Any amount of such scholarship or
payment to a veteran that is made available for subsistence is to be
included in income;
(vii) The special pay to a family member serving in the Armed
Forces who is exposed to hostile fire;
(viii) (A) Amounts received under training programs funded by HUD;
(B) Amounts received by a disabled person that are disregarded for
a limited time for purposes of Supplemental Security Income eligibility
and benefits because they are set aside for use under a Plan for
Achieving Self-Support (PASS); or
(C) Amounts received by a participant in other publicly assisted
programs which are specifically for or in reimbursement of out-of-
pocket expenses incurred (special equipment, clothing, transportation,
child care, etc.) and which are made solely to allow participation in a
specific program;
(ix) Temporary, nonrecurring or sporadic income (including gifts);
(x) For all initial determinations and reexaminations of income
carried out on or after April 23, 1993, reparation payments paid by a
foreign government pursuant to claims filed under the laws of that
government by persons who were persecuted during the Nazi era; or
(xi) Amounts specifically excluded by any other Federal statute
from consideration as income for purposes of determining eligibility or
benefits under a category of assistance programs that includes
assistance under the United States Housing Act of 1937. A notice is
published from time to time in the Federal Register and distributed to
IHAs identifying the benefits that qualify for this exclusion. Updates
will be published and distributed when necessary.
(3) If it is not feasible to anticipate a level of income over a
12-month period, the income anticipated for a shorter period may be
annualized subject to a redetermination at the end of the shorter
period.
(4) Any family receiving the reparation payments referred to in
paragraph (2)(x) of this definition of Annual Income that has been
requested to repay assistance under this part as a result of receipt of
such payments shall not be required to make further repayments on or
after April 23, 1993.
Applicable surface. All intact and nonintact interior and exterior
painted surfaces of a residential structure.
Assisted dwelling unit. A dwelling unit assisted under the programs
covered by this part 950.
Base year. The IHA's fiscal year immediately preceding its first
fiscal year under PFS.
Base-year expense level. The expense level (excluding utilities,
audits, and certain other items) for the year, computed as provided in
Sec. 950.710(a)
Benefit/cost analysis. For purposes of subpart K of this part, a
direct comparison of the present worth of any savings generated by a
given system during the expected useful life of the system or the
estimated remaining life of the project, whichever is the shortest
number of years, to the cost of the change.
BIA. The Bureau of Indian Affairs in the Department of the
Interior.
Change factor. The ratio of the affected IHA fiscal year heating
degree days (HDD) divided by the average annual HDD of the rolling base
period. (Affected year HDD divided by rolling base period average HDD).
Checkmeter. A device for measuring utility consumption of each
individual dwelling unit where the utility service is supplied through
a mastermeter system. The IHA pays the utility supplier on the basis of
the mastermeter readings and uses the checkmeters to determine whether
and to what extent utility consumption of each dwelling unit is in
excess of the allowance for IHA-furnished utilities, established in
accordance with subpart K of this part.
Chewable surface. All chewable protruding painted surfaces up to
five feet from the floor or ground, which are readily accessible to
children under seven years of age, e.g., protruding corners,
windowsills and frames, doors and frames, and other protruding
woodwork.
Chief executive officer (CEO). The CEO of a unit of general local
government means the elected official or the legally designated
official who has the primary responsibility for the conduct of that
entity's governmental affairs. Examples of the CEO of a unit of general
local government are: the elected mayor of a municipality; the elected
county executive of a county; the chairperson of a county commission or
board in a county that has no elected county executive; or the official
designated pursuant to law by the governing body of a unit of general
local government (e.g., Tribal administrator). The CEO for an Indian
Tribe is the Tribal governing official.
Child care expenses. Amounts anticipated to be paid by the family
for the care of children under 13 years of age during the period for
which annual income is computed, but only where such care is necessary
to enable a family member to be gainfully employed or to further his or
her education only to the extent such amounts are not reimbursed. The
amount deducted shall reflect reasonable charges for child care, and,
in the case of child care necessary to permit employment, the amount
deducted shall not exceed the amount of income received from such
employment.
Common property. The non-dwelling structures and equipment, common
areas, community facilities, and in some cases certain component parts
of dwelling structures, which are contained in the development. It also
may include common property as defined in a cooperative form of
ownership, as determined by the IHA.
Comprehensive grant number. A grant number that is unique to each
work statement (under subpart I of this part) covering the improvements
to one or more existing Indian housing projects.
Comprehensive Plan. A plan prepared by an IHA, and approved by HUD,
under the Comprehensive Grant Program setting forth all of the physical
and management improvement needs of the IHA and its Indian housing
developments, indicating the relative urgency of needs, and which
includes the IHA's action plan, cost estimates, and required local
government and IHA certifications. The Comprehensive Plan may be
revised, as necessary, but must be revised at least every sixth year.
(See subpart I of this part.)
Construction contract. The contract for construction in the case of
the conventional method, or the contract of sale in the case of the
Turnkey method.
Cooperation agreement. An agreement between an IHA and a local
governing (taxing) body that assures exemption from real and personal
property taxes and provides for payments in lieu of taxes by the IHA;
and that provides for cooperation with respect to the development and
operation of low income housing owned by the IHA.
Cost effective. As used in subpart K of this part, an energy
conservation measure with a pay-back period of fifteen years or shorter
shall be considered cost effective.
Current budget year. The IHA fiscal year in which the IHA is
operating.
Defective lead-based paint surface. Paint on applicable surfaces
having a lead content of greater than or equal to 1 mg/cm2, that is
cracking, scaling, chipping, peeling or loose.
Defective paint surface. Paint on applicable surfaces that is
cracking, scaling, chipping, peeling or loose.
Demolition. The razing in whole, or in part, of one or more
permanent buildings of an Indian housing project.
Dependent. A member of the family household (excluding foster
children) other than the family head or spouse, who is under 18 years
of age or is a disabled person or handicapped person, or is a full-time
student.
Deprogramming. Removal from the IHA's inventory under the ACC,
pursuant to the IHA's formal request and HUD's approval, of a dwelling
unit no longer used for dwelling purposes or a nondwelling structure or
a unit used for nondwelling purposes that the IHA has determined will
no longer be used for IHA purposes.
Development. Any or all undertakings necessary for planning, land
acquisition, demolition, construction, or equipment, in connection with
a low income housing project.
Disabled person. A person who is under a disability as defined in
section 223 of the Social Security Act (42 U.S.C. 423), or who has a
developmental disability as defined in section 102(7) of the
Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C.
6001(7)).
Displaced person. A person displaced by governmental action, or a
person whose dwelling has been extensively damaged or destroyed as a
result of a disaster declared or otherwise formally recognized under
Federal disaster relief laws.
Disposition. The conveyance or other transfer by the IHA, by sale
or other transaction, of any interest in the real estate of an Indian
housing project, excluding transfers of property described in
Sec. 950.921(b)(1)(i) through (vii).
Earned home payments account (EHPA). In the Turnkey III program
(subpart G of this part), this account is established and maintained
pursuant to Sec. 950.517 by the IHA based on a portion of the
homebuyer's required monthly payment. The EHPA should equal the IHA's
estimate of the monthly cost for routine maintenance of the home.
Elderly family. A family whose head or spouse (or sole member) is
an elderly, disabled, or handicapped person, as defined in this
section. It may include two or more elderly, disabled or handicapped
persons living together, or one or more of these persons living with
one or more live-in aides, as defined in this section.
Elderly person. A person who is at least 62 years of age.
Elevated blood lead level or EBL. Excessive absorption of lead,
that is, a confirmed concentration of lead in whole blood of 25 ug/dl
(micrograms of lead per deciliter of whole blood) or greater.
Emergency Modernization (CIAP). A type of modernization program for
a development that is limited to physical work items of an emergency
nature, posing an immediate threat to the health or safety of residents
or related to fire safety, which must be corrected within one year of
CIAP funding approval.
Emergency work. Physical work items of an emergency nature, posing
an immediate threat to the health or safety of residents, which must be
completed within one year of funding. Under the Comprehensive Grant
program, management improvements are not eligible as emergency work
and, therefore, must be covered by the Comprehensive Plan (including
the action plan), before the IHA may carry them out. See subpart I of
this part.
Energy audit. A process carried out in accordance with subpart K of
this part, which identifies and specifies the energy and cost savings
that are estimated to result from installing or accomplishing an energy
conservation measure.
Energy conservation measures (ECMs). Physical improvements or
modifications that, if undertaken for a building or facility, or its
equipment, are likely to reduce the cost of energy in an amount
sufficient to recover the installation costs in a period no longer than
the useful life of the measure. (See subpart K of this part.)
Family. Family includes but is not limited to:
(1) An elderly family or single person as defined in this part;
(2) The remaining member of a tenant family; and
(3) A displaced person.
Family project. Any project assisted under section 9 of the Act (42
U.S.C. 1437g) that is not an elderly project. For this purpose, an
elderly project is one that was designated for occupancy by the elderly
at its inception (and has retained that character) or, although not so
designated, for which the IHA gives preference in tenant selection
(with HUD approval) for all units in the project to elderly families. A
building within a mixed-use project that meets these qualifications
shall, for purposes of this definition, be excluded from any family
project, as shall zero bedroom units.
Federally recognized tribe. Any Indian tribe, band, nation or other
organized group or community, including any Alaska Native village or
regional corporation or village as defined in or established pursuant
to the Alaska Native Claims Settlement Act, which is recognized as
eligible for the special programs and services provided by the United
States to Indians because of their status as Indians.
FFY. Federal Fiscal Year (starting with October 1, and ending with
September 30, and designated by the calendar year in which it ends).
Force account labor. Labor directly employed by the IHA on either a
permanent or a temporary basis.
Formula. The formula prescribed by HUD to be used in the
Performance Funding System to estimate the cost of operating an average
unit in an IHA's inventory. (See subpart J of this part.)
Formula expense level. The per-unit per-month dollar amount of
expenses (excluding utilities and audits) computed under the formula,
in accordance with Sec. 950.710.
Full-time student. A person who is carrying a subject load that is
considered full-time for day students under the standards and practices
of the educational institution attended. An educational institution
includes a vocational school with a diploma or certificate program, as
well as an institution offering a college degree.
Handicapped assistance expenses. Reasonable expenses that are
anticipated, during the period for which annual income is computed, for
attendant care and auxiliary apparatus for a handicapped or disabled
family member and that are necessary to enable a family member
(including the handicapped or disabled member) to be employed, provided
that the expenses are neither paid to a member of the family nor
reimbursed by an outside source.
Handicapped person. A person having a physical or mental impairment
that:
(1) Is expected to be of long-continued and indefinite duration;
(2) Substantially impedes his or her ability to live independently;
and
(3) Is of such a nature that such ability could be improved by more
suitable housing conditions.
Hard costs. The physical improvement costs in development accounts
1450 through 1475 of the Low-Rent Housing Accounting Handbook, 7510.1,
as revised, which include: Account 1450 Site Improvements; Account 1460
Dwelling Structures; Account 1465.1 Dwelling Equipment--Nonexpendable;
Account 1470 Nondwelling Structures; and Account 1475 Nondwelling
Equipment.
Heating degree days (HDD). The annual arithmetic sum of the
positive differences (those under 65 degrees) of the average of the
lowest and highest daily outside temperature in degrees Fahrenheit,
subtracted from 65 degrees Fahrenheit.
High-risk. See 24 CFR 85.12 and Sec. 950.135.
Home. A dwelling unit covered by a homebuyer agreement.
Homebuyer. The member or members of a low income family who have
executed a homebuyer agreement with the IHA and who have not yet
achieved homeownership.
Homebuyer agreement. A Mutual Help and Occupancy Agreement or a
Turnkey III Homebuyer's Ownership Opportunity Agreement.
Homebuyer Association. In the Turnkey III program this means an
incorporated organization (as defined in Sec. 950.511) composed of all
of the families who are entitled to occupancy pursuant to a Homebuyer
Ownership Opportunity Agreement or who are homeowners.
Homeowner. A former homebuyer who has achieved ownership of his or
her home and acquired title to the home.
HUD. The Department of Housing and Urban Development, including the
Field Offices that have been delegated authority under the Act to
perform functions pertaining to this part for the area in which the IHA
is located.
HUD Field Office. The HUD Offices in Chicago, Oklahoma City,
Denver, Phoenix, Seattle, and Anchorage, which have been delegated
authority to administer programs under the United States Housing Act of
1937 for the area in which the IHA is located.
IHA homeownership financing. IHA financing for purchase of a home
by an eligible homebuyer who gives the IHA a promissory note and
mortgage for the balance of the purchase price.
IHS. The Indian Health Service in the Department of Health and
Human Services.
Indian. Any person recognized as being an Indian or Alaska Native
by an Indian Tribe, the Federal Government, or any State.
Indian area. The area within which an Indian Housing Authority is
authorized to provide low income housing.
Indian Housing Authority (IHA). An entity that is authorized to
engage in or assist in the development or operation of low income
housing for Indians that is established either:
(1) By exercise of the power of self-government of an Indian Tribe
independent of State law; or
(2) By operation of State law providing specifically for housing
authorities for Indians, including regional housing authorities in the
State of Alaska.
Indian Tribe. Any Tribe, band, pueblo, group, community, or nation
of Indians or Alaska Natives.
Interdepartmental agreement. The agreement among HUD, the
Department of Health and Human Services, the Department of Interior,
and other appropriate agencies, concerning assistance to projects
developed and operated under the Act.
Latent defect. A design or construction deficiency that could not
reasonably have been foreseen by the IHA or the Office of Indian
Programs.
Lead-based paint. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1.0 mg/
cm2, or .5 percent by weight.
Live-in aide. A person who resides with an elderly, disabled, or
handicapped person or persons and who:
(1) Is determined by the IHA to be essential to the care and well-
being of the person(s);
(2) Is not obligated for support of the person(s); and
(3) Would not be living in the unit except to provide necessary
supportive services. (See definition of annual income for treatment of
a live-in aide's income.)
Local inflation factor. The weighted average percentage increase in
local government wages and salaries for the area in which the IHA is
located and non-wage expenses based upon the implicit price deflator
for State and local government purchases of goods and services. This
weighted average percentage will be supplied by HUD. HUD anticipates
that it will update the local inflation factor each year.
Low-income family. A family whose annual income does not exceed 80
percent of the median income for the area, as determined by HUD with
adjustments for smaller and larger families. HUD may establish income
limits higher or lower than 80 percent of the median income for an
Indian area on the basis of its finding that such variations are
necessary because of the prevailing levels of construction costs or
unusually high or lower family incomes.
Management capability. (1) An IHA has management capability if it
is:
(i) Not designated as High Risk under Sec. 950.135; or
(ii) Designated as High Risk, but has a reasonable prospect of
acquiring management capability which may include modernization-funded
management improvements.
(2) An IHA may be considered for funding of non-emergency physical
improvements where it is making reasonable progress toward meeting the
goals established in its management improvement plan under
Sec. 950.135.
Management improvement plan. A document developed by the IHA in
accordance with Sec. 950.135 which specifies the actions to be taken,
including timetables, to correct deficiencies identified as a result of
a management assessment.
Mastermeter system. A utility distribution system in which an IHA
is supplied utility service by a utility supplier through a meter or
meters and the IHA then distributes the utility to its tenants.
Medical expenses. Those medical expenses, including medical
insurance premiums, that are anticipated during the period for which
annual income is computed, and that are not covered by insurance.
Meter loop. A device provided to accommodate future installation of
a utility meter. (See subpart K of this part).
Modernization capability. An IHA has modernization capability for
CIAP if it is capable of effectively carrying out the proposed
modernization improvements. Where an IHA does not have a funded
modernization program in progress, HUD will determine whether the IHA
has a reasonable prospect of acquiring modernization capability through
hiring staff or contracting for assistance. (See Sec. 950.135.)
Modernization funds. Funds derived from an allocation of budget
authority for the purpose of funding physical and management
improvements.
Modernization program. An IHA's program for carrying out
modernization, as set forth in the approved CIAP budget for
modernization funds. (See subpart I (CIAP) of this part.)
Modernization project. The improvement of one or more existing
Indian housing developments under a new number designated for that
modernization program (CIAP). For each modernization project, HUD and
the IHA shall enter into an ACC amendment, requiring low-income use of
the housing for not less than 20 years from the date of the ACC
amendment (subject to sale of homeownership units in accordance with
the terms of the ACC).
Monthly adjusted income. One twelfth of adjusted income.
Monthly Equity Payments Account (MEPA). A homebuyer account in the
Mutual Help Homeownership Opportunity program credited with the amount
by which each required monthly payment exceeds the administration
charge.
Monthly income. One twelfth of annual income.
MH. Mutual Help.
MH Construction Contract. A construction contract for an MH
project, which shall be on a form prescribed by HUD.
MH Contribution. Land, labor, cash, materials, or equipment--or a
combination of these--contributed toward the development cost of a
project in accordance with a homebuyer's MHO Agreement, credit for
which is to be used toward purchase of a home.
MH Program. The MH Homeownership Opportunity Program.
MHO Agreement. A Mutual Help and Occupancy Agreement between an IHA
and a homebuyer.
Near elderly family. A family whose head or spouse (or sole member)
is at least 50 years of age but below the age of 62 years.
Net family assets. Net cash value after deducting reasonable costs
that would be incurred in disposing of real property, savings, stocks,
bonds, and other forms of capital investment, excluding interests in
Indian trust land and excluding equity accounts in HUD homeownership
programs. The value of necessary items of personal property such as
furniture and automobiles are excluded, and, in the case of a family in
which any member is actively engaged in a business or farming
operation, the assets that are a part of the business or farming
operation are excluded. In cases where a trust fund, such as individual
Indian monies held by the BIA, has been established and the trust is
not revocable by, or under the control of, any member of the family or
household, the value of the trust fund will not be considered an asset
so long as the fund continues to be held in trust. In determining net
family assets, IHAs shall include the value of any business or family
assets disposed of by an applicant or tenant for less than fair market
value (including a disposition in trust, but not in a foreclosure or
bankruptcy sale) during the two years preceding the date of application
for the program or reexamination, as applicable, in excess of the
consideration received therefor. In the case of a disposition as part
of a separation or divorce settlement, the disposition will not be
considered to be for less than fair market value if the applicant or
tenant receives important consideration not measurable in dollar terms.
Nonroutine maintenance. (1) For purposes of the Turnkey III Program
(Nonroutine Maintenance Reserve), nonroutine maintenance refers to
infrequent and costly items of maintenance and replacement, including
dwelling equipment such as a range or refrigerator, or major components
such as heating or plumbing systems or a roof. Specifically excluded
are maintenance expenses attributable to homebuyer negligence or to
defective materials or workmanship.
(2) For purposes of the CIAP and Comprehensive Grant Modernization
Programs under subpart I of this part and the applicability of wage
rates, nonroutine maintenance refers to work items that ordinarily
would be performed on a regular basis in the course of upkeep of a
property, but have become substantial in scope because they have been
put off, and that involve expenditures that would otherwise materially
distort the level trend of maintenance expenses. Replacement of
equipment and materials rendered unsatisfactory because of normal wear
and tear by items of substantially the same kind does qualify, but
reconstruction, substantial improvement in the quality or kind of
original equipment and materials, or remodeling that alters the nature
or type of housing units does not qualify.
NRMR. The nonroutine maintenance reserve account in the Turnkey III
Program established and maintained in accordance with Sec. 950.519.
Operating budget. The IHA's operating budget (HUD form 52564) and
all related documents, required by HUD to be submitted pursuant to the
ACC.
Operating subsidy. Annual contributions for IHA operations made by
HUD under the authority of section 9 of the Act. (See subpart J of this
part with respect to rental projects. See also Sec. 950.434 (Mutual
Help Operating Subsidy) and Sec. 950.523 (Turnkey III Operating
Subsidy).)
Other income. Income to the IHA other than dwelling rental income
and income from investments, except that, for purposes of determining
operating subsidy eligibility, the following items are excluded: Grants
and gifts for operations, other than for utility expenses, received
from Federal, State, and local governments, individuals or private
organizations; amounts charged to tenants for repairs for which the IHA
incurs an offsetting expense; and legal fees in connection with
eviction proceedings, when those fees are lawfully charged to tenants.
Other Modernization (modernization other than emergency). A type of
modernization program under the Comprehensive Improvement Assistance
Program (CIAP) for a development that includes one or more physical
work items, where HUD determines that the physical improvements are
necessary and sufficient to extend substantially the useful life of the
development, and/or one or more management work items (including
planning costs), and/or testing, professional risk assessments, interim
containment, and abatement of lead-based paint.
Partnership process. A specific and ongoing process that is
designed to ensure that residents, resident groups, and the IHA work in
a cooperative and collaborative manner to develop, implement and
monitor the CIAP or Comprehensive Grant Program. At a minimum, an IHA
shall ensure that the partnership process incorporates full resident
participation in each of the required program components.
Pay-back period. The number of years required to accumulate net
savings to equal the cost of an energy conservation measure.
Performance funding system (PFS). The standards, policies and
procedures established by HUD for determining the amount of operating
subsidy an IHA is eligible to receive for its owned rental projects,
based on the costs of operating a comparable well-managed project.
Pilot. Payment in lieu of taxes. Includes all payments made by an
IHA to the local governing body (or other taxing jurisdiction) for the
provision of certain municipal services, including that portion of
payments in lieu of taxes which is to be applied as a reimbursement of
payments of offsite utilities. The amount charged is determined by the
cooperation agreement which is generally defined as 10 percent of
shelter rent. Shelter rent is defined as dwelling rentals less total
utility expenses.
Program reservation. A written notification by HUD to an IHA, which
is not a legal obligation, but which expresses HUD's determination,
subject to fulfillment by an IHA of all legal and administrative
requirements within a stated time, that HUD will enter into a new or
amended ACC covering the stated number of housing units, or such other
number as is consistent with funding reserved by HUD for the project.
Project. Housing developed, acquired, or assisted by an IHA under
the Act, and the improvement of this housing.
Project for elderly families. A rental project or portion of a
rental project assisted under the U.S. Housing Act of 1937 that was
designated for occupancy by the elderly at its inception (and that has
retained that character) or, although not so designated, for which the
IHA gives preference in tenant selection (with HUD approval) for all
units in the project, or for a portion of the units in the project, to
elderly families.
Project units. All dwelling units of an IHA's projects.
Projected operating income level. The per unit per month dollar
amount of dwelling rental income plus nondwelling income, computed as
provided in Sec. 950.725.
Reasonable cost. Total unfunded hard cost needs for a development
that do not exceed 90 percent of the computed total development cost
limit for a new development with the same structure type and number and
size of units in the market area.
Requested budget year. The budget year (fiscal year) of an IHA
following the current budget year.
Resident groups. Democratically elected resident groups such as
IHA-wide resident groups, area-wide resident groups, single development
resident groups, or RMCs.
Retail service. Purchase of utility service by IHA tenants directly
from the utility supplier.
Rolling base period. The 36-month period that ends 12 months before
the beginning of the IHA requested budget year, which is used to
determine the allowable utilities consumption level used to compute the
utilities expense level.
Single person. A person who lives alone or intends to live alone,
and who does not qualify as:
(1) An elderly family;
(2) A displaced person (as defined in this section); or
(3) The remaining member of a tenant family.
Soft costs. The non-physical improvement costs, which exclude any
costs in development accounts 1450 through 1475.
State. Any of the several States of the United States of America,
the District of Columbia, the Commonwealth of Puerto Rico, the
territories and possessions of the United States, the Trust Territory
of the Pacific Islands, and Indian Tribes.
Subsequent homebuyer. Any homebuyer other than the homebuyer who
first occupies a home pursuant to an MHO agreement.
Substantial rehabilitation. A modernization program for a project
that provides for all physical and management improvements needed to
meet the modernization and energy conservation standards and to ensure
long-term physical and social viability.
Successor homebuyer. A person eligible to become a homebuyer who
has been designated by a current homebuyer to succeed to an interest
under a homeownership agreement in the event of the current homebuyer's
death or mental incapacity.
Surcharge. The amount charged by the IHA to a tenant, in addition
to the Tenant Rent, for consumption of utilities in excess of the
allowance for IHA-furnished utilities or for estimated consumption
attributable to tenant-owned major appliances or to optional functions
of IHA-furnished equipment. Surcharges calculated pursuant to subpart
K, based on estimated consumption where checkmeters have not been
installed, are referred to as ``scheduled surcharges.''
Tenant-purchased utilities. Utilities purchased by the tenant
directly from a utility supplier.
Tenant rent. The amount payable monthly by the family as rent to
the IHA. Where all utilities (except telephone) and other essential
housing services are supplied by the IHA, tenant rent equals total
tenant payment. Where some or all utilities (except telephone) and
other essential housing services are not supplied by the IHA and the
cost thereof is not included in the amount paid as rent, tenant rent
equals total tenant payment less the utility allowance.
Total development cost. The sum of all HUD-approved costs for a
project including all undertakings necessary for administration,
planning, site acquisition, demolition, construction or equipment and
financing (including the payment of carrying charges), and for
otherwise carrying out the development of the project. The maximum
total development cost excludes offsite water and sewer facilities
development costs; costs normally paid for by other entities, but
included in the development cost budget for the project for contracting
or accounting convenience; and any donations received from public or
private sources.
Total tenant payment. The monthly amount calculated under subpart D
of this part. Total tenant payment does not include any surcharge for
excess utility consumption or other miscellaneous charges (see subpart
K of this part).
Unit approved for deprogramming. (1) A dwelling unit for which HUD
has approved the IHA's formal request to remove the dwelling unit from
the IHA's inventory and the Annual Contributions Contract but for which
removal, i.e. deprogramming, has not yet been completed; or
(2) A nondwelling structure or a dwelling unit used for nondwelling
purposes which the IHA has determined will no longer be used for IHA
purposes and which HUD has approved for removal from the IHA's
inventory and Annual Contributions Contract.
Unit months available. Project units multiplied by the number of
months the project units are expected to be available for occupancy
during a given IHA fiscal year. Except as provided in the following
sentence, for purposes of this part, a unit is considered available for
occupancy from the date on which the end of the initial operating
period for the project is established until the time it is approved by
HUD for deprogramming and is vacated or approved for nondwelling use.
On or after July 1, 1991, a unit is not considered available for
occupancy in any IHA Requested Budget Year if the unit is located in a
vacant building in a project that HUD has determined is nonviable.
Utilities. For purposes of determining utility allowances,
utilities include electricity, gas, heating fuel, water, sewerage
service, septic tank pumping/maintenance, sewer system hookup charges
(after development), and trash and garbage collection. Telephone
service is not included as a utility. For purposes of IHA accounting,
PFS and non-PFS, trash and garbage collection and maintenance and
repair of any systems are considered maintenance expenses and not
utility expenses.
Utilities expense level. The per-unit per-month dollar amount of
utilities expense used in calculation of operating subsidy, as provided
in Sec. 950.715.
Utility allowance. An allowance for IHA-furnished utilities
represents the maximum consumption units (e.g., kilowatt hours of
electricity), that may be used by a dwelling unit without a surcharge
against the tenant for excess consumption. An allowance for tenant-
purchased utilities is a fixed dollar amount that is deducted from the
total tenant payment otherwise chargeable to a tenant who has retail
service, whether the charges are more or less than the amounts of the
allowance. (See Secs. 950.865 and 950.870.)
Utility reimbursement. The amount, if any, by which the utility
allowance for tenant-purchased utilities for the unit, if applicable,
exceeds the family's total tenant payment.
Very low-income family. A low-income family whose annual income
does not exceed 50 percent of the median income for the area, as
determined by HUD, with adjustments for smaller and larger families.
HUD may establish income limits higher or lower than 50 percent of the
median income for an Indian area on the basis of its finding that such
variations are necessary because of unusually high or low family
incomes.
Welfare assistance. Welfare or other payments to families or
individuals, based on need, that are made under programs funded,
separately or jointly, by Federal, State or local governments.
Work item. Any separately identifiable unit of work constituting a
part of a modernization program.
Sec. 950.110 Assistance from Indian Health Service and Bureau of
Indian Affairs.
Because HUD assistance under this part is not limited to IHAs of
federally recognized Tribes, provisions in this part relating to
assistance from BIA or IHS, or to required approvals, actions or
determinations by these agencies in connection with such assistance,
are applicable only to projects undertaken by IHAs of federally
recognized Tribes or by regional housing authorities created by Alaska
state law. These projects shall be developed promptly and operated in
accordance with the provisions of this part and the Interdepartmental
Agreement.
Sec. 950.115 Applicability of civil rights requirements.
(a) Indian Civil Rights Act. (1) The Indian Civil Rights Act (title
II of the Civil Rights Act of 1968, 25 U.S.C. 1301-1303) provides,
among other things, that ``no Indian tribe in exercising powers of
self-government shall . . . deny to any person within its jurisdiction
the equal protection of its laws or deprive any person of liberty or
property without due process of law.'' The Indian Civil Rights Act
(ICRA) applies to any tribe, band, or other group of Indians subject to
the jurisdiction of the United States in the exercise of recognized
powers of self-government. The ICRA is applicable in all cases where an
IHA has been established by exercise of Tribal powers of self-
government.
(2) In the case of IHAs established pursuant to State law,
determinations by HUD of the applicability of the ICRA on a case-by-
case basis may consider such factors as the existence of recognized
powers of self-government; the scope and jurisdiction of such powers;
and the applicability of such powers to the area of operation of a
particular IHA. Generally, determinations by HUD of the existence of
recognized powers of self-government and the jurisdiction of such
powers will be made in consultation with the Department of Interior-
Bureau of Indian Affairs, and may consider applicable legislation,
treaties and judicial decisions. The area of operation of an IHA may be
determined by the jurisdiction of the governing body creating the IHA,
any limitations within the enabling legislation, and judicial
decisions.
(3) Projects of IHAs subject to the ICRA shall be developed and
operated in compliance with its provisions and all HUD regulations and
handbooks thereunder.
(b) Nonapplicability of Title VI, the Fair Housing Act, and title
II of the Americans with Disabilities Act. Title VI of the Civil Rights
Act of 1964 (42 U.S.C. 2000d), which prohibits discrimination on the
basis of race, color or national origin in federally assisted programs,
the Fair Housing Act (42 U.S.C. 3601-3619), which prohibits
discrimination based on race, color, religion, sex or national origin
in the sale or rental of housing, and title II of the Americans with
Disabilities Act (42 U.S.C. 12131) do not apply to IHAs established by
exercise of a Tribe's powers of self-government. HUD regulations
implementing Title VI and the Fair Housing Act (24 CFR parts 1 and 100)
and 49 CFR part 24 which implements title II of the Americans with
Disabilities Act shall not be applicable to development or operation of
projects by such IHAs. Any determination by HUD of the applicability of
Title VI, the Fair Housing Act and title II of the Americans with
Disabilities Act on a case-by-case basis shall consider the
applicability of the Indian Civil Rights Act under paragraph (a) of
this section. Actions taken by an IHA to implement the statutory
admission restriction in favor of Indian families in the MH program, as
set forth in Sec. 950.416, shall not be considered a violation of any
provision of either Title VI, the Fair Housing Act, or title II of the
Americans with Disabilities Act.
(c) Indian Housing Act of 1988--Mutual Help program admissions. For
provisions generally limiting admission to the Mutual Help
Homeownership Opportunity program to Indians and requiring findings of
need for admission of non-Indians, see Sec. 950.416.
(d) Disability. (1) Under section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794), as amended, HUD is required to assure that no
otherwise-qualified disabled person is excluded from participation,
denied benefits, or discriminated against under any program or activity
receiving Federal financial assistance, solely by reason of his or her
disability. IHAs must comply with implementing instructions in 24 CFR
part 8.
(2) The IHA shall comply with the Architectural Barriers Act of
1968 (42 U.S.C. 4151-4157), and HUD implementing regulations (24 CFR
part 40).
(e) Minority Business Enterprise Development and Women's Business
Enterprise Policy. Executive Orders 12432 (3 CFR, 1983 Comp., p. 198)
and 12138 (3 CFR, 1979 Comp. p. 39), respectively, apply to Indian
Housing Authorities.
Sec. 950.117 Displacement, relocation, and acquisition.
(a) Minimizing displacement. Consistent with the other goals and
objectives of this part, IHAs shall assure that they have taken all
reasonable steps to minimize the displacement of persons (families,
individuals, businesses, nonprofit organizations, and farms) as a
result of a project assisted under this part.
(b) Temporary relocation. Residents who will not be required to
move permanently, but who must relocate temporarily (e.g., to permit
rehabilitation), shall be provided:
(1) Reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the temporary relocation, including the
cost of moving to and from the temporary housing and any increase in
monthly rent/utility costs.
(2) Appropriate advisory services, including reasonable advance
written notice of:
(i) The date and approximate duration of the temporary relocation;
(ii) The location of the suitable, decent, safe and sanitary
housing to be made available for the temporary period;
(iii) The terms and conditions under which the resident may lease
and occupy a suitable, decent, safe, and sanitary dwelling in the
development following its completion; and
(iv) The provisions of paragraph (b)(1) of this section.
(c) Relocation assistance for displaced persons. (1) A ``displaced
person'' (defined in paragraph (g) of this section) must be provided
relocation assistance at the levels described in, and in accordance
with the requirements of, the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C.
4601-4655) and implementing regulations at 49 CFR part 24.
(2) A comparable Indian housing unit, project-based Section 8
housing or a privately-owned dwelling made affordable by a Section 8
Rental Certificate or Rental Voucher, may qualify as a comparable
replacement dwelling for a person displaced from an Indian housing
unit.
(d) Real property acquisition requirements. The acquisition of real
property for a development is subject to the URA and the requirements
described in 49 CFR part 24, subpart B, whether the acquiring entity is
organized under State law or Tribal law.
(e) Appeals. A person who disagrees with the IHA's determination
concerning whether the person qualifies as a ``displaced person,'' or
the amount of relocation assistance for which the person is eligible,
may file a written appeal of that determination with the IHA. A lower-
income person who is dissatisfied with the IHA's determination on his
or her appeal may submit a written request for review of that
determination to the HUD Field Office.
(f) Responsibility of IHA. (1) The IHA shall certify (i.e., provide
assurance of compliance, as required by 49 CFR part 24) that it will
comply with the URA, the regulations at 49 CFR part 24, and the
requirements of this section, and shall ensure such compliance
notwithstanding any third party's contractual obligation to the IHA to
comply with those provisions.
(2) The cost of required relocation assistance is an eligible
project cost in the same manner and to the same extent as other project
costs. However such assistance also may be paid from funds available
from other sources.
(3) The IHA shall maintain records in sufficient detail to
demonstrate compliance with the requirements of this section.
(g) Definition of displaced person. (1) For purposes of this
section, the term ``displaced person'' means a person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves personal property from real property,
permanently, as a direct result of acquisition, rehabilitation,
demolition, or conversion of a unit to homeownership (Mutual Help
Homeownership Opportunity (MH) Program) for a project assisted under
this part or as a direct result of disposition in accordance with
subpart M of this part. This includes any permanent, involuntary move
for an assisted project including any permanent move from the
development that is made:
(i) After notice to the person by the IHA or property owner to move
permanently from the property, if the move occurs on or after:
(A) For the comprehensive improvement assistance program (CIAP) and
the comprehensive grant program (CGP) under subpart I of this part, 45
calendar days from before:
(1) The IHA issues the invitation for bids for the project, or
(2) The start of force account work, whichever is applicable; or
(B) For the disposition or demolition of Indian housing under
subpart M of this part, the date of HUD approval of the IHA's proposal;
or
(C) For other projects subject to this section, the date HUD
approves the site for the project; or, if HUD site approval is not
required, the date the IHA approves the site for the project;
(ii) Before the date described in paragraph (g)(1)(i) of this
section, if the IHA or HUD determines that the displacement resulted
directly from acquisition, rehabilitation, demolition, or conversion
for the assisted project; or
(iii) By a resident of a dwelling unit, if any one of the following
three situations occurs:
(A) The resident moves after the ``initiation of negotiations'' and
the move occurs before the resident is provided written notice offering
him or her the opportunity to lease and occupy a suitable, decent,
safe, and sanitary dwelling in the same development, under reasonable
terms and conditions, upon its completion. Such reasonable terms and
conditions include a monthly rent and estimated average monthly utility
costs that do not exceed the amount determined in accordance with
Sec. 950.325; or
(B) The resident is required to relocate temporarily, does not
return to the development, and either:
(1) The resident is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation,
or
(2) Other conditions of the temporary relocation are not
reasonable; or
(C) The resident is required to move to another dwelling unit in
the same development but is not offered reimbursement for all
reasonable out-of-pocket expenses incurred in connection with the move,
or other conditions of the move are not reasonable.
(2) Notwithstanding the provisions of paragraph (g)(1) of this
section, a person does not qualify as a ``displaced person'' (and is
not eligible for relocation assistance under the URA or this section),
if:
(i) The person has been evicted for serious or repeated violation
of the terms and conditions of the lease or occupancy agreement,
violation of applicable Federal, State, tribal, or local law, or other
good cause, and HUD determines that the eviction was not undertaken for
the purpose of evading the obligation to provide relocation assistance;
(ii) The person moved into the property after the date described in
paragraph (g)(1)(i) of this section and, before commencing occupancy,
was provided written notice of the project, its possible impact on the
person (e.g., the person may be displaced, temporarily relocated, or
suffer a rent increase) and the fact that he or she will not qualify as
a ``displaced person'' (or for assistance under this section) as a
result of the project:
(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
(iv) HUD determines that the person was not displaced as a direct
result of acquisition, rehabilitation, demolition, or conversion for
the project.
(3) The IHA may, at any time, ask HUD to determine whether a
displacement is or would be covered by this section.
(h) Definition of initiation of negotiations. For purposes of
determining the formula for computing the replacement housing
assistance to be provided to a resident, the term ``initiation of
negotiations'' means the following action:
(1) For the comprehensive improvement assistance program (CIAP) or
comprehensive grant program (CGP) under subpart I of this part, 45
calendar days before:
(i) The IHA's issuance of the invitation for bids for the project;
or
(ii) The start of force account work, whichever is applicable;
(2) For an IHA purchase through an arm's-length transaction as
described in 49 CFR 24.101(a)(1), the seller's acceptance of the IHA's
written offer to purchase the property;
(3) For an IHA purchase that does not qualify as an arm's-length
transaction, the delivery of the initial written purchase offer from
the IHA to the Owner of the property. However, if the IHA issues a
notice of intent to acquire the property, and a person moves after that
notice, but before the initial written purchase offer, the ``initiation
of negotiations'' is the actual move of the person from the property;
(4) For disposition or demolition of Indian housing under subpart M
of this part, HUD approval of the IHA's proposal; or
(5) For other programs under this part 950, the notice to the
occupant that he or she must move permanently, or, if there is no
notice, the person's actual move from the property.
(Approved by the Office of Management and Budget under control
number 2506-0121)
Sec. 950.120 Compliance with other Federal requirements.
(a) Environmental clearance. Before approving a proposed
development program or modernization project, HUD will comply with the
requirements of 24 CFR part 50.
(b) Flood insurance protection. HUD will not approve financial
assistance for acquisition, construction, reconstruction, repair, or
improvement of a building located in an area that has been identified
by the Federal Emergency Management Agency (FEMA) as having special
flood hazards, unless the following conditions are met:
(1) Flood insurance on the building is obtained in compliance with
section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C.
4012a(a)); and
(2) The community in which the area is situated is participating in
the National Flood Insurance Program in accord with section 202(a) of
the Act (42 U.S.C. 4106(a)), or less than a year has passed since FEMA
notification regarding such flood hazards. For this purpose, the
``community'' is the jurisdiction, such as an Indian Tribe or
authorized Tribal organization, an Alaska native village or authorized
native organization, or a municipality or county, that has authority to
adopt and enforce flood plain management regulations for the area.
(c) Wage rates for laborers and mechanics. (1) With respect to
construction work on a project, including a modernization project
(except for nonroutine maintenance work, as described in paragraph (2)
of the definition of ``nonroutine maintenance'' in Sec. 950.102), the
IHA and its contractors shall pay not less than the wages prevailing in
the locality, as predetermined by the Secretary of Labor pursuant to
the Davis-Bacon Act (40 U.S.C. 276a through 276a-5), to all laborers
and mechanics who are employed by an IHA or its contractors for work or
contracts over $2,000.
(2) With respect to all maintenance work on a project, including
nonroutine maintenance work (as described in paragraph (2) of the
definition of ``nonroutine maintenance'' in Sec. 950.102) on a
modernization project, the IHA and its contractors shall pay not less
than the wages prevailing in the locality, as determined or adopted
(after a determination under State, Tribal or local law) by HUD
pursuant to section 12 of the United States Housing Act of 1937 (42
U.S.C. 1437j), to all laborers and mechanics who are employed by an IHA
or its contractors.
(3) Prevailing wage rates determined under State or Tribal law are
inapplicable under the circumstances set out in Sec. 950.172(b).
(d) Professional and technical wage rates. All architects,
technical engineers, draftsmen and technicians employed in the
development of a project shall be paid not less than the wages
prevailing in the locality, as determined or adopted (after a
determination under applicable State, Tribal, or local law) by HUD.
(e) Access to records: audits. (1) HUD and the Comptroller General
of the United States shall have access to all books, documents, papers,
and other records that are pertinent to the activities carried out
under this part, in order to make audit examinations, excerpts, and
transcripts, in accordance with 24 CFR 85.42.
(2) IHAs that receive financial assistance under this part must
comply with the audit requirements of 24 CFR part 44. If an IHA has
failed to submit an acceptable audit on a timely basis in accordance
with that part, HUD may arrange for, and pay the costs of, the audit.
In such circumstances, HUD may withhold, from assistance otherwise
payable to the IHA under this part, amounts sufficient to pay for the
reasonable costs of conducting an acceptable audit, including, when
appropriate, the reasonable costs of accounting services necessary to
place the IHA's books and records into auditable condition. The costs
to place the IHA's books and records into auditable condition do not
generate additional subsidy eligibility under this part.
(f) Uniform administrative requirements. The Uniform Administrative
Requirements for Grants and Cooperative Agreements to States, Local,
and Federally Recognized Indian Tribal Governments, as set forth in 24
CFR part 85, are applicable to grants under this part, except as
specified in this part. However, the provisions of 24 CFR 85.36 have
been incorporated in the procurement subpart (subpart B) of this part.
(g) Lead based paint poisoning prevention. See 24 CFR part 35 and
subpart H of this part.
(h) Coastal barriers. In accordance with the Coastal Barriers
Resources Act (16 U.S.C. 3501), no financial assistance under this part
may be made available within the Coastal Barrier Resources System.
(i) Economic opportunities for low and very low-income persons.
IHAs shall comply with section 3 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701u) and the regulations in part 135, as
provided in part 135, to the maximum extent consistent with, but not in
derogation of, compliance with section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e(b)). (See
also 24 CFR 950.170(c).)
Sec. 950.125 Establishment of IHAs pursuant to State law.
An IHA may be established pursuant to a State law that provides for
the establishment of IHAs by State or federally recognized Indian
tribes with all necessary legal powers to carry out low-income housing
projects for Indians.
Sec. 950.126 Establishment of IHAs by Tribal ordinance.
(a) Legal capacity of Tribe to establish IHA. Where an Indian Tribe
has governmental police power to promote the general welfare, including
the power to create a housing authority, an IHA may be established by
Tribal ordinance enacted by the governing body of the Tribe.
(b) Form of ordinance. The form of Tribal ordinance shall be
determined by the Tribe and reviewed by the ONAP Administrator. The IHA
must also demonstrate that it has the legal authority to develop, own,
and operate a public housing project under the Act. A sample format
will be provided by HUD.
(c) Approval or review of ordinance. HUD shall not enter into an
undertaking for assistance to an IHA formed by Tribal ordinance unless
such ordinance has been submitted to HUD, accompanied by evidence that
the Tribe's enactment of the ordinance either has been approved by the
Department of the Interior or has been reviewed and not objected to by
that Department.
(d) Submission to HUD of documents establishing IHA. The Tribal
ordinance, evidence of Department of the Interior approval or review,
and the following documentation relating to the initial organization of
the IHA shall be submitted to HUD prior to receiving financial
assistance. This includes:
(1) Certificate of appointment of Commissioners;
(2) Commissioner's oath of office;
(3) Notice of organization;
(4) Consent to meeting;
(5) Minutes of meeting;
(6) Resolutions establishing the IHA, adopting the by-laws,
adopting the seal, designating a regular place of meeting, and
designating officers;
(7) By-Laws;
(8) Certificate of Secretary as to authenticity of documents; and
(9) General certificate of Housing Authority.
Sec. 950.130 IHA Commissioners who are tenants or homebuyers.
(a) Tenant or homebuyer commissioners. No person shall be barred
from serving on an IHA's Board of Commissioners because he or she is a
tenant or homebuyer in a housing project of the IHA. A Commissioner who
is a tenant or homebuyer shall be entitled to participate fully in all
meetings concerning matters that affect all of the tenants or
homebuyers, even though such matters affect him or her as well.
However, no such Commissioner shall be entitled or permitted to
participate in or be present at any meeting (except in his or her
capacity as a tenant or homebuyer), or be counted or treated as a
member of the Board, concerning any matter involving his or her
individual rights, obligations, or status as a tenant or homebuyer.
(b) Commissioner as IHA employee. A member of the IHA's Board of
Commissioners shall not be eligible for employment by the IHA, except
under extremely unusual circumstances where it is documented that no
one except the commissioner is qualified for the position and where the
HUD Field Office approves in advance of the hiring.
Sec. 950.135 Administrative capability.
(a) HUD determination. At least annually, HUD shall carry out such
reviews of the performance of each IHA, including remote reviews, on-
site limited and full reviews, audits, surveys, and a formal annual
review or risk analysis assessment, as may be necessary or appropriate
to make the determinations required by this section, taking into
consideration all available evidence. HUD will evaluate an IHA's
compliance in the areas of development, modernization, and operations,
including such functions as administration, financial management,
occupancy, and maintenance.
(b) Obligation to maintain. (1) An IHA must maintain administrative
capability at all times throughout the term of the ACC. In order to be
considered administratively capable, an IHA must administer the Indian
housing program in accordance with applicable statutory requirements,
HUD regulations, contracts, HUD handbooks and other program
requirements with no serious deficiencies. If any of the following
conditions exist, it shall be considered a serious deficiency:
(i) The IHA is not financially stable, based on the most recent
Administrative Capability Assessment, annual audit, technical
assistance visit, or other reliable information;
(ii) An audit, conducted in accordance with 24 CFR part 44 and with
Sec. 950.120, or HUD reviews (including monitoring findings) reveal
deficiencies that HUD reasonably believes require corrective action
and/or that corrective actions are not taken in accordance with
established timeframes;
(iii) The IHA has management systems that do not meet the standards
as set forth in 24 CFR part 85, and the lack of such systems may result
in mismanagement or misuse of Federal funds;
(iv) The IHA has not conformed to the terms and conditions of
previous awards, including for new construction, the Comprehensive
Improvement Assistance Program or the use of Operating Subsidies;
(v) The IHA lacks properly trained and competent personnel at key
management positions of the IHA; or
(vi) The IHA is in violation of the terms of applicable statutes,
regulations, Annual Contributions Contracts or handbooks.
(2) If an IHA has serious deficiencies, HUD shall take any or all
of the following actions:
(i) Issue a notice of deficiency;
(ii) Issue a corrective action order; or
(iii) Classify the IHA as ``high risk'' (see 24 CFR part 85).
(c) Notice of deficiency. Based on HUD reviews of IHA performance
and findings of any of the deficiencies in paragraph (b)(1) of this
section, HUD may issue to the IHA a notice of deficiency, stating the
specific program requirements that the IHA has violated and requesting
the IHA to take appropriate action. The notification shall be in
writing and contain the following:
(1) The deficiencies, i.e., the IHA actions and the statutory,
regulatory, handbook or other requirements that have been violated;
(2) Recommended actions that may be taken by the IHA and a
timeframe for completion;
(3) The documentation necessary for evidence that all actions have
been completed.
(d) Corrective action order. (1) Based on HUD reviews of IHA
performance and findings of any of the deficiencies described in
paragraph (b)(1) of this section, HUD may issue to the IHA a corrective
action order. An order may be issued, whether or not a notice of
deficiency previously has been issued with regard to the specific
deficiency on which the corrective action order is based. HUD may order
corrective action at any time by notifying the IHA of the specific
program requirements that the IHA has violated, and by specifying the
corrective actions that must be taken. HUD shall design corrective
action to prevent a continuation of the deficiency, mitigate any
adverse effects of the deficiency to the extent possible, and prevent a
recurrence of the same or similar deficiencies.
(2) Before ordering corrective action, HUD will notify the IHA and
give it an opportunity to consult with HUD regarding the proposed
action.
(3) Any corrective action ordered by HUD shall become a condition
of the ACC grant agreement.
(4) The order shall be in writing and shall contain the following:
(i) The deficiencies, i.e., the IHA actions and the statutory,
regulatory, handbook or other requirements that have been violated;
(ii) The corrective action(s) that must be taken by the IHA and the
time allowed for completing the corrective action(s);
(iii) The method of requesting reconsideration of the HUD action
and the documentation necessary to evidence that all corrective actions
have been completed.
(e) Management improvement plan. (1) When an IHA receives a
corrective action order, it must respond to the determination, in
writing. This response must include a management improvement plan to
correct existing deficiencies. The plan shall describe in detail the
method to be used and the time schedule to be maintained, shall be
approved by the IHA Board of Commissioners, and is subject to HUD
approval.
(2) After receiving the response from the IHA, HUD may direct the
IHA to take one or more of the following actions:
(i) Submit additional information: (A) Concerning the IHA's
administrative, planning, budgeting, accounting, management, and
evaluation functions, to determine the cause for the IHA having
deficiencies, as described in paragraph (b)(1) of this section;
(B) Explaining any steps the IHA is taking to correct the
deficiencies;
(C) Documenting that IHA activities were not inconsistent with the
IHA's annual statement or other applicable statutes, regulations, or
program requirements;
(ii) Submit schedules for completing the work identified in the
MIP;
(iii) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's MIP;
(iv) Not incur financial obligations, or to suspend payments for
one or more activities;
(v) Reimburse, from non-HUD sources, one or more program accounts
for any amounts improperly expended; or
(vi) Take such other corrective actions as HUD determines
appropriate to correct the IHA deficiencies.
(3) HUD shall determine whether the IHA has satisfied, or has made
reasonable progress towards satisfying, the management improvement
plan.
(4) If the IHA does not satisfy the terms of the plan or does not
act in good faith to meet the timeframes included in its MIP, HUD may
impose additional restrictions. In addition, existing projects may be
terminated, or other action may be instituted, as appropriate.
(f) High risk determination. An IHA may be classified as ``high
risk'' and determined ineligible for certain types of future funding
related to the classification of risk, or may be determined eligible
for future funding but subject to special conditions or restrictions
corresponding to the high risk classification. A corrective action
order listing the specific violation shall accompany the ``high risk''
designation.
(1) If an IHA is determined to be high risk, the conditions that
form the basis for that determination shall be sufficiently serious to
warrant a determination to exclude the IHA from future funding of a
particular type. The determination of high risk shall state the cause
for that finding.
(2) An IHA may continue to be eligible for funding despite a
finding that it is high risk--subject to special conditions and/or
restrictions corresponding to the deficiencies found--if it has
submitted a management improvement plan that was approved by HUD, and
it has exhibited substantial compliance with the plan or a good faith
effort to comply with the plan. If HUD determines that it is necessary
to impose special conditions or restrictions, it will notify the IHA in
writing of the applicable conditions or restrictions. One or more of
the following special conditions or restrictions may be imposed:
(i) Submission to HUD of additional documentation;
(ii) Submission to HUD of additional or more detailed financial
reports;
(iii) Additional project monitoring from the HUD Field Office;
(iv) Additional requirements for technical assistance, from HUD or
another entity approved by HUD;
(v) Establishing additional approvals by HUD;
(vi) Withholding some or all of the IHA's grant;
(vii) Declaring a breach of the ACC grant amendment with respect to
some or all of the IHA's functions; or
(viii) Any other sanction authorized by law or regulation.
(g) Appeals. (1) An IHA may appeal a corrective action order or a
determination of high risk status to the local HUD Administrator,
Office of Native American Programs (ONAP). All appeals must be made in
writing, within 30 calendar days of notice to the IHA of the HUD action
and must state clearly any justification or evidence that the action is
unwarranted or too severe. If an appeal is filed concerning one or more
action(s), the action(s) shall not take effect until HUD makes a final
determination on the appeal or notifies the IHA that special
circumstances exist that warrant giving immediate effect to the
announced HUD action. The HUD Administrator must respond to the appeal
within 30 days of receipt of the appeal.
(2) An IHA may appeal a decision of the Administrator to the ONAP,
Headquarters, only if the case involves actions related to a
determination of ineligibility of funding for the upcoming funding
cycle. An appeal of the Administrator's decision must be made to ONAP,
Headquarters in writing, stating the justification or evidence, and
must be received within 21 days of the date of the Administrator's
decision. Decisions reviewed by Headquarters will be evaluated based on
the facts as presented to the Administrator and on any aggravating or
extenuating circumstances.
(3) The IHA's Board of Commissioners must notify the Tribal
government of HUD's final determination to withhold or suspend funds or
declare a breach of the ACC grant agreement, as well as the basis for,
and consequences resulting from, such a determination.
Subpart B--Procurement
Sec. 950.160 Procurement standards.
(a) HUD standards. (1) Applicability. This subpart sets forth
Federal requirements to be followed by IHAs in the procurement of
services, supplies, and goods.
(2) Contracting authorization. An IHA may execute contracts without
HUD approval for the procurement of work, materials, equipment and/or
professional services, in accordance with paragraph (a)(3)(ii) of this
section. Before the execution of contracts, the IHA Board of
Commissioners will insure that systems are in place to ensure program
requirements are satisfied before the execution of contracts and will
periodically review compliance with such systems.
(3) Limitations. (i) An IHA shall not award a contract for the
project until the prospective contractor has demonstrated, to the
satisfaction of the IHA, the technical, administrative and financial
capability to perform contract work of the size and type involved and
within the time provided under the contract. The IHA shall not award a
contract to a person or firm on the List of Parties Excluded from
Federal Procurement and Nonprocurement Programs compiled, maintained
and distributed by the General Services Administration (GSA) or to a
person or firm that is subject to a limited denial of participation
issued by the HUD Office of Native American Programs. (See 24 CFR part
24.)
(ii) The IHA may execute or approve any agreement or contract for
personnel, management, legal, or other services with any person or firm
without the prior written approval of HUD, except under the following
circumstances:
(A) Where the term of the agreement or contract (including renewal)
is in excess of two years; or
(B) Where the amount of the agreement or contract is in excess of
the amount included for such purpose in the HUD-approved development
cost budget, or operating budget or an amount specified from time to
time by HUD, as the case may be; or
(C) Where the agreement or contract is for legal or other services
in connection with litigation if the estimated cost exceeds $25,000; or
(D) For contracts in excess of $25,000 in the aggregate where the
IHA proposes to award a contract based upon a single bid or proposal
received.
(4) Records. An IHA shall maintain records sufficient to detail the
significant history of a procurement. The IHA shall maintain evidence
in its files:
(i) That the solicitation and award procedures were conducted in
compliance with State, Tribal, or local laws and Federal requirements,
including requirements for Indian preference and wage rates;
(ii) That the award does not exceed the approved budget amount and
is not being made on the basis of a single bid or proposal; and
(iii) That the IHA reviewed the contractor's qualifications;
checked to ensure that the contractor is not listed on the GSA List of
Parties Excluded from Federal Procurement and Nonprocurement Programs;
and determined that the contractor has the capacity to successfully
complete the work or services under the terms and conditions of the
contract. This determination shall consider the contractor's record of
past performance, integrity, compliance with public policy, and
financial and technical resources.
(5) Contract administration. An IHA is responsible, in accordance
with good administrative practice and sound business judgment, for the
settlement of all contractual and administrative issues arising out of
procurement.
(6) Competition. All procurement transactions must be conducted in
a manner providing full and open competition.
(7) Contract cost and price. An IHA must perform a cost or price
analysis in connection with every procurement action, including
contract modifications.
(b) IHA standards--(1) IHA procedures. Each IHA shall adopt,
promulgate, and comply with, rules or regulations for the procurement
and administration of supplies, materials, services and equipment in
connection with the development and operation of projects. Upon
adoption or modification, the IHA will promptly furnish a copy of these
rules or regulations to HUD. These rules or regulations shall contain
provisions on at least the following subjects:
(i) Procedures to ensure that all procurement transactions are
conducted in a full and open competitive manner, consistent with the
standards of 24 CFR 85.36;
(ii) Identification (by position title) of IHA officials authorized
to enter into and approve contracts on a competitive basis as
authorized by 24 CFR 85.36(d)(4);
(iii) Procedures for inventory control;
(iv) Procedures for storage and protection of goods and supplies;
(v) Procedures for issuance of, or other disposition of, supplies
and equipment;
(vi) Procedures for implementing Indian preference requirements;
(vii) Procedures for handling complaints and protests regarding
procurement;
(viii) Standards of conduct governing IHA directors, board members,
officers and employees; and
(ix) Conflict of interest provisions governing directors, officers,
employees, contractors/developers and others doing business with the
IHA.
(2) Contract administration system. An IHA shall maintain a
contract administration system that ensures that contractors perform in
accordance with the terms, conditions, and specifications of their
contracts and purchase orders.
(c) Government-wide contract requirements. A HUD regulation found
at 24 CFR part 85 embodies government-wide administrative requirements
for grants to State, local and Federally recognized Indian Tribal
governments (including grants received by IHAs). The contract
provisions listed in 24 CFR 85.36(i) of that regulation are to be
included in any IHA contracts.
Sec. 950.165 Methods of procurement.
(a) Small purchase procedures. Small purchase procedures are those
relatively simple and informal procurement methods for securing
services, supplies, or other property that do not cost more than
$25,000 in the aggregate. If small purchase procurements are used,
price or rate quotations will be obtained from an adequate number of
qualified sources.
(b) Procurement by sealed bids (Invitations for Bid (IFB)). Bids
are publicly solicited and a firm-fixed-price contract (lump sum or
unit price) is awarded to the responsible bidder whose bid, conforming
with all the material terms and conditions of the invitation for bids,
is the lowest in price. The sealed bid method is the preferred method
for procuring construction, if the conditions in Sec. 950.165(b)(1)
apply.
(1) In order for sealed bidding to be feasible, the following
conditions should be present:
(i) A complete, adequate, and realistic specification or purchase
description is available;
(ii) Two or more responsible bidders are willing and able to
compete effectively for the business; and
(iii) The procurement lends itself to a firm fixed price contract
and the selection of the successful bidder can be made principally on
the basis of price.
(2) If sealed bids are used, the following requirements apply:
(i) The invitation for bids will be publicly advertised and bids
shall be solicited from an adequate number of known suppliers,
providing them sufficient time prior to the date set for opening the
bids;
(ii) The invitation for bids, which will include any specifications
and pertinent attachments, shall define the items or services in order
for the bidder to properly respond;
(iii) All bids will be publicly opened at the time and place
prescribed in the invitation for bids;
(iv) A firm fixed-price contract award will be made in writing to
the lowest responsive and responsible bidder; and
(v) Any or all bids may be rejected if there is a sound documented
reason.
(c) Procurement by competitive proposals (Request for Proposals
(RFP)). The technique of competitive proposals is normally conducted
with more than one source submitting an offer, and either a fixed-price
or cost-reimbursement type contract is awarded. It is generally used
when conditions are not appropriate for the use of sealed bids. If this
method is used, the following requirements apply:
(1) Requests for proposals will be publicized and identify all
evaluation factors and their relative importance. Any response to
publicized requests for proposals shall be honored to the maximum
extent practical;
(2) Proposals will be solicited from an adequate number of
qualified sources;
(3) IHAs will have a method for conducting technical evaluations of
the proposals received and for selecting awardees;
(4) Awards will be made to the responsible firm whose proposal is
most advantageous to the program, with price and other factors
considered; and
(5) IHAs may use competitive proposal procedures for
qualifications-based procurement of architectural/engineering (A/E)
professional services whereby competitors' qualifications are evaluated
and the most qualified competitor is selected, subject to negotiation
of fair and reasonable compensation. The method, where price is not
used as a selection factor, can only be used in procurement of A/E
professional services. It cannot be used to purchase other types of
services though A/E firms are a potential source to perform the
proposed effort.
(d) Procurement by noncompetitive proposals is procurement through
solicitation of a proposal from only one source, or where after
solicitation of a number of sources, competition is determined
inadequate.
(1) Procurement by noncompetitive proposals may be used only when
the award of a contract is infeasible under small purchase procedures,
sealed bids or competitive proposals and one of the following
circumstances applies:
(i) The item is available only from a single source;
(ii) The public exigency or emergency for the requirement will not
permit a delay resulting from competitive solicitation;
(iii) HUD authorizes noncompetitive proposals; or
(iv) After solicitation of a number of sources, competition is
determined inadequate.
(2) Cost analysis, i.e., verifying the proposed cost data, the
projections of the data, and the evaluation of the specific elements of
costs and profit, is required.
Sec. 950.170 Other requirements applicable to development contracts.
(a) Bonding requirements. For construction contracts for more than
$100,000, each contractor shall be required to provide bid guarantees
and adequate assurance of performance and payment acceptable to HUD in
accordance with 24 CFR 85.36(h). The following methods may be used to
provide performance and payment assurance:
(1) Performance and payment bonds for 100 percent of the total
contract price.
(2) Deposit with the IHA of a cash escrow of not less than 20
percent of the total contract price, subject to reduction during the
warranty period, commensurate with potential risk.
(3) Letter of credit for 25 percent of the total contract price,
unconditionally payable upon demand of the IHA, subject to reduction
during the warranty period commensurate with potential risk.
(4) Letter of credit for 10 percent of the total contract price and
compliance with the procedures for monitoring of disbursements by the
contractor. In the case of a Mutual Help project, the term total
contract price as used with respect to each of the above assurance
methods includes the value of all Mutual Help contributions for work,
materials, or equipment to be provided to the contractor for use in
performing the contract work.
(b) Executive Order 11246 (equal employment opportunity). Contracts
for construction work in connection with Projects under this part are
subject to Executive Order 11246 (3 CFR, 1964-65 Comp., p. 339), and
Executive Order 11375 (3 CFR, 1966-70 Comp., p. 684), and to applicable
implementing regulations (24 CFR part 130; 41 CFR chapter 60), rules,
and orders of HUD and the Office of Federal Contract Compliance
Programs of the Department of Labor. Executive Order 11246 prohibits
discrimination and requires affirmative action to ensure that employees
or applicants for employment are treated without regard to their race,
color, religion, sex, or national origin. Compliance with E.O. 11246,
and related regulations, orders and requirements shall be to the
maximum extent consistent with, but not in derogation of, compliance
with section 7(b) of the Indian Self-Determination and Education
Assistance Act.
(c) Local area residents. In accordance with section 3 of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the
implementing regulations in 24 CFR part 135, IHAs, their contractors
and subcontractors shall make best efforts, consistent with existing
Federal, State, and local laws and regulations (including section 7(b)
of the Indian Self-Determination and Education Assistance Act, to give
low- and very low-income persons the training and employment
opportunities generated by section 3 covered assistance (as this term
is defined in 24 CFR 135.7) and to give section 3 business concerns the
contracting opportunities generated by section 3 covered assistance.
Sec. 950.172 Wage rates.
(a) Determination of prevailing wage rates. For the applicable
method of determination of the prevailing wage rates to be paid
laborers and mechanics, see Sec. 950.120(c).
(b) Preemption of prevailing wage rates. (1) A prevailing wage rate
determined under State or Tribal law shall be inapplicable to a
contract or IHA-performed work item for the development, maintenance or
modernization of a project whenever:
(i) The contract or the work item is otherwise subject to State or
Tribal law requiring the payment of wage rates determined by a State,
local, or Tribal government or agency to be prevailing and is for a
project assisted with funds for low-income housing under the Act; and
(ii) The wage rate (the basic hourly rate and any fringe benefits)
determined under State or Tribal law to be prevailing with respect to
an employee in any trade or position employed in the development,
maintenance, or improvement of a project exceeds whichever of the
following Federal wage rates is applicable:
(A) The wage rate determined by the Secretary of Labor pursuant to
the Davis-Bacon Act (40 U.S.C. 276a, et seq.) to be prevailing in the
locality with respect to such trade;
(B) An applicable apprentice wage rate based thereon specified in
an apprenticeship program registered with the Department of Labor or a
DOL-recognized State Apprenticeship Agency;
(C) An applicable trainee wage rate based thereon specified in a
DOL-certified trainee program; or
(D) The wage rate determined by the Secretary of HUD to be
prevailing in the locality with respect to such trade or position.
(2) For the purpose of ascertaining whether a wage rate determined
under State or Tribal law for a trade or position exceeds the Federal
wage rate:
(i) Where a rate determined by the Secretary of Labor or an
apprentice or trainee wage rate based thereon is applicable, the total
wage rate determined under State or Tribal law, including fringe
benefits (if any) and basic hourly rate, shall be compared to the total
wage rate determined by the Secretary of Labor or apprentice or trainee
wage rate; and
(ii) Where a rate determined by the Secretary of HUD is applicable,
any fringe benefits determined under State or Tribal law shall be
excluded from the comparison with the rate determined by the Secretary
of HUD.
(3) Whenever paragraph (b)(1)(i) of this section is applicable:
(i) Any solicitation issued by the IHA and any contract executed by
the IHA for development, maintenance or modernization of the project
shall include a statement as prescribed in this paragraph and failure
to include this statement may constitute grounds for requiring re-
solicitation. The statement that any prevailing wage rate (including
basic hourly rate and any fringe benefits) determined under State or
Tribal law to be prevailing with respect to an employee in any trade or
position employed under the contract is inapplicable to the contract
and shall not be enforced against the contractor or any subcontractor
with respect to employees engaged under the contract must be included
whenever either of the following occurs:
(A) Such nonfederal prevailing wage rate exceeds:
(1) The applicable wage rate determined by the Secretary of Labor
pursuant to the Davis-Bacon Act (40 U.S.C. 276a, et seq.) to be
prevailing in the locality with respect to such trade;
(2) An applicable apprentice wage rate based thereon specified in
an apprenticeship program registered with the Department of Labor or a
DOL-recognized State Apprenticeship Agency; or
(3) An applicable trainee wage rate based thereon specified in a
DOL-certified trainee program; or
(B) Such nonfederal prevailing wage rate, exclusive of any fringe
benefits, exceeds the applicable wage rate determined by the Secretary
of HUD to be prevailing in the locality with respect to such trade or
position.
(ii) The IHA itself shall not be required to pay the basic hourly
rate or any fringe benefits comprising a prevailing wage rate
determined under State or Tribal law and described in paragraph (b)(2)
of this section to any of its own employees who may be engaged in the
development, maintenance or modernization of the project; and
(iii) Neither the basic hourly rate nor any fringe benefits
comprising a prevailing wage rate determined under State or Tribal law
and described in paragraph (b)(2) of this section shall be enforced
against the IHA or any of its contractors or subcontractors with
respect to employees engaged in the contract or IHA-performed work item
for development, maintenance or modernization of the project.
(4) Nothing in paragraph (b) of this section shall affect the
applicability of any wage rate established in a collective bargaining
agreement with an IHA or its contractors or subcontractors where such
wage rate equals or exceeds the applicable Federal wage rate referred
to in paragraph (b)(1)(ii) of this section, nor does paragraph (b) of
this section impose a ceiling on wage rates an IHA or its contractors
or subcontractors may choose to pay independent of State law.
(5) The provisions of paragraph (b) of this section shall apply to
work performed under any prime contract entered into as a result of a
solicitation of bids or proposals issued on or after October 6, 1988
and to any work performed by employees of an IHA on or after October 6,
1988.
Sec. 950.175 Indian preference requirements.
(a) Applicability. HUD has determined that grants under this part
are subject to section 7(b) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450e(b)), which requires that, to
the greatest extent feasible:
(1) Preference and opportunities for training and employment shall
be given to Indians; and
(2) Preference in the award of contracts and subcontracts shall be
given to Indian organizations and Indian-owned economic enterprises.
(b) Definitions. Indian organizations and Indian-owned economic
enterprises include both of the following:
(1) Any economic enterprise as defined in section 3(e) of the
Indian Financing Act of 1974 (25 U.S.C. 1452); that is, ``any Indian-
owned commercial, industrial, or business activity established or
organized for the purpose of profit provided that such Indian ownership
and control shall constitute not less than 51 percent of the
enterprise''; and
(2) Any ``Tribal organizations'' as defined in section 4(c) of the
Indian Self-Determination and Education Assistance Act (25 U.S.C.
1453); that is, ``the recognized governing body of any Indian Tribe;
any legally established organization of Indians which is controlled,
sanctioned or chartered by such governing body or which is
democratically elected by the adult members of the Indian community to
be served by such organizations and which includes the maximum
participation of Indians in all phases of its activities.''
(c) Preference employment and training. To the greatest extent
feasible, IHAs and their contractors and subcontractors shall give
preference and opportunities for training and employment in connection
with the administration of grants awarded under this part to Indians
and Alaskan natives.
(d) Preference in contracting. To the greatest extent feasible,
IHAs shall give preference in the award of contracts for projects
funded under this part to Indian organizations and Indian-owned
economic enterprises.
(1) Each IHA shall: (i) Advertise for bids or proposals limited to
qualified Indian organizations and Indian-owned enterprises; or
(ii) Use a two-stage preference procedure, as follows:
(A) Stage 1. Invite or otherwise solicit Indian-owned economic
enterprises to submit a statement of intent to respond to a bid
announcement limited to Indian-owned firms.
(B) Stage 2. If responses are received from more than one Indian
enterprise found to be qualified, advertise for bids or proposals
limited to Indian organizations and Indian-owned economic enterprises;
or
(iii) Develop and incorporate into their procurement policy,
subject to HUD Field Office one-time approval, the IHA's method of
providing preference. In no instance shall HUD approve a method which
provides preference based upon affiliation or membership in a
particular tribe or group of tribes.
(2) If the IHA selects a method of providing preference that
results in fewer than two responsible qualified organizations or
enterprises submitting a statement of intent, a bid or a proposal to
perform the contract at a reasonable cost, then the IHA shall:
(i) Re-compete the contract, using any of the methods described in
paragraph (e)(1) of this section; or
(ii) Re-compete the contract without limiting the advertisement for
bids or proposals to Indian organizations and Indian-owned economic
enterprises; or
(iii) If only one bid or proposal is received, request Field Office
review and approval of the proposed contract and related procurement
documents, in accordance with 24 CFR 85.36, in order to award the
contract to the single source.
(3) Procurements that are within the dollar limitations established
for small purchases under 24 CFR 85.36(d)(1) need not follow the formal
requirements for public announcement and advertising for bids or
proposals as provided in paragraph (d)(1) of this section. However, an
IHA small purchase procurement shall, to the greatest extent feasible,
provide Indian preference in the award of contracts.
(4) All preferences shall be publicly announced in the
advertisement and in the solicitation and the contract documents.
(5) An IHA, at its discretion, may require information of
prospective contractors seeking to qualify as Indian organizations or
Indian-owned economic enterprises. IHAs may require prospective
contractors to submit information prior to submitting a bid or
proposal, or at the time of submission. Information requested by the
IHA may include but is not limited to the following:
(i) Evidence showing fully the extent of Indian ownership, control,
and interest;
(ii) Evidence of structure, management and financing affecting the
Indian character of the enterprise, including major subcontracts and
purchase agreements; materials or equipment supply arrangements; and
management salary or profit-sharing arrangements; and evidence showing
the effect of these on the extent of Indian ownership and interest; and
(iii) Evidence sufficient to demonstrate to the satisfaction of the
IHA that the prospective contractor has the technical, administrative,
and financial capability to perform contract work of the size and type
involved.
(6) The IHA shall incorporate the following clause (referred to as
the Section 7(b) clause) in each contract awarded in connection with a
project funded under this part:
(i) The work to be performed under this contract is on a project
subject to Section 7(b) of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450e(b)) (Indian Act). Section 7(b) requires
that to the greatest extent feasible:
(A) Preferences and opportunities for training and employment shall
be given to Indians, and
(B) Preferences in the award of contracts and subcontracts shall be
given to Indian organizations and Indian-owned economic enterprises.
(ii) The parties to this contract shall comply with the provisions
of section 7(b) of the Indian Act.
(iii) In connection with this contract, the contractor shall, to
the greatest extent feasible, give preference in the award of any
subcontracts to Indian organizations and Indian-owned economic
enterprises, and preferences and opportunities for training and
employment to Indians and Alaskan natives.
(iv) The contractor shall include this Section 7(b) clause in every
subcontract in connection with the project, and shall, at the direction
of the IHA, take appropriate action pursuant to the subcontract upon a
finding by the IHA or HUD that the subcontractor has violated the
Section 7(b) clause of the Indian Act.
(e) Additional Indian preference requirements. An IHA may, with
prior HUD approval, provide for additional Indian preference
requirements as conditions for the award of, or in the terms of, any
contract in connection with a project funded under this part. The
additional Indian preference requirements shall be consistent with the
objectives of the Section 7(b) clause of the Indian Act and shall not
result in a significantly higher cost or greater risk of non-
performance or longer period of performance. The additional Indian
preference requirements permitted by this part do not include the
imposition of geographic preferences or restrictions to the procurement
process.
(f) Complaint procedures. The following complaint procedures are
applicable to complaints arising out of any of the methods of providing
for Indian preference contained in this subpart, including alternate
methods enacted and approved in the manner described in this subpart.
(1) Each complaint shall be in writing, signed, and filed with the
IHA.
(2) A complaint must be filed with the IHA no later than 20
calendar days from the date of the action (or omission) upon which the
complaint is based.
(3) Upon receipt of a complaint, the IHA shall promptly stamp the
date and time of receipt upon the complaint, and immediately
acknowledge its receipt.
(4) Within 20 calendar days of receipt of a complaint, the IHA
shall either meet, or communicate by mail or telephone, with the
complaining party in an effort to resolve the matter. The IHA shall
make a determination on a complaint and notify the complainant, in
writing, within 30 calendar days of submittal of the complaint to the
IHA. The decision of the IHA shall constitute final administrative
action on the complaint.
Sec. 950.190 Insurance.
(a) Purpose. This section implements policies concerning insurance
coverage required under the Annual Contributions Contract (ACC) or
Mutual Help Annual Contributions Contract (MHACC) between HUD and an
IHA. These contracts require (in section 305 of the ACC and Article IX
of the MHACC) that IHAs maintain specified insurance coverage for
property and casualty losses that would jeopardize the financial
stability of the IHAs. The insurance coverage is required to be
obtained under procedures that provide ``for open and competitive
bidding.'' The HUD Appropriations Act for Fiscal Year 1992 (Pub.L. 102-
368) provided that an IHA could purchase insurance coverage without
regard to competitive selection procedures when it purchases it from a
nonprofit insurance entity owned and controlled by IHAs approved by HUD
in accordance with standards established by regulation. This section
specifies the standards.
(b) Method of selection of insurance coverage. While 24 CFR part 85
requires that grantees solicit full and open competition for their
procurements, the HUD Appropriations Act for Fiscal Year 1992 (Pub.L.
102-368) provides an exception to this requirement. IHAs are authorized
to obtain any line of insurance from a nonprofit insurance entity that
is owned and controlled by IHAs and approved by HUD in accordance with
this section, without regard to competitive selection procedures.
Procurement of insurance from other entities is subject to competitive
selection procedures.
(c) Approval of a nonprofit insurance entity. Under the following
conditions, HUD will approve a nonprofit self-funded insurance entity
created by IHAs that limits participation to IHAs (and to nonprofit
entities associated with IHAs that engage in activities or perform
functions only for housing authorities or housing authority residents):
(1) An insurance company (including a risk retention group).
(i) The insurance company maintains a current license or is
authorized to do business in the State or Tribal area by the State
Insurance Commissioner or Indian Tribal governing body and has
submitted documentation of this authority to HUD and
(ii) The insurance company has not been suspended from providing
insurance coverage in the State or Tribal area or been suspended or
debarred from doing business with the federal government. The insurance
company is obligated to send to HUD a copy of any action taken by the
authorizing official to withdraw the license or authorization.
(2) An entity not organized as an insurance company.
(i) The entity has competent underwriting staff (hired directly or
engaged by contract with a third party), as evidenced by professionals
with an average of at least five years of experience in large risk
(exceeding $100,000 in annual premiums) commercial underwriting or at
least five years of experience in the underwriting of risks for public
entity risk pools. This standard may be satisfied by submission of
evidence of competent underwriting staff, including copies of resumes
of underwriting staff for the entity;
(ii) The entity has efficient and qualified management (hired
directly or engaged by contract with a third party), as evidenced by
the report submitted to HUD in accordance with paragraph (d)(3) of this
section and by having at least one senior staff person who has a
minimum of five years of experience:
(A) At the management level of Vice President of a property/
casualty insurance entity;
(B) As a senior branch manager of a branch office with annual
property/casualty premiums exceeding $5 million; or
(C) As a senior manager of a public entity risk pool. Documentation
for this standard must include copies of resumes of key management
personnel responsible for oversight and for the day-to-day operation of
the entity;
(iii) The entity maintains internal controls and cost containment
measures, as evidenced by an annual budget;
(iv) The entity maintains sound investments consistent with:
(A) The State insurance commissioner's requirements for licensed
insurance companies, or other State statutory requirements controlling
investments of public entities in the State in which the entity is
organized, investing only in assets that qualify as ``admitted
assets''; or
(B) Any applicable provisions of Indian Tribal law concerning
investments, in the case of an IHA that is not subject to such State
law;
(v) The entity maintains adequate surplus and reserves for
undischarged liabilities of all types, as evidenced by a current
audited financial statement and an actuarial review conducted in
accordance with paragraph (d) of this section; and
(vi) Upon application for initial approval, the entity has proper
organizational documentation, as evidenced by copies of the articles of
incorporation, by-laws, business plans, copies of contracts with third
party administrators, and an opinion from legal counsel that
establishment of the entity conforms with all legal requirements under
Federal and State, or Tribal law. Any material changes made to these
documents after initial approval must be submitted for review and
approval before becoming effective.
(d) Professional evaluations of performance. Audits and actuarial
reviews are required to be prepared and submitted annually to the HUD
Office of Public and Indian Housing, for review and appropriate action,
by nonprofit insurance entities that are not insurance companies
approved under paragraph (c)(1) of this section. Selection of entities
to perform such reviews shall comply with the competitive requirements
of 24 CFR 85.36. In addition, an evaluation of other management factors
is required to be performed by an insurance professional every three
years. For fiscal years ending on or after December 31, 1993, the
initial audit, actuarial review, and insurance management review
required for a nonprofit insurance entity must be submitted to HUD
within 90 days after the end of entity's fiscal year.
(1) The annual financial statement prepared in accordance with
generally accepted accounting principles (including any supplementary
data required by GASB 10) is to be audited by an independent auditor
(see 24 CFR part 44), in accordance with generally accepted auditing
standards. The independent auditor shall express an opinion on whether
the entity's financial statement is presented fairly in accordance with
generally accepted accounting principles. A copy of this audit must be
submitted to HUD.
(2) The actuarial review must be done consistent with requirements
established by the National Association of Insurance Commissioners and
must be conducted by an independent property/casualty actuary who is an
Associate or Fellow of a recognized professional actuarial
organization, such as the Casualty Actuary Society. The report issued,
a copy of which must be submitted to HUD, must include an opinion on
any over or under reserving and the adequacy of the reserves maintained
for the open claims and for incurred but unreported claims.
(3) A review must be conducted, a copy of which must be submitted
to HUD, by an independent insurance consulting firm that has at least
one person on staff who has received the professional designation of
chartered property/casualty underwriter (CPCU), associate in risk
management (ARM), of associate in claims (AIC), of the following:
(i) Efficiency of any Third Party Administrator;
(ii) Timeliness of the claim payments and reserving practices; and
(iii) The adequacy of reinsurance coverage.
(e) Revocation of approval of a nonprofit insurance entity. HUD may
revoke its approval of a nonprofit insurance entity under this section
when it no longer meets the requirements of this section. The nonprofit
insurance entity will be notified in writing of the proposed revocation
of its approval, and the manner and time in which to request a hearing
to challenge the determination. The procedure to be followed is
specified in 24 CFR part 26.
Subpart C--Development
Sec. 950.200 Roles and responsibilities of Federal agencies.
HUD, IHS, BIA, and other appropriate agencies shall coordinate
functions in accordance with the Interdepartmental Agreement. HUD shall
take the lead role in any area specifically related to the construction
of Indian housing under this part.
Sec. 950.205 Allocation.
HUD will allocate funds to Indian Field Offices using a systematic
process that considers the relative need for housing in each HUD area
or other geographic area, based on the most recent and reliable data
available. (See 24 CFR part 791, subpart D.)
Sec. 950.210 Authority for proceeding without HUD approval.
(a) IHA authority to proceed. An IHA may proceed with development
functions without obtaining HUD approval as otherwise specified in this
part.
(b) Rescinding authorization. At any time during the development
process, HUD may make a determination that an IHA, due to performance
deficiencies, shall obtain HUD approval of additional processing steps.
If such a determination is made, HUD shall explain in writing the
reasons for the determination and specify any processing steps which
are subject to additional technical assistance and prior approval by
HUD. Processing under this ``assisted'' method of development may
result from:
(1) A request from an IHA to receive additional assistance in the
development process but only to the extent that HUD agrees that such
assistance is necessary and has the resources available to provide such
assistance;
(2) The result of monitoring an IHA's development performance
pursuant to Sec. 950.135. When identified deficiencies are corrected to
the satisfaction of HUD, the IHA's development processing will return
to the ``standard'' method of development or, with the agreement of the
IHA and HUD, may continue to be processed under the ``assisted'' method
of development in accordance with Sec. 950.210(b).
(3) The IHA staff is inexperienced in or has had no recent
experience in the development of new housing.
Sec. 950.215 Production methods.
Choice and approval of production method. The IHA may utilize any
production method or combination of production methods to develop its
projects as long as the production method(s) is not in conflict with
the procurement requirements of 24 CFR 85.36 and subpart B of this
part. The IHA shall advise HUD on the application for a project of its
choice of production methods. Prior HUD approval is required if the
method selected is force account or if the IHA proposes to utilize a
noncompetitive procurement method. If HUD disapproves the IHA's
preferred development method, it will furnish a statement of its
reasons to the IHA. Historically, production methods utilized in the
Indian Housing program are:
(a) Conventional method. Under the Conventional method, the IHA
plans the project and prepares drawings and specifications. The IHA
solicits competitive bids through public advertisement and awards the
contract to the lowest responsible bidder.
(b) Turnkey method. Under the Turnkey method, the IHA advertises
for developers to submit proposals to build a project described in the
IHA's invitation for proposals. The invitation for proposals may
prescribe the sites to be used. The IHA evaluates the proposals and
selects the best proposal after considering price, design, site, the
developer's experience and other evidence of the developer's ability to
complete the project. Upon completion of the project (or stages
thereof) in accordance with the contract of sale, the IHA purchases the
project (or stage) from the developer.
(c) Modified Turnkey. Under this modified method, the procedure is
similar to the conventional method, except that the developer/
contractor usually receives no progress payments from the IHA and is
responsible for acceptable completion before receiving any payment from
the IHA.
(d) Self-Help. The Self-Help method is applicable only to the
Mutual Help Homeownership Opportunity program. Under this method, with
technical assistance and supervision and materials provided by the IHA,
a small group of families build a substantial portion of the homes to
be purchased by the families in the group. Their work is supplemented
by skilled labor obtained under contract. See subpart F of this part
for more details concerning this method.
(e) Acquisition of existing housing (with or without
rehabilitation). Under the Acquisition method, the IHA purchases
existing housing that may need only minor repairs or that may require
substantial rehabilitation. Repair or rehabilitation may be
accomplished before acquisition using Turnkey procedures or after
acquisition using Conventional or Force Account procedures. An ACC may
be executed before site approval, provided the IHA has documented
evidence that adequate sites are available to accommodate the units
contained in the program reservation.
(f) Force account method. (1) Under the Force Account method, an
IHA performs construction or rehabilitation using its own work force,
either entirely or in combination with contractors.
(2) The Force Account method may be used only if justified by the
IHA and approved by the HUD Field Office. The IHA must demonstrate that
it has the technical and administrative capabilities to complete the
project within the projected time and budget. The HUD Field Office
shall require that a Tribe or IHA agree in writing: to cover any costs
in excess of the HUD-estimated construction costs; demonstrate that it
has the financial resources to meet the excess costs up to a specified
amount; and provide some form of security acceptable to HUD to cover
excess costs. For this purpose, an IHA may use attachable assets
including funds maintained in its reserve for replacements received
from the sale of Mutual Help units.
Sec. 950.220 Total development cost.
(a) Total development cost standard. The total development cost
(TDC) standard, which limits the allowable cost for developing Indian
housing projects, is determined as a per unit cost for various unit
sizes, structure types and geographic areas. It is developed by HUD by
applying a simple multiplier to an average construction cost. The costs
covered by the TDC approved for a project, which is subject to the TDC
standard, include all costs associated with the project, except for
costs of off-site water and sanitation facilities infrastructure and
donations received from any public or private source. Costs for off-
site water and sanitation facilities infrastructure and any donations
received must be included in the project development cost budget but
will be excluded from the calculation of the project TDC.
(b) Creation of TDC areas. HUD Field Offices shall periodically
assess the adequacy of the existing TDC areas. The geographical area
used as a TDC area shall be a single contiguous physical area with a
clearly identified boundary line. TDC areas shall have a relatively
consistent construction bidding environment, and they shall not
overlap. An IHA may request or the HUD Field Office Administrator may
initiate preparation of a recommendation for changing the TDC areas.
(c) Approval of total development cost for a project. The total
development cost, as defined in Sec. 950.102, is the amount approved by
HUD for development of a particular project, and it will not exceed the
TDC limit except as follows:
(1) The Secretary may provide that the TDC for a project may exceed
the TDC limit by up to 10 percent of the published TDC for special
situations such as, but not limited to, required relocation costs,
start-up costs for on-site solid waste removal, and energy efficient
housing design.
(2) In unusual circumstances, where the Secretary makes a written
determination that there is good cause to exceed the limit of 110
percent of the maximum allowable TDC, the Secretary may approve a
higher amount. An example of a circumstance that might form the basis
for this type of determination is an unforeseen site improvement cost
that is on-site only (not including any cost related to roads or
driveways).
(3) Any approval to exceed the TDC limit for a development that is
based on the published TDC standard shall be subject to fund
availability.
(d) In approving the total development cost, HUD will approve a
reasonable amount for preliminary planning.
(e) Program reservations. (1) Funds reserved for initial program
reservations shall be based on reasonable costs for developments.
(2) After initial funding, the IHA may propose any reasonable
housing design in their development program, as long as the building
codes and other standards adopted by the IHA are not compromised and
the cost of the units to HUD will not exceed the funds reserved.
(3) The IHA must commence construction within 30 months from the
program reservation date. An IHA's failure to commence construction
within 30 months constitutes grounds for termination of the project.
Excluded from this computation is delay in construction caused by the
failure of HUD to process such project within a reasonable period of
time, any environmental review requirement, any legal action affecting
the project, or any other factor beyond the control of the IHA.
(f) Cost review. HUD will review the development budget of each
project for compliance with the maximum allowable TDC based on
published TDC standards and with reasonable development costs,
determined by a cost estimate prepared using HUD data on Indian housing
developments actually constructed. The review will consider any
conditions that may affect the cost analysis, such as logistical
problems associated with developments of remote location, low density
or scattered sites, the unavailability of skilled labor and acceptable
materials, local customs, abnormal climatic conditions, and alternative
heat sources, such as wood or coal.
(g) Construction at reasonable cost. The IHA shall complete
development of each project at the lowest possible cost of construction
and long-term operation of the project, and in no event may the cost of
the project exceed the approved total development cost.
(h) Training of residents. The development cost budget submitted
with the development program shall include an estimated amount for
costs of a HUD-approved tenant counseling program. This counseling
shall be subject to the provisions of Sec. 950.453, substituting renter
and prospective renter for Homebuyer, where applicable. Those
provisions which by their nature are only applicable to MH projects are
applicable only to a MH counseling program.
(i) Initial insurance premiums. The insurance premiums for the
first three years may be included in development costs, with no
obligation for reimbursement from operating receipts. The anticipated
cost of such premiums may be charged to the development and placed in
escrow by the IHA to enable closeout of the development program.
(Approved by the Office of Management and Budget under control
number 2577-0101.)
Sec. 950.225 Application.
(a) Submission to HUD. (1) An IHA may submit an application for a
project after HUD issues a general notification that funds are
available.
(2) The application shall be on the form prescribed by HUD and
shall be accompanied by all the legal and administrative attachments
required by the form. The application must include comments by the
Chief Executive Officer on behalf of the unit of local government where
the project is to be located.
(3) Where the provisions for the necessary local government
cooperation are not contained in the ordinance or other enactment
creating the IHA, the IHA shall submit an executed cooperation
agreement (or a copy of an existing one) for the location involved,
which is sufficient to cover the number of units in the application.
(4) For an IHA that administers the Indian housing program for more
than one specific Tribal government, or in the case of Alaska, more
than one village, the IHA may submit an application on behalf of each
distinct Tribal entity or village. An IHA administering the program in
this manner is an ``umbrella'' IHA.
(5) An application which contains rental housing shall include:
(i) A certification that the IHA has reviewed the expected income
and expenses of the proposed development and that the development is
financially feasible at the current subsidy expense level; or
(ii) A request for an allowable expense level which will enable the
project to be feasibly operated.
(6) An application which contains mutual help housing shall include
a certification that there is a sufficient number of eligible
homebuyers to ensure the viability of the project.
(b) In order to submit an application, the IHA must be eligible and
have satisfied any requirements imposed in accordance with
Sec. 950.135. If an ineligible IHA submits an application, the HUD
Field Office will return the application and will outline the specific
reasons for the determination of ineligibility.
(c)(1) Applications will be rated and points will be awarded for
the following categories:
(i) The relative unmet need for housing;
(ii) The relative IHA occupancy rate compared to the occupancy
rates of other eligible IHAs submitting applications;
(iii) Length of time since the last program reservation date for
each IHA compared to other eligible IHAs submitting applications;
(iv) Current IHA development pipeline activity; and
(v) Other factors identified in a notice of funding availability.
(2) After the completion of the rating process, applications will
be listed together to produce an ordered ranking. An IHA that has not
previously received housing assistance under this part will be given a
preference over all previously funded IHAs. The application with the
highest point total will be funded first; the next highest will be
funded second; and the process will continue until funds are exhausted.
(d) Program reservation. (1) The program reservation will specify
housing type, household type, development method, the funds reserved,
the minimum and maximum number of total units, and units of each
bedroom size to be developed. The program reservation will limit the
total project development cost to the TDC level.
(2) As long as the total project development cost limit is not
exceeded, the number of units may be changed by the IHA. If an IHA
desires to change the number of units to be developed, it must submit
to HUD a request to amend the program reservation, including
documentation supporting the request. HUD will either approve the
request or notify the IHA of the reason the request is not approved.
Amendment funds may not be used to increase the project size.
(e) Execution of ACC. (1) Upon issuance of the program reservation
by HUD, the IHA and HUD may execute an ACC to cover the costs of
surveys and other HUD-approved planning activities with respect to the
number of units covered by the program reservation. HUD may execute an
ACC for an amount which the IHA demonstrates to the satisfaction of the
HUD Field Office is required for the planning of the project. In
support of a request for an ACC for planning, the IHA shall submit for
HUD approval a preliminary budget showing anticipated expenditures and
any needed supporting documentation. A preliminary budget for planning
may include costs for comprehensive planning. (See paragraph (g) of
this section).
(2) Funds for planning shall in no event be provided or used for
purposes, or in amounts, that would not be approvable for inclusion in
a development cost budget.
(3) Use of development funds of projects under ACC to cover costs
for another project is strictly prohibited except as provided for under
paragraph (g) of this section.
(f) ACC amendment for construction and operation. An amendment to
the ACC to cover development and operation of a project shall not be
executed until the IHA has adopted, and HUD has approved, the
development program for the project. In no event may an IHA execute a
contract for construction or development before the execution of an ACC
amendment for construction or development.
(g) Comprehensive housing plan. At the request of an IHA, HUD may
approve up to an additional one percent of the program reservation
above the amount approved in accordance with paragraph (d)(1) of this
section to establish and/or update a master housing plan for its area
of operation. The plan should contain such elements as proposed housing
sites, existing and proposed off-site roads, existing and proposed
water and sewer facilities. In addition, the plan should address
geographical and topographical features, as well as socio-economic and
cultural factors such as employment opportunities, schools and services
which have an impact on the placement of residential housing. The plan
should be approved by resolution of the Tribal council. The one percent
cost for the comprehensive housing plan may be charged to the
development and placed in an escrow or revolving fund account by the
IHA to enable closeout of the development program and/or pooling of
planning resources.
Sec. 950.230 Project coordination.
(a) Project coordination meeting. Upon notification of a Program
Reservation, the IHA shall schedule a project coordination meeting to
plan and schedule the steps needed to develop the project. The IHA will
invite to the project coordination meeting the project designer (if
known) and any Tribal, state or Federal officials who will participate
in the development of the project. At the project coordination meeting,
the IHA shall establish a schedule of planning activities including
target date(s) for completion of key activities including the
submission of the complete development program to HUD. The schedule,
including any amendments thereto, shall be provided to meeting
participant and to HUD to be used in planning and monitoring
activities.
(b) Citizen participation. The IHA shall hold at least one public
meeting at which comments are solicited on both the proposed sites and
project design from potential occupants, as well as from other persons
interested in the project. Such meeting may be held in conjunction with
a regularly scheduled board meeting or may be held separately after
adequate notice is provided to the public to enable full participation
by interested parties. The IHA should give maximum consideration to all
public comments in the design of the project. Minutes from the meeting
and a summary of the IHA's action on public comments shall be included
in the submission of the development program to HUD. Failure to hold a
public meeting or to include the minutes of the meeting in the
development program shall be grounds for disapproval of the development
program.
Sec. 950.235 Site selection criteria.
(a) Relation to Tribal, local and regional plans. Selected sites
must comply with all applicable Tribal, local and/or regional plans.
(b) Access roads. Access roads up to the boundaries of multi-unit
sites shall be provided by the BIA, the Tribe or other appropriate
agency and shall not be an eligible cost of the project. Access roads
up to the boundaries of individual homesites in a scattered site
project shall be provided by the homebuyer, the Tribe, or other
appropriate agency and shall not be an eligible cost of the project.
Access roads shall be maintained by a responsible local entity to
provide safe and suitable vehicular access at all times. No site may be
approved unless such access roads exist, or a written assurance has
been obtained from the responsible entity that roads will be
constructed before commencement of project construction.
(c) Utilities. Before final site approval, the IHA must demonstrate
that all utility services necessary for the operation of the project
are available or will be available at the time of project occupancy and
that no legal, political, geographical, or contractual obstacles exist
that will prevent access to these utility services.
(d) Physical characteristics of site. The physical characteristics
of a site shall facilitate overall economy in site preparation,
construction, and management. Only reasonable costs for surveys,
planning, test borings, and test wells shall be included in the
development cost of the project.
(e) Size of sites. An individual homesite, whether a scattered site
or included in a multi-unit site, shall not exceed the size determined
by the IHA or by Tribal or local policy to be necessary for the use and
occupancy by the resident of the dwelling unit.
(f) Alternate sites. In order to minimize delay to the project in
the event of the withdrawal of a selected homebuyer or an approved
site, the IHA should have a reasonable number of alternates available.
Each homesite shall be legally and practicably available for use by
another homebuyer. If a site is part of other land owned by the
prospective homebuyer, the lease or other conveyance to the IHA shall
include the legal right of access to the site by any substitute
homebuyer.
Sec. 950.240 Types of interest in land.
(a) Trust or restricted land. Sites on Tribally or individually
owned trust or restricted land (as defined in 25 CFR 151.2) shall be
leased to the IHA for a term of not less than 50 years (25 years,
automatically renewable for an additional term of 25 years) on a HUD
approved form of lease, which will provide that the lease cannot be
terminated before its expiration without the consent of the IHA, or,
while the site remains under the ACC, by HUD.
(b) Unrestricted land. Sites on unrestricted land shall be either
conveyed to the IHA in fee or leased to the IHA on a HUD approved form
of lease for a term of not less than 50 years.
(c) Other. Not withstanding the type of interest in land, all
project property shall be exempt from local or state imposed real or
personal property tax in accordance with section 6(d) of the U.S.
Housing Act of 1937 (42 U.S.C. 1437d(d)).
Sec. 950.245 Appraisals.
(a) When the cost of a site is to be charged to the IHA's
development cost, an appraisal shall be made in accordance with the
requirements of the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601-4655).
Government-wide implementing regulations are at 49 CFR part 24. The
cost of donated land may be assumed to be $1,500 per unit. An appraisal
of donated land must be performed only if the IHA determines that the
value to be attributed to the site exceeds $1,500.
(b) When the interest to be appraised is a leasehold interest in
Tribally or individually owned trust or restricted land and comparable
leasehold transactions are not available, the appraiser shall estimate
the value of the land as if alienable in fee, based on a comparison of
the land being valued with sales of fee interests in comparable land in
the same or competing market areas.
Sec. 950.250 Site approval.
(a) IHA certification. Prior to or concurrent with the submission
of the Development Program, the IHA shall submit a written
certification to HUD that all conditions which would prevent the site
from being included in the project have been satisfactorily addressed
and there are no legal or physical reasons which would interfere with
the occupancy and use of the site during the term of the ACC. Such
certification shall be conditioned only upon final acquisition or
execution of a lease on the property.
(b) Tentative site approval. (1) When a site is proposed for use,
the IHA shall inspect the property to ascertain its suitability for
development. Where appropriate, the IHA shall request an inspection of
any proposed site by utility suppliers, the BIA, the IHS, and a
representative of the local governing body and shall include each
agency's comments in a list of potential site approval concerns. If the
IHA determines that a site does not contain any legal or physical
conditions which would exclude it from consideration for acquisition,
the IHA shall prepare a listing of all conditions which must be
corrected or addressed prior to acquisition of the site. The
determination by the IHA and the preparation of the list of conditions
shall be considered the tentative approval of the site.
(2) Tentative site approval will not be determined until the
requirements for compliance with local governmental approval have been
met. (See 24 CFR part 791.)
(3) Upon determination of tentative site approval, the IHA shall
request environmental review by HUD. HUD may request the IHA to provide
information or conduct surveys or studies which will assist in the
determination by HUD of the environmental suitability of the site for
development. Upon completion of the environmental review, HUD will
provide the IHA with a copy of its Environmental Assessment,
environmental review, Finding of No Significant Impact (FONSI) and/or
with the reasons why the site was not environmentally satisfactory. The
cost of completing environmental surveys or studies is an eligible
project cost. Until HUD issues a FONSI, eligible planning costs are
limited to those activities necessary to aid in the completion of the
environmental assessment.
(c) Final site approval. (1) Final site approval occurs when a site
satisfies all of the conditions stated in the tentative approval and,
with respect to trust land or restricted land over which the BIA has
authority, the BIA has given either unconditional concurrence for final
site approval or concurrence conditioned only on subsequent execution
of site leases or right-of-way easements. If the BIA has given final
site approval conditioned on subsequent execution of site leases of
rights-of-way, the IHA shall obtain from the BIA written assurance that
a valid lease, executed by all the necessary parties, can be obtained
within a reasonable time and before start of construction.
(2) Final site approval on all sites for the project must occur:
(i) Before execution of an ACC for construction and operation,
except for a project developed under the acquisition method or for
restricted land sites, in accordance with paragraph (c)(3) of this
section;
(ii) Before any commitment is made to acquire or lease any site;
and
(iii) Before construction is started. In addition, leases and
necessary rights-of-way must be obtained before solicitation of
construction bids or before construction may begin on any units.
(3) With respect to trust or restricted land sites, HUD may execute
the ACC for construction and operation before final site approval of
all sites only when the following conditions have been met:
(i) All sites for the project have tentative site approval;
(ii) At least 50 percent of the sites have final site approval;
(iii) HUD is satisfied that the balance of the sites will meet the
requirements for final site approval no later than one year from
execution of the construction contract; and
(iv) The construction contract provides that if all sites, finally
approved and with executed leases, have not been delivered by the IHA
to the contractor within one year from execution of the construction
contract (or HUD-approved extension), the construction contract shall
be reduced by the amount attributable to the units to be developed on
the undelivered sites.
Sec. 950.255 Design criteria.
(a) Applicable building code. (1) General. For purposes of housing
assisted under chapter IX of this title, the IHA must use the
applicable Tribal or other local building code where it meets or
exceeds standards of model national building codes; or if there is
none, it must use a model building code, or a State or other locality's
building code. Newly constructed housing shall meet or exceed the
requirements of the latest Model Energy Code published by the Council
of American Building Officials. The IHA must coordinate with the Tribe,
or local government, if appropriate, to assure adoption of a code that
satisfies the standards specified in paragraph (a)(2) of this section.
The code may make special provisions for traditional and culturally
oriented design features. In the absence of tribally adopted codes, the
IHA shall determine, by Resolution of the Board of Commissioners,
building codes to be followed in the development of its housing.
(2) Required standards. The code used must provide sufficient
flexibility to permit the use of different designs and materials; must
include standards for reasonable site designs; must include cost-
effective energy conservation performance standards designed to ensure
the lowest total construction and operating costs; must give proper
consideration to the needs of physically handicapped persons for ready
access to, and use of, housing assisted under this chapter (see 24 CFR
part 8); and must be sufficient to produce a decent, safe and sanitary
home.
(b) Fuel and energy consumption. In selecting from among design
options for heating, cooking, and electrical systems, maximum attention
shall be given to cost, adequacy, maintenance of the system, and the
long term reliability of fuel supplies. Where fuel is not locally
available at low cost, alternate systems such as wind, solar, or coal,
may be used and included in the project cost.
(c) Moderate housing design. The design chosen by the IHA must be
of moderate design standard taking into consideration anticipated long
term operating costs.
(d) Water provisions for Alaska. Alaska Native housing assisted
under this part shall be designed and constructed to include water
storage tanks when the housing is not served by or scheduled to be
served by piped utilities. These tanks shall be no less than 100
gallons in capacity and be constructed to be accessed from outside the
house.
(e) Design approval. The IHA shall obtain the approval of project
designs by all local or tribal regulatory agencies, by the BIA for on-
site streets, and the IHS, where appropriate, for community water and/
or sewer facilities. The IHA shall assure the design meets applicable
building codes, that the project can be constructed within the amount
of funds reserved for the development, and that the project is
financially feasible including ongoing maintenance cost considerations.
Sec. 950.260 IHA development program.
An IHA development program is required for all development methods,
and must be approved by HUD.
(a) IHA submission. (1) Submission of the development program shall
be in accordance with the schedule established at the project
coordination meeting. The IHA's failure to submit the complete
development program in the form prescribed by HUD by the date
established will be a factor in HUD's evaluation of an IHA's
administrative capability in accordance with Sec. 950.135.
(2) In order to achieve construction start within 30 months from
the program reservation date (see Sec. 950.220(e)(3), the development
program should be submitted to HUD not later than 18 months from the
program reservation date.
(b) HUD review. HUD will review the IHA development program upon
receipt. HUD will advise the IHA of any deficiencies and will provide
the IHA an opportunity to make corrections within 30 days of receipt of
the notice of deficiencies. To be approvable, the development program
must demonstrate legal sufficiency, the financial feasibility of the
project, and its compliance with all program requirements. Upon
conclusion of HUD's review, the development program will be either
approved or disapproved. If the development program is approved, the
ACC will be executed or amended, as necessary, and the IHA will be
authorized to acquire the units or prepare final plans for
construction. If the initial submission is disapproved, HUD will notify
the IHA of the reasons and allow the IHA to amend and resubmit the
development program.
Sec. 950.265 Construction and inspections.
Following approval of the development program, the IHA shall
commence final planning and begin construction within 12 months of the
development program approval date. Unless there are circumstances
beyond the IHA's control, as defined in Sec. 950.220(e)(3), failure to
commence construction within 30 months from the time of program
reservation constitutes cause for HUD termination of the ACC and
recapture of the reserved funds.
(a) Conventional projects. The IHA shall prepare the plans,
advertise for bids, and award a construction contract. Within 10 days
of the award of a construction contract, the IHA shall prepare and
submit to HUD a certification that it has met all program requirements
for site acquisition; the preparation of final plans and
specifications; and the bidding, evaluation and award of the
construction contract. Included in the submission to HUD, the IHA shall
submit a copy of the set of construction plans and specifications, the
bid advertisement, the construction contract, the notice to proceed and
the contract award development cost budget.
(b) Turnkey and modified turnkey projects. The IHA shall execute
the contract of sale. Within 10 days of execution of the contract of
sale, the IHA shall prepare and submit to HUD a certification that it
has met all program requirements for site acquisition; the review and
acceptance of the final plans and specifications; and the execution of
the contract of sale. The IHA shall submit a copy of the set of
construction plans and specifications and the Contract of Sale and the
contract award development cost budget with the certification to HUD.
(c) Force account. The IHA shall prepare the final construction
plans and specifications; a detailed plan for constructing the project
including the scope of work to be performed by the IHA staff or by
subcontractors; and begin work. Within 10 days of the date construction
activities begin, the IHA shall prepare and submit to HUD a
certification that it has met all program requirements for site
acquisition, the proper preparation of final plans and specifications
and the preparation of its work plan. Included in the submission to
HUD, the IHA shall provide a copy of the set of construction plans and
specifications, the work plan developed to complete construction of the
project, and the contract award development cost budget.
(d) Inspections and monitoring. (1) IHA construction inspections.
Whatever the development method used, the IHA shall be responsible for
obtaining inspections throughout the construction period. The frequency
of inspections and the procedures to be used shall assure completion of
quality housing in accordance with the contract documents. Inspections
shall be performed by an architect, engineer, or other qualified person
selected by the IHA.
(2) Coordination of inspections. The IHA shall coordinate
inspections with tribal or local regulatory agencies and, where
applicable, the BIA and/or IHS, to assure that all governing codes and
other requirements are met.
(3) HUD construction monitoring. HUD representatives or agents may
visit construction sites to evaluate the IHA's contract administration.
These visits should not be construed by the IHA as construction
inspections.
Sec. 950.270 Construction completion and settlement.
(a) Final inspection. The IHA shall assure that all work is
satisfactorily completed, in accordance with the terms of the
construction contract, prior to scheduling a final inspection. The
final inspection shall be made jointly by the IHA and the contractor.
Where appropriate, the IHA shall notify tribal or local regulatory
agencies, the BIA, the IHS, and HUD before this inspection to provide
them with the opportunity to participate in the final inspection of all
or part of the work. In a MH project, homebuyers shall also be invited
to participate in the inspection of their homes, but acceptance shall
be by the IHA. Maximum consideration shall be given to all homebuyer
concerns.
(b) Contract settlement. (1) If the final inspection discloses no
deficiencies other than punch list items or seasonal completion items,
the IHA shall, as soon as practical, develop an interim Certificate of
Completion to enable partial settlement of the contract. The interim
Certificate will detail the items remaining and set forth a schedule
for their completion, and will allow the IHA to accept the units (or
stage) for occupancy. Upon completion of the interim Certificate and
receipt of the contractors Certificate and Release, the IHA shall
release the monies due the contractor less withholdings in accordance
with the construction contract.
(2) The contractor shall complete the punch list items in
accordance with the time schedule contained in the interim Certificate
of Completion. The IHA may pay the contractor for such items which are
completed to the satisfaction of the IHA. If the IHA is satisfied that
the applicable requirements of the construction contract and the
interim Certificate have been met, the IHA shall prepare a final
Certificate of Completion and release the amounts withheld to the
contractor/developer.
(c) Notification to HUD. (1) Within 10 days of acceptance of the
project or any part thereof, the IHA shall notify HUD of such action.
Upon acceptance of all units within a project, the IHA shall provide a
notification to HUD of the date the project was fully available for
occupancy by residents.
(2) The IHA shall provide HUD notice of the end of the rent-up
period within 10 days of such occurrence.
(3) The IHA shall provide HUD with a copy of all interim and final
certificates of completion within 10 days of their execution.
Sec. 950.275 Warranty inspections and enforcement.
(a) The construction contract shall specify the warranty periods
applicable to items completed as part of the contract. It shall also
provide for assignment to the IHA of manufacturers' and suppliers'
warranties covering equipment or supplies.
(b) The IHA shall conduct an inspection of each dwelling unit at
least once not later than six months after the start of the
contractor's warranty period. A separate or final warranty inspection
shall be made in time to exercise the IHA's rights before expiration of
the contractor's warranties. Each inspection shall cover all items
under warranty at the time of the inspection, including items covered
by manufacturers' and suppliers' warranties. At each inspection, the
IHA shall obtain a signed statement from the occupants as to any
deficiencies in the structure, equipment, grounds, etc., so that it may
enforce any rights under applicable warranties.
Sec. 950.280 Correcting deficiencies.
(a) Responsibility. The IHA shall pursue correction of any
deficiencies against the responsible party (e.g. architect, contractor
or the MH homebuyer) as soon as possible after discovering the
deficiencies. Where the costs of correcting deficiencies cannot be
recovered from the responsible party and/or the deficiency requires
immediate correction to protect life or safety or to avoid further
damage to the project unit(s), the IHA may apply to HUD for amendment
of the development budget to provide the funds required, or may request
that operating receipts or other funds be authorized to be used to
cover the costs. In any case, program funds shall not be used for this
purpose without prior HUD approval. The IHA shall be responsible for
correction of any deficiencies which could have been detected and/or
corrected during the warranty period if the IHA had inspected at the
appropriate time or had pursued correction of deficiencies against the
responsible parties.
(b) Amendments. (1) HUD may, but is not obligated to provide
additional funding to the IHA to correct deficiencies. The ACC may be
amended to provide amounts needed to correct deficiencies (and any
damage resulting there from) in design, construction, and equipment
only where there is substantial evidence that it is not possible to
obtain timely correction or payment by the responsible parties,
including the source of the performance bond.
(2) In the case of a MH home, the additional cost for correcting
deficiencies in design, construction or equipment (and any damage
resulting therefrom) shall not result in an increase in the homebuyer's
purchase price. If a homebuyer is not in compliance with the MHO
Agreement, HUD shall require the IHA to reach agreement with the
homebuyer to correct the noncompliance before approving the work.
Sec. 950.285 Fiscal closeout.
The IHA shall submit the actual development cost certificate within
24 months of the date of full availability (see Sec. 950.270(c)(1)), or
such later date as may be approved by HUD, in a form prescribed by HUD,
to the HUD office for review, audit verification and approval. The
audit shall follow the requirements of 24 CFR part 44 (Single Audit Act
of 1984). If the audited development cost indicates that excess funds
have been approved, the IHA shall dispose of the excess as HUD directs.
If the audited development cost certificate discloses unauthorized
expenditures, the IHA shall take such corrective actions as HUD
directs.
Subpart D--Operation
Sec. 950.301 Admission policies.
(a) Admission policies. (1) The IHA shall adopt written policies
for admission of participants. The policies shall cover all programs
operated by the housing authority and, as applicable, will address the
programs individually to meet their specific requirements (i.e.,
Rental, MH, or Turnkey III). A copy of the policies shall be posted
prominently in the IHA's office for examination by prospective
participants, and shall be submitted to the HUD Field Office promptly
after adoption by the IHA. (See Sec. 950.416 with respect to Mutual
Help admission policies.)
(2) The policies shall include tenant and homebuyer selection
criteria designed to:
(i) Avoid concentrations of the most economically and socially
deprived families in any one or all of the IHA's projects;
(ii) Ensure that, to the maximum extent feasible, the projects of
the IHA include families with a broad range of incomes which generally
reflect the range of incomes of those low-income families in the Indian
area who would be qualified for admission to the type of project;
(iii) Preclude admission of applicants whose habits and practices
reasonably may be expected to have a detrimental effect on the
participants or the project environment; and
(iv) For not less than 70 percent of the units made available for
occupancy in a given fiscal year, to give a preference in the selection
of participants (in accordance with Sec. 950.305) who at the time they
are seeking housing assistance, are involuntarily displaced, living in
substandard housing, or paying more than 50 percent of family income
for rent.
(3) The IHA admission policies shall include the following:
(i) Requirements for applications and waiting lists, including
requirement for selection from the top of the list;
(ii) Procedures governing participant transfer between units,
projects, and programs;
(iii) Other IHA priorities, if any, and a requirement that a
participant is not eligible for voluntary transfer unless all
obligations under the current program have been met, including payment
of charges to the IHA and completion of maintenance requirements;
(iv) Compliance with 24 CFR part 750, which requires applicants and
participants to disclose and verify social security numbers at the time
eligibility is determined and at later income reexaminations; and
(v) Compliance with 24 CFR part 760, which requires applicants and
participants to sign and submit consent forms for the obtaining of wage
and claims information from State wage and information collection
agencies.
(b) Income limits. (1) A family must be a Low-income Family, as
defined in Sec. 950.102, to be eligible for admission. (With respect to
eligibility for the Mutual Help program, see special provisions of
Sec. 950.416.)
(2) In extremely unusual circumstances, the IHA may request that
HUD increase or decrease income limits for low-income families or for
very low-income families in the Indian area because of unusually high
or low family incomes. Such a request can be granted only by joint
approval of HUD's Assistant Secretary for Housing and Assistant
Secretary for Public and Indian Housing, after consultation with the
Secretary of Agriculture (if the income limits are being established
for a ``rural area'' as defined in section 520 of the Housing Act of
1949 (42 U.S.C. 1490)).
(c) Standards for IHA tenant/homebuyer selection criteria. (1) The
criteria to be established and information to be considered shall be
reasonably related to individual attributes and behavior of an
applicant, and shall not be related to those which may be imputed to a
particular group or category of persons of which an applicant may be a
member. The IHA's tenant/homebuyer selection criteria must be in
accordance with HUD guidelines and submitted to the HUD Field Office.
(With respect to the Mutual Help program, see special provisions of
Sec. 950.416.)
(2) In the event of any unfavorable information regarding an
applicant, the IHA must take into consideration the time, nature, and
extent of the past occurrence and reasonable probability of future
favorable performance.
(d) Admission of single persons--priority to elderly and displaced
persons. An IHA shall extend preference to elderly families (including
disabled persons and handicapped persons) and displaced persons over
single persons.
(e) Selection preference with respect to projects for elderly
families. (1) In determining priority for admission to projects for
elderly families, an IHA must give a preference to elderly families.
When selecting applicants for admission from among elderly families, an
IHA must follow its policies and procedures for applying the Federal
preferences contained in Sec. 950.305.
(2) An IHA may give a preference to near elderly families in
determining priority for admission to projects for elderly families
when the IHA determines that there are not enough eligible elderly
families to fill all the units that are currently vacant or expected to
become vacant in the next 12 months. In no event may an IHA admit a
near elderly family if there are eligible elderly families on the IHA's
waiting list that would be willing to accept an offer for a suitable
vacant unit in that project.
(3) Before electing the discretionary preference in paragraph
(e)(2) of this section, an IHA must conduct outreach to attract
eligible elderly families, including, where appropriate, elderly
families residing in projects not designated as being for elderly
families.
(4) If an IHA elects the discretionary preference in paragraph
(e)(2) of this section, the IHA must follow its policies and procedures
for applying the Federal preferences contained in Sec. 950.305 when
selecting applicants for admission from among near elderly families.
Near elderly families that do not qualify for a Federal preference and
that are given preference for admission under this section over other
non-elderly families that qualify for such a Federal preference are not
subject to the 30 percent limitation on admission of families without a
Federal preference over families with such a Federal preference that
may initially receive assistance in any one-year period, as set out in
Sec. 950.305(b)(2)(ii). If a near elderly applicant is a single person,
the near elderly single person may be given a preference for admission
over other single persons to projects for the elderly.
(f) Verification of information and notification to applicants.
(1) Verification. Adequate procedures shall be developed to obtain
and verify information with respect to each applicant. Information
relative to the acceptance or rejection of an applicant shall be
documented and placed in the applicant's file.
(2) Notification to applicants. (i) If an applicant is determined
to be ineligible for admission to a project, the IHA shall promptly
notify the applicant of the basis for such determination and shall
provide the applicant, upon request and within a reasonable time after
the determination is made, with an opportunity for an informal hearing
on such determination; and
(ii) When a determination has been made that an applicant is
eligible and satisfies all requirements for admission including the
tenant selection criteria, the applicant shall be notified of the
approximate date of occupancy insofar as that date can be reasonably
determined.
(Approved by the Office of Management and Budget under control
number 2577-0063.)
Sec. 950.305 Federal selection preferences.
(a) General. (1) In selecting applicants for admission to its
projects, each IHA must give preference to applicants who are otherwise
eligible for assistance and who, at the time they are seeking housing
assistance, are involuntarily displaced, living in substandard housing,
or paying more than 50 percent of family income for rent.
(2)(i) The IHA must inform all applicants of the availability of
the Federal preferences, and must give all applicants an opportunity to
show that they qualify for a preference. For purposes of this paragraph
(a)(2)(i) of this section, applicants include families on any waiting
list maintained by the IHA when this section is implemented or
thereafter.
(ii) If the IHA determines that the notification to all applicants
on a waiting list required by paragraph (a)(2)(i) of this section is
impracticable because of the length of the list, the IHA may provide
this notification to fewer than all applicants on the list at any given
time. The IHA must, however, have notified a sufficient number of
applicants at any given time that, on the basis of the IHA's
determination of the number of applicants on the waiting list who
already claim a Federal preference, and the anticipated number of
project admissions:
(A) There is an adequate pool of applicants who are likely to
qualify for a Federal preference; and
(B) It is unlikely that, on the basis of the IHA's framework for
applying the preferences under paragraph (b) of this section and the
preferences claimed by those already on the waiting list, any applicant
who has not been so notified would receive assistance before those who
have received notification.
(3) An IHA must apply the definitions of ``standard, permanent
replacement housing''; ``involuntary displacement''; ``substandard
housing'' and ``homeless family''; ``family income''; and ``rent'' set
forth in paragraphs (c)(5), (d), (f), (h), and (i), respectively, of
this section, unless the IHA submits alternative definitions for HUD's
review and approval. An IHA may apply the verification procedures found
in paragraphs (e), (g), and (j) of this section, or it may, in its own
discretion and without HUD approval, adopt verification procedures of
its own.
(4) For purposes of this section, the term ``Federal preference''
means a tenant selection preference provided under this section. The
term ``preference'' means a Federal preference, unless the context
indicates otherwise.
(b) Applying the Federal preferences. (1) Each IHA must include the
Federal preferences in its tenant selection policies and procedures.
The IHA must apply the Federal preferences in a manner that is
consistent with the provisions of this section, and other applicable
requirements.
(2)(i) Except as provided in paragraph (b)(2)(ii) of this section,
the IHA must establish a system for applying the Federal preferences
that provides that an applicant who qualifies for any of the Federal
preferences is to be admitted before any other applicant who is not so
qualified without regard to the other applicant's qualification for one
or more preferences or priorities that are not provided by Federal law,
place on the waiting list, or the time of submission of an application
for admission.
(ii) The IHA's system for applying the Federal preferences may
provide for circumstances in which applicants who do not qualify for a
Federal preference are admitted before other applicants who are so
qualified. Not more than 10 percent of the applicants who initially are
admitted in any one-year period (or such shorter period selected by the
IHA before the beginning of its first full year under this paragraph
(b)(2)(ii)) of this section may be applicants referred to in the
preceding sentence.
(iii) In applying the preferences under paragraph (b)(2) of this
section, the IHA may determine the relative weight to be accorded the
Federal preferences, through means such as:
(A) Applying non-Federal preferences or priorities (such as local
residency preferences) as a way of ranking applicants who qualify (or
claim qualification) for a Federal preference;
(B) Aggregating the Federal preferences (i.e., two Federal
preferences outweigh one and three outweigh two);
(C) Ranking the Federal preferences (e.g., provide that an
applicant living in substandard housing has greater need for housing
than (and, therefore, would be considered for admission before) an
applicant paying more than 50 percent of income for rent); or
(D) Ranking the Federal preferences' definitional elements (e.g.,
provide that those living in housing that is dilapidated or has been
declared unfit for habitation by an agency or unit of government have a
greater need for housing than, and take precedence over, those whose
housing is substandard only because it does not have a usable bathtub
or shower inside the unit for the exclusive use of the family).
(3) To the extent that title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d) and the Fair Housing Act (42 U.S.C. 3601-3619) apply to a
Tribal government, any selection preferences or priorities used by an
IHA within such a Tribe's jurisdiction must be established and
administered in a manner that is consistent with HUD's affirmative fair
housing objectives and that is not incompatible with title VI of the
Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42
U.S.C. 3601-3620); Executive Order 11063 on Equal Opportunity in
Housing, (3 CFR, 1959-63 Comp., p. 652), as amended by Executive Order
12259 (3 CFR, 1980 Comp., p. 307); section 504 of the Rehabilitation
Act of 1973 (29 U.S.C. 794); the Age Discrimination Act of 1975 (42
U.S.C. 6101-07); and HUD's regulations and requirements issued under
these authorities.
(c) Qualifying for a Federal preference. (1) An applicant qualifies
for a Federal preference if:
(i) The applicant has been involuntarily displaced and is not
living in standard, permanent replacement housing, or within no more
than six months from the date of certification under paragraph (c)(2)
of this section or verification under paragraph (c)(3) of this section
(as appropriate), the applicant will be involuntarily displaced;
(ii) The applicant is living in substandard housing; or
(iii) The applicant is paying more than 50 percent of family income
for rent.
(2) Applicants may claim qualification for a Federal preference
when they apply for admission to a project (or thereafter until they
are offered a unit in the project) by certifying to the IHA that they
qualify for a preference under paragraph (c)(1) of this section by
virtue of the applicant's current status. The applicant's current
status must be determined without regard to whether there has been a
change in the applicant's qualification for a preference between the
certification under paragraph (c)(2) of this section and admission to a
project, including a change from one Federal preference category to
another.
(3) Once an applicant's qualification for a Federal preference
under paragraph (c)(1) of this section has been verified, an IHA need
not require the applicant to verify such qualification again, unless,
as determined by the IHA, such a long time has elapsed since
verification as to make reverification desirable, or the IHA has
reasonable grounds to believe that the applicant no longer qualifies
for a Federal preference.
(4) For purposes of this paragraph (c), ``standard, permanent
replacement housing'' is housing:
(i)(A) That is decent, safe, and sanitary;
(B) That is adequate for the family size; and
(C) That the family is occupying pursuant to a lease or occupancy
agreement.
(ii) Such housing does not include transient facilities, such as
motels, hotels, or temporary shelters for victims of domestic violence
or homeless families, and in the case of domestic violence referred to
in paragraph (d)(2) of this section, does not include the housing unit
in which the applicant and the applicant's spouse or other member of
the household who engages in such violence live.
(5) An applicant may not qualify for a Federal preference under
paragraph (c)(1)(ii) of this section if the applicant is paying more
than 50 percent of family income to rent a unit because the applicant's
housing assistance under the United States Housing Act of 1937 (42
U.S.C. 1437-1440) or section 101 of the Housing and Urban Development
Act of 1965 (12 U.S.C. 1701s) with respect to that unit has been
terminated as a result of the applicant's refusal to comply with
applicable program policies and procedures with respect to the
occupancy of underoccupied and overcrowded units.
(d) Definition of involuntary displacement. (1) An applicant is or
will be involuntarily displaced if the applicant has vacated or will
have to vacate his or her housing unit as a result of one or more of
the following actions:
(i) A disaster, such as a fire or flood, that results in the
uninhabitability of an applicant's unit;
(ii) Activity carried on by an agency of the United States or by
any State or local governmental body or agency in connection with code
enforcement or a public improvement or development program; or
(iii) Action by a housing owner that results in an applicant's
having to vacate his or her unit, where:
(A) The reason for the owner's action is beyond an applicant's
ability to control or prevent;
(B) The action occurs despite an applicant's having met all
previously imposed conditions of occupancy; and
(C) The action taken is other than a rent increase.
(2) An applicant also is involuntarily displaced if:
(i)(A) The applicant has vacated his or her housing unit as a
result of actual or threatened physical violence directed against the
applicant or one or more members of the applicant's family by a spouse
or other member of the applicant's household; or
(B) The applicant lives in a housing unit with such an individual
who engages in such violence.
(ii) For purposes of paragraph (d)(2) of this section, the actual
or threatened violence must, as determined by the IHA in accordance
with HUD's administrative instructions, have occurred recently or be of
a continuing nature.
(3) For purposes of paragraph (d)(1)(iii) of this section, reasons
for an applicant's having to vacate a housing unit include, but are not
limited to, conversion of an applicant's housing unit to non-rental or
non-residential use; closure of an applicant's housing unit for
rehabilitation or for any other reason; notice to an applicant that he
or she must vacate a unit because the owner wants the unit for the
owner's personal or family use or occupancy; sale of a housing unit in
which an applicant resides under an agreement that the unit must be
vacant when possession is transferred; or any other legally authorized
act that results or will result in the withdrawal by the owner of the
unit or structure from the rental market. Such reasons do not include
the vacating of a unit by a tenant as a result of actions taken because
of the tenant's refusal:
(i) To comply with applicable program policies and procedures under
this title with respect to the occupancy of underoccupied and
overcrowded units, or
(ii) To accept a transfer to another housing unit in accordance
with a court decree or in accordance with such policies and procedures
under a HUD-approved desegregation plan.
(e) Verification procedures for applicants involuntarily displaced.
Verification of an applicant's involuntary displacement is established
by the certification, in a form prescribed by the Secretary:
(1) Made by a unit or agency of government that an applicant has
been or will be displaced as a result of a disaster, as defined in
paragraph (d)(1)(i) of this section;
(2) Made by a unit or agency of government that an applicant has
been or will be displaced by government action, as defined in paragraph
(d)(1)(ii) of this section;
(3) Made by an owner or owner's agent that an applicant had to, or
will have to, vacate a unit by a date certain because of an owner
action referred to in paragraph (d)(1)(iii) of this section; or
(4) Made by the local police department, social services agency, or
court of competent jurisdiction, or a clergyman, physician, or public
or private facility that provides shelter or counseling to the victims
of domestic violence, that an applicant has been or is being displaced
because of domestic violence, as described in paragraph (d)(2) of this
section.
(f) Definition of substandard housing. (1) A unit is substandard if
it:
(i) Is dilapidated;
(ii) Does not have operable indoor plumbing;
(iii) Does not have a usable flush toilet inside the unit for the
exclusive use of a family;
(iv) Does not have a usable bathtub or shower inside the unit for
the exclusive use of a family;
(v) Does not have electricity, or has inadequate or unsafe
electrical service;
(vi) Does not have a safe or adequate source of heat;
(vii) Should, but does not, have a kitchen; or
(viii) Has been declared unfit for habitation by an agency or unit
of government.
(2) For purposes of paragraph (f)(1) of this section, a housing
unit is dilapidated if it does not provide safe and adequate shelter,
and in its present condition endangers the health, safety, or well-
being of a family, or it has one or more critical defects, or a
combination of intermediate defects in sufficient number or extent to
require considerable repair or rebuilding. The defects may involve
original construction, or they may result from continued neglect or
lack of repair or from serious damage to the structure.
(3) For purposes of paragraph (f) of this section, an applicant who
is a ``homeless family'' is living in substandard housing. For purposes
of the preceding sentence, a ``homeless family'' includes any
individual or family who:
(i) Lacks a fixed, regular, and adequate nighttime residence; and
(ii) Has a primary nighttime residence that is:
(A) A supervised publicly or privately operated shelter designed to
provide temporary living accommodations (including welfare hotels,
congregate shelters, and transitional housing for the mentally ill);
(B) An institution that provides a temporary residence for
individuals intended to be institutionalized; or
(C) A public or private place not designed for, or ordinarily used
as, a regular sleeping accommodation for human beings. A ``homeless
family'' does not include any individual imprisoned or otherwise
detained pursuant to an Act of the Congress or a State law.
(4) For purposes of paragraph (f)(1) of this section, single room
occupancy (SRO) housing, as defined in 24 CFR 882.102, is not
substandard solely because it does not contain sanitary or food
preparation facilities (or both).
(g) Verification procedures for applicants living in substandard
housing. Verification that an applicant is living in substandard
housing consists of certification, in a form prescribed by the
Secretary, from a unit or agency of government or from an applicant's
present landlord that the applicant's unit has one or more of the
deficiencies listed in, or the unit's condition is as described in,
paragraph (f)(1) or (f)(2) of this section. In the case of a ``homeless
family'' (as described in paragraph (f)(3) of this section),
verification consists of certification, in a form prescribed by the
Secretary, of this status from a public or private facility that
provides shelter for such individuals, or from the local police
department or social services agency.
(h) Definition of family income. For purposes of this section,
family income is ``monthly income'', which is one-twelfth of ``annual
income'' as defined in Sec. 950.102.
(i) Definition of rent. (1) For purposes of this section, rent is
defined as:
(i) The actual amount due, calculated on a monthly basis, under a
lease or occupancy agreement between a family and the family's current
landlord; and
(ii) In the case of utilities purchased directly by tenants from
utility providers;
(A) The IHA's reasonable estimate of tenant-purchased utilities
(except telephone) and the other housing services that are normally
included in rent; or
(B) If the family chooses, the average monthly payments that it
actually made for these utilities and services for the most recent 12-
month period or, if information is not obtainable for the entire
period, for an appropriate recent period.
(2) For purposes of calculating rent under paragraph (i) of this
section, amounts paid to or on behalf of a family under any energy
assistance program must be subtracted from the otherwise applicable
rental amount to the extent that they are not included in the family's
income.
(3) In the case of an applicant who owns a manufactured home, but
who rents the space upon which it is located, rent under paragraph (i)
of this section includes the monthly payment to amortize the purchase
price of the home, as calculated in accordance with HUD's requirements.
(4) In the case of members of a cooperative, rent under paragraph
(i) of this section means the charges under the occupancy agreement
between the members and the cooperative.
(j) Verification of an applicant's income, rent, and utilities
payments. The IHA must verify that an applicant is paying more than 50
percent of family income for rent, as follows:
(1) The IHA must verify the family's income in accordance with the
standards and procedures that it uses to verify income for the purpose
of determining applicant eligibility and total tenant payment.
(2)(i) An IHA must verify the amount due to the family's landlord
(or cooperative) under the lease or occupancy agreement:
(A) By requiring the family to furnish copies of its most recent
rental (or cooperative charges) receipts (which may include cancelled
checks or money order receipts) or a copy of the family's current lease
or occupancy agreement; or
(B) By contacting the landlord (or cooperative) or its agent
directly.
(ii) An IHA must verify the amount paid to amortize the purchase
price of a manufactured home:
(A) By requiring the family to furnish copies of its most recent
payment receipts (which may include cancelled checks or money order
receipts) or a copy of the family's current purchase agreement; or
(B) By contacting the lienholder directly.
(3) To verify the actual amount that a family paid for utilities
and other housing services, the IHA must require the family to provide
copies of the appropriate bills or receipts, or must obtain the
information directly from the utility or service supplier.
(k) Notice and opportunity for a meeting where Federal preference
is denied. If the IHA determines that an applicant does not meet the
criteria for receiving a Federal preference, the IHA must promptly
provide the applicant with written notice of the determination. The
notice must contain a brief statement of the reasons for the
determination, and state that the applicant has the right to meet with
the IHA's designee to review it. If requested, the meeting must be
conducted by a person or persons designated by the IHA. Those
designated may be an officer or employee of the IHA, including the
person who made or reviewed the determination, or his or her
subordinate. The procedures specified in this paragraph must be carried
out in accordance with HUD's requirements. The applicant may exercise
other rights if the applicant believes that he or she has been
discriminated against on the basis of race, color, religion, sex,
national origin, age, or handicap.
(l) Closure of waiting list. Notwithstanding the fact that the IHA
may not be accepting additional applications because of the length of
the waiting list, the IHA may not refuse to place an applicant on the
waiting list if the applicant is otherwise eligible for admission and
claims that he or she qualifies for a Federal preference under this
section, unless the IHA determines, on the basis of the number of
applicants who are already on the waiting list and who claim a Federal
preference, and the anticipated number of project admissions, that:
(1) There is an inadequate pool of applicants who are likely to
qualify for a Federal preference; and
(2) It is unlikely that, on the basis of the IHA's system for
applying the Federal preferences, the preference or preferences that
the applicant claims, and the preferences claimed by applicants on the
waiting list, the applicant would qualify for admission before other
applicants on the waiting list.
Sec. 950.310 [Reserved]
Sec. 950.315 Initial determination, verification, and reexamination of
family income and composition.
(a) Income, family composition, and eligibility. The IHA is
responsible for determination of annual income and adjusted income, for
determination of eligibility for admission and total tenant payment or
homebuyer required monthly payment; and for reexamination of family
income and composition at least annually for all tenants and
homebuyers. The ``effective date'' of an examination or reexamination
refers to:
(1) In the case of an examination for admission, the effective date
of initial occupancy; and
(2) In the case of a reexamination of an existing tenant or
homebuyer, the effective date of any change in tenant payment or
required monthly payment resulting from the reexamination.
(3) If there is no change, the effective date is the date a change
would have taken place if the reexamination had resulted in a change in
payment.
(b) Verification. As a condition of admission to, or continued
occupancy of, any assisted unit, the IHA shall require the family head
and other such family members as it designates to execute a HUD-
approved release and consent form (including any release and consent as
required under 24 CFR part 760) authorizing any depository or private
source of income, or any Federal, State, or local agency, to furnish or
release to the IHA and to HUD such information as the IHA or HUD
determines to be necessary. The IHA also shall require the family to
submit directly the documentation determined to be necessary, including
any information required under 24 CFR part 750. Information or
documentation shall be determined to be necessary if it is required for
purposes of determining or auditing a family's eligibility to receive
housing assistance, for determining the family's adjusted income or
tenant rent or required monthly payment, for verifying related
information, or for monitoring compliance with equal opportunity
requirements. The use or disclosure of information obtained from a
family or from another source pursuant to this release and consent
shall be limited to purposes directly connected with administration of
this part or an application for assistance.
(c) Rent and homebuyer payment adjustments. After consultation with
the family and upon verification of the information, the IHA shall make
appropriate adjustments in the rent or homebuyer payment amount. The
tenant or homebuyer shall comply with the IHA's policy regarding
required interim reporting of changes in the family's income.
Sec. 950.320 Determination of rents and homebuyer payments.
(a) Rental and Turnkey III projects. The amount of rent required of
a tenant in a rental project or the Turnkey III homebuyer payment
amount for a homebuyer in a Turnkey III project for Turnkey III
contracts executed after August 1, 1982, shall be equal to the total
tenant payment as determined in accordance with Sec. 950.325. For
Turnkey III contracts executed on or before August 1, 1982, the Turnkey
III homebuyer payment is determined in accordance with the contract. If
the utility allowance exceeds the rent or required monthly payment, the
IHA will pay the utility reimbursement as provided in Sec. 950.325(b).
In the case of a Turnkey III homebuyer, payment of a utility
reimbursement may affect the IHA's evaluation of the Turnkey III
homebuyer's homeownership potential. (See Secs. 950.503(c)(3) and
950.529 regarding loss of homeownership potential and Sec. 950.523
regarding funds to cover such reimbursements.)
(b) MH projects. The amount of the required monthly payment for a
homebuyer in an MH project is determined in accordance with subpart E
of this part.
Sec. 950.325 Total tenant payment--Rental and Turnkey III programs.
(a) Total tenant payment. Total tenant payment shall be the highest
of the following, rounded to the nearest dollar:
(i) 30 percent of monthly adjusted income;
(ii) 10 percent of monthly income; or
(iii) If the family receives welfare assistance from a public
agency and a part of such payments, adjusted in accordance with the
family's actual housing costs, is specifically designated by such
agency to meet the family's housing costs, the monthly portion of such
payments which is so designated.
(2) If the family's welfare assistance is ratably reduced from the
standard of need by applying a percentage, the amount calculated under
paragraph (a)(3) of this section shall be the amount resulting from one
application of the percentage.
(b) Utility reimbursement. If the utility allowance exceeds the
total tenant payment, the difference (the utility reimbursement) shall
be due to the family. If the utility company consents, an IHA may, at
its discretion, pay the utility reimbursement directly to the utility
company.
Sec. 950.335 Rent and homebuyer payment collection policy.
Each IHA shall establish and adopt, and use its best efforts to
obtain compliance with, written policies sufficient to assure the
prompt payment and collection of rent and homebuyer payments. A copy of
the written policies shall be posted prominently in the IHA office, and
shall be provided upon request. Such policies must be in accordance
with HUD guidelines and will be reviewed by HUD. Unless HUD has issued
a corrective action order in accordance with Sec. 950.135, HUD approval
of the policy is not required.
Sec. 950.340 Grievance procedures and leases.
(a) Grievance procedures. (1) General. Each IHA shall adopt
grievance procedures that are appropriate to local circumstances. These
procedures shall comply with the Indian Civil Rights Act, if
applicable, and section 6(k) of the Act, as applicable, and shall
assure that tenants and homebuyers will:
(i) Be advised of the specific grounds of any proposed adverse
action by the IHA;
(ii) Have an opportunity for a hearing before an impartial party
upon timely request;
(iii) Have a reasonable opportunity to examine any documents,
records or regulations related to the proposed action before the
hearing (or trial in court);
(iv) Be entitled to be represented by another person of their
choice at any hearing;
(v) Be entitled to ask questions of witnesses and have others make
statements on their behalf; and
(vi) Be entitled to receive a written decision by the IHA on the
proposed action.
(2) Expedited grievance procedure. An IHA may establish an
expedited grievance procedure for any grievance concerning a
termination of tenancy or eviction that involves:
(i) Any criminal activity that threatens the health, safety or
right to peaceful enjoyment of the Indian housing development by other
residents or employees of the IHA or,
(ii) Any drug-related criminal activity on or near the premises.
(3) Exclusion of certain grievances. (i) General. An IHA may pursue
termination of tenancy or eviction without offering a grievance
procedure where the termination or eviction is based on one of the
grounds stated in paragraph (a)(2) of this section if applicable.
Tribal or State law requires that, before eviction, a tenant (including
a homebuyer under a homeownership agreement) be given a hearing in
court, if HUD has determined that the Tribal or State procedures
provide the basic elements of due process.
(ii) Basic elements of due process. The elements of due process
against which the jurisdiction's procedures are measured by HUD are the
following:
(A) Adequate notice to the tenant of the grounds for terminating
the tenancy and for eviction;
(B) Right of the tenant to be represented by counsel;
(C) Opportunity for the tenant to refute the evidence presented by
the IHA, including the right to confront and cross-examine witnesses
and to present any affirmative legal or equitable defense that the
tenant might have; and
(D) A decision on the merits.
(4) Notice to post office of certain evictions. When an IHA evicts
an individual or family from a dwelling unit for engaging in criminal
activity, including drug-related criminal activity, the IHA shall
notify the local post office serving that dwelling unit that the
evicted individual or family is no longer residing in the dwelling unit
(so that the post office will terminate delivery of mail for such
persons at the unit, and that such persons will not return to the unit
to pick up mail).
(5) Notice of procedures. A copy of the grievance procedures shall
be posted prominently in the IHA office, and shall be provided to any
tenant, homebuyer, or applicant upon request.
(b) Leases. Each IHA shall use leases that:
(1) Do not contain unreasonable terms and conditions;
(2) Obligate the IHA to maintain the project in a decent, safe, and
sanitary condition;
(3) Require the IHA to give adequate written notice of termination
of the lease which shall not be less than--
(i) A reasonable time, but not to exceed 30 days, when the health
or safety of other tenants or IHA employees is threatened;
(ii) Fourteen days in the case of nonpayment of rent; and
(iii) Thirty days in any other case;
(4) Require that the IHA may not terminate the tenancy except for
serious or repeated violation of the terms or conditions of the lease
or for other good cause;
(5) Provide that any criminal activity that threatens the health,
safety or right to peaceful enjoyment of the premises by other tenants
or any drug-related criminal activity, on or near the premises, engaged
in by an Indian housing tenant, any member of the tenant's household,
or any guest or other person under the tenant's control, shall be cause
for termination of tenancy. For purposes of this section, the term
``drug-related criminal activity'' means the illegal manufacture, sale,
distribution, use, or possession with intent to manufacture, sell,
distribute, or use, of a controlled substance (as defined in section
102 of the Controlled Substances Act (21 U.S.C. 802)); and
(6) Specify that respect to any notice of termination of tenancy or
eviction, notwithstanding any applicable Tribal or State law, an Indian
housing tenant shall be informed of the opportunity, before any hearing
or trial, to examine any relevant documents, records or regulations
directly related to the termination or eviction.
(Approved by the Office of Management and Budget under control
number 2577-0171)
Sec. 950.345 Maintenance and improvements.
(a) General. Each IHA shall adopt, and use its best efforts to
obtain compliance with, written policies to assure full performance of
the respective maintenance responsibilities of the IHA and tenants. A
copy of such policies shall be posted prominently in the IHA office,
and shall be provided to an applicant or tenant upon entry into the
program and upon request.
(b) Provisions for rental projects. For rental projects, the
maintenance policies shall contain provisions on at least the following
subjects:
(1) The responsibilities of tenants for normal care and maintenance
of their dwelling units, and of the common property, if any;
(2) Procedures for handling maintenance service requests from
tenants;
(3) Procedures for IHA inspections of dwelling units and common
property;
(4) Special arrangements, if any, for obtaining maintenance
services from outside workers or contractors; and
(5) Procedures for charging tenants for damages for which they are
responsible.
(Approved by the Office of Management and Budget under control
number 2577-0114)
Sec. 950.346 Fire safety.
(a) Applicability. This section applies to all IHA-owned or leased
housing, including Mutual Help and Turnkey III.
(b) Smoke detectors. (1) After October 30, 1992, each unit must be
equipped with at least one battery-operated or hard-wired smoke
detector, or such greater number as may be required by applicable
State, local or Tribal codes, in working condition, on each level of
the unit. In units occupied by hearing-impaired residents, smoke
detectors must be hard-wired.
(2) After October 30, 1992, the public areas of all housing covered
by this section must be equipped with a sufficient number, but not less
than one for each area, of battery-operated or hard-wired smoke
detectors to serve as adequate warning of fire. Public areas include,
but are not limited to, laundry rooms, community rooms, day care
centers, hallways, stairwells, and other common areas.
(3) The smoke detector for each individual unit must be located, to
the extent practicable, in a hallway adjacent to the bedroom or
bedrooms. In units occupied by hearing-impaired residents, hard-wired
smoke detectors must be connected to an alarm system designed for
hearing-impaired persons and installed in the bedroom or bedrooms
occupied by the hearing-impaired residents. Individual units that are
jointly occupied by both hearing and hearing-impaired residents must be
equipped with both audible and visual types of alarm devices.
(4) If needed, battery-operated smoke detectors, except in units
occupied by hearing-impaired residents, may be installed as a temporary
measure where no detectors are present in a unit. Temporary battery-
operated smoke detectors must be replaced with hard-wired electric
smoke detectors in the normal course of an IHA's planned CIAP or CGP
program to meet the HUD Modernization Standards of applicable State,
local or Tribal codes, whichever standard is stricter. Smoke detectors
for units occupied by hearing-impaired residents must be installed in
accordance with the acceptability criteria in paragraph (b)(3) of this
section.
(5) IHAs shall use operating funds to provide battery-operated
smoke detectors in units that do not have any smoke detectors in place.
If operating funds or reserves are insufficient to accomplish this,
IHAs may apply for emergency CIAP funding. IHAs may apply for CIAP or
CGP funds to replace battery-operated smoke detectors with hard-wired
smoke detectors in the normal course of a planned modernization
program.
Sec. 950.360 IHA employment practices.
(a) Indian preference. Each IHA shall adopt written policies with
respect to the IHA's own employment practices, which shall be in
compliance with its obligations under section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e(b)), and
E.O. 11246 (3 CFR, 1964-65 Comp., p. 339) as amended by Executive Order
11375 (3 CFR, 1966-70 Comp., p. 684), where applicable. A copy of these
policies shall be posted in the IHA office, and a copy shall be
submitted to HUD promptly after adoption by the IHA. (Title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e), as amended, which prohibits
discrimination in employment by making it unlawful for employers to
engage in certain discriminatory practices, excludes Indian Tribes from
the nondiscrimination requirements of Title VII. See also
Sec. 950.165(b)(2)(ii).)
(b) Wage rates. See Sec. 950.120 (c) and (d) with respect to the
wage rates applicable to IHA employees.
(Approved by the Office of Management and Budget under control
number 2577-0130)
Subpart E--Mutual Help Homeownership Opportunity Program
Sec. 950.401 Scope and applicability.
(a) Scope. This subpart sets forth the requirements that are
applicable to the MH Homeownership Opportunity Program. For any matter
not covered in this subpart, see the provisions of the other subparts
contained in this part. Projects developed under the Self-Help
development method must comply with the requirements of subparts E and
F of this part.
(b) Applicability. The provisions of this subpart are applicable to
all MH projects placed under ACC on or after March 9, 1976, and to any
projects converted in accordance with Secs. 950.455 or 950.503.
Sec. 950.413 Special provisions for development of an MH project.
(a) MH construction contracts. (1) Special provisions to be
included in advertisements. The advertisement for a construction
contract other than one used in Self-Help shall state that:
(i) The project is an MH project;
(ii) The contractor may obtain a copy of the proposed MH
construction contract; and
(iii) The contractor may obtain a list of the sites.
(2) Responsibility of contractor. The construction contract shall
provide that the contractor is responsible for acceptable completion of
all the homes.
(b) Consultation with homebuyers. The IHA shall provide for
soliciting comments from homebuyers and other interested parties, as
provided in Sec. 950.225(c), concerning the planning and design of the
homes. Any changes resulting from such consultation shall be consistent
with project standards and cost limitations.
(c) Financial feasibility. The application shall be supported by
signed applications maintained in the IHA's office of a sufficient
number of selected homebuyers who are able and willing to pay the
projected administration charge, meet the other obligations under MHO
Agreements (see Sec. 950.416(b)), and enter into MHO Agreements. HUD
may request submission of the applications, as necessary.
(d) Rights under MHO agreement if project fails to proceed. Any MHO
Agreement shall be subject to revocation by the IHA if the IHA or HUD
decides not to proceed with the development of the project in whole or
in part. In such event, any contribution made by the homebuyer or Tribe
shall be returned. If the contribution was a land contribution, it will
be returned to the contributor.
(e) Mutual Help contribution. See Sec. 950.419.
(f) Insurance. Upon occupancy, the homebuyer is responsible for
payment of insurance coverage as part of its administration charge (see
Sec. 950.427(b)).
Sec. 950.416 Selection of MH homebuyers.
(a) Admission policies. (1) Low-income families. An IHA's written
admission policies for the MH program, adopted in accordance with
Sec. 950.301, must limit admission to low-income families.
(i) An IHA may provide for admission of applicants whose family
income exceeds the levels established for low-income families to the MH
program operated on an Indian reservation or in an Indian area, if the
IHA demonstrates to HUD's satisfaction that there is a need for housing
for such families that cannot reasonably be met except under this
program.
(ii) An IHA may provide for admission of a non-Indian applicant to
the MH program operated on an Indian reservation or in an Indian area,
if the IHA determines that the presence of the family on the Indian
reservation or other Indian area is essential to the well-being of
Indian families and the need for housing for the family cannot
reasonably be met except under this program. If the IHA permits
admission of non-Indians to its MH program, the IHA must specify the
criteria it uses to determine whether a family's presence is essential
in its admission policies.
(2) Limitation on number of units for non-low income families. The
number of dwelling units in any project assisted under the MH program
that may be occupied by or reserved for families on Indian reservations
and other Indian areas whose incomes exceed the levels established for
low-income families (i.e., applicants admitted under paragraph
(a)(1)(i) of this section) may not exceed whichever of the following is
higher:
(i) Ten percent of the dwelling units in the project; or
(ii) Five dwelling units.
(3) Different standards for MH program. The IHA's admission
policies for MH projects should be different from those for its rental
or Turnkey III projects. The policies for the MH program should provide
standards for determining a homebuyer's:
(i) Ability to provide maintenance for the unit;
(ii) Potential for maintaining at least the current income level;
(iii) Successor to a unit at the time of an ``event'' (``event''
should also be defined by the IHA in its policy); and
(iv) Initial purchase price and the purchase price for a subsequent
homebuyer.
(b) Ability to meet homebuyer obligations. A family shall not be
selected for MH housing unless, in addition to meeting the income
limits and other requirements for admission (see Sec. 950.301), the
family is able and willing to meet all obligations of an MHO Agreement,
including the obligations to perform or provide the required
maintenance, to provide the required MH Contribution and its own
utilities, and to pay the administration charge.
(c) MH waiting list. (1) Families who wish to be considered for
selection for MH housing shall apply specifically for such housing. A
family on any other IHA waiting list, or a tenant in a rental project
of the IHA, must also submit an application for selection in order to
be considered for an MH project; and
(2) The IHA shall maintain a waiting list, separate from any other
IHA waiting list, of families that have applied for MH housing and that
have been determined to meet the admission requirements. The IHA shall
maintain an MH waiting list in accordance with requirements prescribed
by HUD and shall make selections in the order in which they appear on
the list.
(d) Making the selections. Within 30 days after HUD approval of the
application for a project, the IHA must proceed with preliminary
selection of as many Homebuyers as there are homes in the project.
Preliminary selection of homebuyers must be made from the MH waiting
list in accordance with the date of application, qualification for a
Federal preference in accordance with Sec. 950.305, other pertinent
factors under the IHA's admissions policies established in accordance
with Sec. 950.301, and all admissions are subject to 24 CFR part 750.
Final selection of a homebuyer will be made only after the site for
that homebuyer has received final site approval, and the form of MH
contribution to be made by that homebuyer (or donated for that
homebuyer) has been determined.
(e) Principal residence. A condition for selection as a homebuyer
is that the family agrees to use the home as their principal residence
during the term of the MHO Agreement. Ownership or use of a decent,
safe and sanitary residence other than the MH home at the time of
occupancy or acquisition during occupancy would disqualify a family
from the MH program. However, there are two situations that are deemed
not to violate the principal residence requirement. First, ownership or
use of a secondary home that is necessary for the family's livelihood
or for cultural preservation, as described in the IHA's admission and
occupancy policy, is acceptable. Second, a family's temporary absence
from its MH home, and related subleasing of it is acceptable if it is
done for reasons and time periods prescribed in the IHA's admission and
occupancy policy.
(f) Notification of applicants. The IHA shall give families prompt
written notice of whether or not they have been selected. If a family
is not selected, the notice must state the basis for the determination
and that the family is entitled to an informal hearing by the IHA on
the determination, if a request for a hearing is made within a
reasonable time (as specified in the notice). Such a hearing should be
held within a reasonable time. (Informal review provisions applicable
to denial of an application for a Federal preference under Sec. 950.305
are contained in paragraph (k) of that section.)
(g) Change in income. (1) If a family's income changes after
selection but before execution of the MHO agreement in such a way as to
make it ineligible (either too high or too low), the IHA may reject the
family for this program. However, even a family with an income above
the low-income limits may be admitted to this program, provided that
the number of such families admitted does not exceed the limit stated
in paragraph (a)(2) of this section.
(2) If a family's income changes after the MHO agreement is
executed but before the unit is occupied so that it no longer qualifies
for the program, the IHA may reject the family for this program. If it
becomes evident that a family's income is inadequate to meet its
obligations, the IHA may counsel the family about other housing
options, such as its rental program. Inability of the family to meet
its obligations under the homebuyer agreement is grounds for
termination of the agreement.
(Approved by the Office of Management and Budget under control
number 2577-0003)
Sec. 950.419 MH contribution.
(a) Amount and form of contribution. As a condition of occupancy,
the MH homebuyer will be required to provide an MH contribution.
Contributions other than labor may be made by an Indian Tribe on behalf
of a family.
(1) The value of the contribution must be $1500.
(2) The MH contribution may consist of land, labor, cash,
materials, equipment, or any combination thereof. Land contributed to
satisfy this requirement must be owned in fee simple by the homebuyer
or must be assigned or allotted to the homebuyer for his or her use
before application for an MH unit. Contributions of land donated by
another person on behalf of the homebuyer will satisfy the requirement
for an MH contribution. A homebuyer may provide cash to satisfy the MH
contribution requirement where the cash is used for the purchase of
land, labor, or materials or equipment for the homebuyer's home.
(3) The amount of credit for an MH contribution in the case of
land, labor, or materials or equipment shall be based upon the market
value at the time of the contribution, but in no case will the credit
exceed $1500. In the case of labor, materials or equipment, market
value shall be determined by the contractor and the IHA. In the case of
land, market value shall be determined by the IHA, but in no case will
the credit exceed $1,500 per homesite. The use of labor, materials or
equipment as MH contributions must be reflected by a reduction in the
Total Contract Price stated in the Construction Contract.
(b) Execution of agreements. For projects other than Self-Help
development projects, MHO Agreements must be signed for all units
before execution of the construction contract for the project, unless
the IHA obtains approval by the HUD Field Office of an exception. Land
leases for trust land must be signed and approved by BIA before
construction start. The MHO Agreement must include the homebuyer's
agreement to satisfy the MH contribution requirement before occupancy
of the unit.
(c) Total contribution to be furnished before occupancy. The
homebuyer cannot occupy the unit until the entire MH contribution is
provided to the IHA. If the homebuyer is unable or unwilling to provide
the MH contribution before occupancy of the project, the MHO Agreement
for the homebuyer shall be terminated, any MH contribution paid by the
homebuyer shall be refunded in accordance with Sec. 950.446, and the
IHA shall select a substitute homebuyer from its waiting list.
(d) MH contribution in event of substitution of homebuyer. If an
MHO Agreement is terminated and a substitute homebuyer is selected, the
amount of MH contribution to be provided by the substitute homebuyer
shall be in accordance with paragraph (a) of this section. The
substitute homebuyer may not occupy the unit until the complete MH
contribution has been made.
(e) Disposition of contribution. If an MHO Agreement is terminated
by the IHA or the homebuyer before the date of occupancy, the homebuyer
may receive reimbursement of the value of the MH contribution made plus
other amounts contributed by the homebuyer, in accordance with
Sec. 950.446.
Sec. 950.422 Commencement of occupancy.
(a) Notice. (1) Upon acceptance by the IHA from the contractor of
the home as ready for occupancy, the IHA shall determine whether the
homebuyer has met all requirements for occupancy, including
satisfaction in full of the MH contribution, and fulfillment of
mandatory homebuyer counseling requirements. (See Sec. 950.453.) The
IHA shall notify the homebuyer in writing that the home is available
for occupancy as of a date specified in the notice, which is called the
date of occupancy.
(2) If the IHA determines that the homebuyer has not fully provided
the MH contribution or met any of the other conditions for occupancy by
the date of occupancy, the homebuyer shall be sent a notice in writing.
This notice must specify the date by which all requirements must be
satisfied and shall advise the homebuyer that the MHO Agreement will be
terminated and a substitute homebuyer selected for the unit if the
requirements are not satisfied. (See Secs. 950.446 and 950.419(d).)
(b) Credits to MH accounts and reserves. Promptly after the date of
occupancy, the IHA shall credit the amount of the MH contribution to
the homebuyer's accounts and reserves in accordance with Sec. 950.437
and shall give the homebuyer a statement of the amounts so credited.
Sec. 950.425 Inspections, responsibility for items covered by
warranty.
(a) Inspection before move-in and identification of warranties.
(1) To establish a record of the condition of the home on the date
of occupancy, the homebuyer (including a subsequent homebuyer) and the
IHA shall make an inspection of the home as close as possible to, but
not later than, the date the homebuyer takes occupancy. This inspection
may be the final inspection required by Sec. 950.270 or may be a
separate inspection with the homebuyer and IHA. After the inspection,
the IHA representative shall give the homebuyer a signed statement of
the condition of the home and equipment and a full written description
of all homebuyer responsibilities. The homebuyer shall sign a copy of
the statement, acknowledging concurrence or stating objections; and any
differences shall be resolved by the IHA and a copy of the signed
inspection report shall be kept at the IHA. This written statement of
the condition of the home shall not limit the homebuyer's right to
claim latent defects in construction that may be covered by warranties
referenced in paragraph (a)(2) of this section.
(2) Within 30 days of commencement of occupancy of each home, the
IHA shall furnish the homebuyer with a list of applicable contractors',
manufacturers' and suppliers' warranties, indicating the items covered
and the periods of the warranties, and stating the homebuyer's
responsibility for notifying the IHA of any deficiencies that would be
covered under the warranties.
(b) Inspections during contractors' warranty periods,
responsibility for items covered by contractors', manufacturers' or
suppliers' warranties. In addition to the inspection required under
paragraph (a) of this section, the IHA will inspect the home regularly
in accordance with paragraph (c) of this section. However, it is the
responsibility of the homebuyer during the period of the applicable
warranties, to promptly inform the IHA in writing of any deficiencies
arising during the warranty period (including manufacturers' and
suppliers' warranties) so that the IHA may enforce any rights under the
applicable warranties. If a homebuyer fails to furnish such a written
report in time, and the IHA is subsequently unable to obtain redress
under the warranty, correction of the deficiency shall be the
responsibility of the homebuyer.
(c) Inspection upon termination of agreement. If the MHO Agreement
is terminated for any reason after commencement of occupancy, the IHA
shall inspect the home after notifying the homebuyer of the time for
inspection and shall give the homebuyer a written statement of the cost
of any maintenance work required to put the home in satisfactory
condition for the next occupant (see Sec. 950.446).
(d) Homebuyer permission for inspections; participation in
inspections. The homebuyer shall permit the IHA to inspect the home at
reasonable hours and intervals during the period of the MHO Agreement
in accordance with rules established by the IHA. The homebuyer shall be
notified of the opportunity to participate in the inspection made in
accordance with this section.
Sec. 950.426 Homebuyer payments--pre-1976 projects.
The amount of the required monthly payment for a homebuyer in an MH
project placed under ACC before March 9, 1976 is determined in
accordance with the MH Agreement and provisions of Secs. 950.315 and
950.102 concerning income. Utility reimbursements are not applicable to
the Mutual Help program.
Sec. 950.427 Homebuyer payments--post-1976 projects.
(a) Applicability. The amount of the required monthly payment for a
homebuyer in an MH project placed under ACC on or after March 9, 1976,
and a homebuyer admitted to occupancy in an existing project on or
after the conversion of the project in accordance with Sec. 950.455 is
determined in accordance with this section.
(b) Establishment of payment. (1) Each homebuyer shall be required
to make a monthly payment (``required monthly payment'') as determined
by the IHA. The minimum required monthly payment must equal the
administration charge.
(2) Subject to the requirement for payment of at least the
administration charge, each homebuyer shall pay an amount of required
monthly payment computed by:
(i) Multiplying adjusted income (determined in accordance with
Sec. 950.315) by a specified percentage; and
(ii) Subtracting from that amount the utility allowance determined
for the unit. The specific percentage shall be no less than 15 percent
and no more than 30 percent, as determined by the IHA.
(3) The IHA shall provide that the required monthly payment may not
be more than a maximum amount. The maximum shall not be less than the
sum of:
(i) The administration charge; and
(ii) The monthly debt service amount shown on the homebuyer's
purchase price schedule.
(4) If the ``required monthly payment'' exceeds the administration
charge, the amount of the excess shall be credited to the homebuyer's
monthly equity payments account (see Sec. 950.437(b)).
(c) Administration charge. The administration charge should reflect
differences in expenses attributable to different sizes or types of
units. It is the amount budgeted by the IHA for monthly operating
expenses covering the following categories (and any other operating
expense categories included in the IHA's HUD-approved operating budget
for a fiscal year or other period, excluding any operating cost for
which operating subsidy is provided):
(1) Administrative salaries, payroll taxes, etc.; travel, postage,
telephone and telegraph, office supplies; office space, maintenance and
utilities for office space; general liability insurance or risk
protection costs; accounting services; legal expenses; and operating
reserve requirements (Sec. 950.431); and
(2) General expenses, such as premiums for fire and related
insurance, payments in lieu of taxes, if any, and other similar
expenses.
(d) Adjustments in the amount of the required monthly payment. (1)
After the initial determination of a homebuyer's required monthly
payment, the IHA shall increase or decrease the amount of such payment
in accordance with HUD regulations to reflect changes in adjusted
income (pursuant to a reexamination by the IHA in accordance with
Sec. 950.315), adjustment's in the administration charge, or in any of
the other factors affecting computation of the homebuyer's required
monthly payment.
(2) In order to accommodate wide fluctuations in required monthly
payments due to seasonal conditions, an IHA may agree with the
homebuyer for payments to be made in accordance with a seasonally
adjusted schedule which assures full payment of the required amount for
each year.
(e) Homebuyer payment collection policy. Each IHA shall establish
and adopt written policies, and use its best efforts to obtain
compliance to assure the prompt payment and collection of required
homebuyer payments. A copy of the policies shall be posted prominently
in the IHA office, and shall be provided to a homebuyer upon request.
Unless HUD has issued a corrective action order with respect to this
function, in accordance with Sec. 950.135, HUD approval is not
required.
Sec. 950.428 Maintenance, utilities, and use of home.
(a) General. Each IHA shall establish and adopt, and use its best
efforts to obtain compliance with, written policies to assure full
performance of the respective maintenance responsibilities of the IHA
and homebuyers. A copy of such written policies shall be posted
prominently in the IHA office, and shall be provided to an applicant or
homebuyer upon entry into the program and upon request.
(b) Provisions for MH projects. For MH Projects, the written
maintenance policies shall contain provisions on at least the following
subjects:
(1) The responsibilities of homebuyers for maintenance and care of
their dwelling units and common property;
(2) Procedures for providing advice and technical assistance to
homebuyers to enable them to meet their maintenance responsibilities;
(3) Procedures for IHA inspections of homes and common property;
(4) Procedures for IHA performance of homebuyer maintenance
responsibilities (where homebuyers fail to satisfy such
responsibilities), including procedures for charging the homebuyer's
proper account for the cost thereof;
(5) Special arrangements, if any, for obtaining maintenance
services from outside workers or contractors; and
(6) Procedures for charging homebuyers for damage for which they
are responsible.
(c) IHA responsibility in MH projects. The IHA shall enforce those
provisions of a Homebuyer's Agreement under which the homebuyer is
responsible for maintenance of the home. The IHA has overall
responsibility to HUD for assuring that the housing is being kept in
decent, safe, and sanitary condition, and that the home and grounds are
maintained in a manner that will preserve their condition, normal wear
and tear excepted. Failure of a homebuyer to meet the obligations for
maintenance shall not relieve the IHA of responsibility in this
respect. Accordingly, except as may be otherwise provided in this
section, the IHA shall conduct a complete interior and exterior
examination of each home at least once a year, and shall furnish a copy
of the inspection report to the homebuyer. The IHA shall take
appropriate action, as needed, to remedy conditions shown by the
inspection, including steps to assure performance of the homebuyer's
obligations under the homebuyer's agreement. The IHA may inspect the
home once every three years, in lieu of an annual inspection where the
homebuyer is in full compliance with the original terms of the
homebuyer's agreement, including payments, and the home is maintained
in decent, safe, and sanitary condition, as reflected by the last
inspection by the IHA. However, if at any time the IHA determines that
the homebuyer is not in compliance with the homebuyer's agreement, it
must reinstate annual inspections.
(d) Homebuyer responsibility in MH program. (1) The homebuyer shall
be responsible for routine and nonroutine maintenance of the home,
including all repairs and replacements (including those resulting from
damage from any cause). The IHA shall not be obligated to pay for or
provide any maintenance of the home other than the correction of
warranty items reported during the applicable warranty period.
(2) Homebuyer's failure to perform maintenance. (i) Failure of the
homebuyer to perform maintenance obligations constitutes a breach of
the MHO Agreement and grounds for its termination. Upon a determination
by the IHA that the homebuyer has failed to perform its maintenance
obligations, the IHA shall require the homebuyer to agree to a specific
plan of action to cure the breach and to assure future compliance. The
plan shall provide for maintenance work to be done within a reasonable
time by the homebuyer, with such use of the homebuyer's account as may
be necessary, or to be done by the IHA and charged to the homebuyer's
account, in accordance with Sec. 950.437. If the homebuyer fails to
carry out the agreed-to plan, the MHO agreement shall be terminated in
accordance with Sec. 950.446.
(ii) If the IHA determines that the condition of the property
creates a hazard to the life, health, or safety of the occupants, or if
there is a risk of damage to the property if the condition is not
corrected, the corrective work shall be done promptly by the IHA with
such use of the homebuyer's accounts as the IHA may determine to be
necessary, or by the homebuyer with a charge of the cost to the
homebuyer's accounts in accordance with Sec. 950.437.
(iii) Any maintenance work performed by the IHA shall be accounted
for through a work order stating the nature of and charge for the work.
The IHA shall give the homebuyer copies of all work orders for the
home.
(e) Homebuyer's responsibility for utilities. The homebuyer is
responsible for the cost of furnishing utilities for the home. The IHA
shall have no obligation for the utilities. However, if the IHA
determines that the homebuyer is unable to pay for the utilities for
the home, and that this inability creates conditions that are hazardous
to life, health, or safety of the occupants or threatens damage to the
property, the IHA may pay for the utilities on behalf of the homebuyer
and charge the homebuyer's accounts for the costs, in accordance with
Sec. 950.437. When the homebuyer's account has been exhausted, the IHA
shall pursue termination of the homebuyer agreement and may offer the
homebuyer a transfer into the rental program if a unit is available.
(f) Obligations with respect to home and other persons and
property.
(1) The homebuyer shall agree to abide by all provisions of the MHO
Agreement concerning homebuyer responsibilities, occupancy and use of
the home.
(2) The homebuyer may request IHA permission to operate a small
business in the unit. An IHA shall grant this authority where the
homebuyer provides the following assurances and may rescind this
authority upon violation of any of the following assurances:
(i) The unit will remain the homebuyer's principal residence;
(ii) The business activity will not disrupt the basic residential
nature of the housing site; and
(iii) The business will not require permanent structural changes to
the unit that could adversely affect a future homebuyer's use of the
unit. The IHA may rescind such authority whenever any of the above
assurances are violated.
(g) Structural changes. (1) A homebuyer shall not make any
structural changes in or additions to the home unless the IHA has
determined that such change would not:
(i) Impair the value of the home, the surrounding homes, or the
project as a whole; or
(ii) Affect the use of the home for residential purposes.
(2) (i) Additions to the home include, but are not limited to,
energy-conservation items such as solar panels, wood-burning stoves,
flues and insulation. Any changes made in accordance with this section
shall be at the homebuyer's expense, and in the event of termination of
the MHO Agreement the homebuyer shall not be entitled to any
compensation for such changes or additions.
(ii) If the homebuyer is in compliance with the terms of the MHO
agreement, the IHA may agree to allow the homebuyer to use the funds in
the MEPA for betterments and additions to the MH home. In such event,
the IHA shall determine whether the homebuyer will be required to
replenish the MEPA or if the funds are to be loaned to the homebuyer at
an interest rate determined by the IHA. The homebuyer cannot use MEPA
funds for luxury items, as determined by the IHA.
(Information collection requirement contained in paragraph (c) has
been approved by the Office of Management and Budget under control
number 2577-0114.)
Sec. 950.431 Operating reserve.
(a) The IHA shall maintain an operating reserve for the project in
an amount sufficient for working capital purposes, for estimated future
nonroutine maintenance requirements for IHA-owned administrative
facilities and common property, for the payment of advance premiums for
insurance, for unanticipated project requirements and for other
eligible uses as determined by the IHA. A contribution to this reserve
shall be determined by the IHA and included in the administration
charge. The amount of this contribution shall be increased or decreased
annually to reflect the needs of the IHA for working capital and for
reserves for anticipated future expenditures and shall be included in
the operating budget submitted to the HUD Field Office for approval. If
the IHA fails to maintain an adequate operating reserve level, HUD may
issue a corrective action order prescribing specific actions that the
IHA must take to improve its financial condition. (See Sec. 950.135).
(b) At the end of each fiscal year or other budget period, the
project operating reserve shall be:
(1) Credited with the amount by which operating receipts exceed
operating expenses of the project for the budget period; or
(2) Charged with the amount by which operating expenses exceed
operating receipts of the project for the budget period.
Sec. 950.432 Operating budget submission and approval.
In addition to other budget documentation required by HUD, each
operating budget or operating budget revision shall include a certified
copy of a resolution of the board of commissioners stating that the
board has reviewed and approved the operating budget or operating
budget revision.
Sec. 950.434 Operating subsidy.
(a) Scope. This section authorizes the use of operating subsidy for
Mutual Help projects; establishes eligible costs; and provides for
determination of operating subsidy on a uniform basis for all MH
projects.
(b) Eligible costs. The reasonable cost of an annual independent
audit is an eligible cost for operating subsidy. Operating subsidy may
also be paid to cover proposed expenditures approved by the HUD Field
Office for the following purposes:
(1) Administration charges for vacant units where the IHA submits
evidence to the HUD Field Office's satisfaction that it is making every
reasonable effort to fill the vacancies;
(2) Collection losses due to payment delinquencies on the part of
homebuyer families whose MHO Agreements have been terminated and who
have vacated the home, and the actual cost of any maintenance
(including repairs and replacements) necessary to put the vacant home
in a suitable condition for a subsequent homebuyer family. Operating
subsidy may be made available for these purposes only after the IHA has
previously used all available homebuyer credits. Every reasonable
effort shall be made to collect charges from a vacated homebuyer,
including court judgments, professional collection services, etc., as
appropriate;
(3) A formula amount for the cost of a HUD-approved counseling
program;
(4) A formula amount for training and related travel of IHA staff
and Commissioners;
(5) The costs of a HUD-approved professional management contract;
and
(6) Operating costs resulting from other unusual circumstances
justifying payment of operating subsidy, if approved by HUD.
(7) Subject to appropriations, and in accordance with the
provisions of subpart O of this part and procedures determined by HUD,
each IHA with a duly elected resident organization shall receive $25
per unit per year for resident participation activities. Of this
amount, $15 per unit per year shall fund resident participation
activities of the RO. Ten dollars per unit per year shall fund IHA
costs incurred in carrying out resident participation activities.
(c) Ineligible costs. No operating subsidy shall be paid for
utilities, maintenance, or other items for which the homebuyer is
responsible except, as necessary, to put a vacant home in condition for
a subsequent family as provided in paragraph (b)(2) of this section.
Sec. 950.437 Homebuyer reserves and accounts.
(a) Refundable and nonrefundable MH reserves. The IHA shall
establish separate refundable and nonrefundable reserves for each
homebuyer effective on the date of occupancy.
(1) The refundable MH reserve represents a homebuyer's interest in
funds that may be used to purchase the home at the option of the
homebuyer. The IHA shall credit this account with the amount of the
homebuyer's cash MH contribution or the value of the labor, materials
or equipment MH contribution.
(2) The nonrefundable MH reserve also represents a homebuyer's
interest in funds that may be used to purchase the home at the option
of the homebuyer. The IHA shall credit this account with the amount of
the homebuyer's share of any credits for land contributed to the
project and the homebuyer's share of any credit for non-land
contributions by a terminated homebuyer.
(b) Equity accounts. (1) Monthly equity payments account
(``MEPA''). The IHA shall maintain a separate MEPA for each homebuyer.
The IHA shall credit this account with the amount by which each
required monthly payment exceeds the administration charge. Should the
homebuyer fail to pay the required monthly payment, the IHA may elect
to reduce the MEPA by the amount owed each month towards the
administration charge, until the MEPA has been fully expended. The MEPA
balance must be comprised of an amount backed by cash actually received
in order for any such reduction to be made.
(2) Investment of equity funds. (i) Funds held by the IHA in the
equity accounts of all the homebuyers in the project shall be invested
in HUD-approved investments. Income earned on the investments of such
funds shall periodically, but at least annually, be prorated and
credited to each homebuyer's equity accounts in proportion to the
amount in each such account on the date of proration. If HUD determines
that accounts are not properly managed and has issued a corrective
action order pursuant to Sec. 950.135, it may ultimately remove
responsibility of the IHA for managing such accounts to a HUD-approved
escrow agent.
(ii) Notwithstanding other provisions of this subpart and subject
to HUD Field Office approval, an IHA may use a portion of the
homebuyers' equity accounts for low-income housing purposes provided
that a reserve of homebuyers' MEPA is maintained. The reserve must be
at a percentage established by the IHA and approved by the HUD Field
Office. (Interest must continue to be credited to the homebuyer's
account based on the MEPA balance and the rate of interest that would
have been earned if the funds were invested.)
(c) Charges for maintenance. (1) If the IHA has maintenance work
done in accordance with Sec. 950.428(a), the cost thereof shall be
charged to the homebuyer's MEPA.
(2) At the end of each fiscal year, the debit balance, if any in
the MEPA shall be charged, first to the refundable MH reserve; and
second, to the nonrefundable MH reserve, to the extent of the credit
balances in that account and those reserves.
(3) In lieu of charging the debit balance in the MEPA to the
homebuyer's refundable MH reserve and/or nonrefundable MH reserve, the
IHA may allow the debit balance to remain in the MEPA pending
replenishment from subsequent credits to the homebuyer's MEPA.
(4) The IHA shall at no time permit the accumulation of a debit
balance in the MEPA in excess of the sum of the credit balances in the
homebuyer's refundable and nonrefundable MH reserves, unless the
expenditure is required to alleviate a hazard to the life, health or
safety of the occupants, or to alleviate risk of damage to the
property.
(d) Disposition of reserves and accounts. When the homebuyer
purchases the home, the balances in the homebuyer's reserves and
accounts shall be disposed of in accordance with Sec. 950.440. If the
MHO agreement is terminated by the homebuyer or the IHA, the balances
in the homebuyer's reserves and accounts shall be disposed of in
accordance with Sec. 950.446.
(e) Use of reserves and accounts; nonassignability. The homebuyer
shall have no right to receive or use the funds in any reserve or
account except as provided in the MHO agreement, and the homebuyer
shall not, without approval of the IHA and HUD, assign, mortgage or
pledge any rights in the MHO agreement or to any reserve or account.
Sec. 950.440 Purchase of home.
(a) General. The IHA provides the family an opportunity to purchase
the dwelling under the Mutual Help and Occupancy Agreement (a lease
with an option to purchase), under which the purchase price is
amortized over the period of occupancy, in accordance with a purchase
price schedule. For acquisition under the MHO agreement, see paragraph
(e) of this section. If a homebuyer wants to acquire ownership in a
shorter period than that shown on the purchase price schedule, the
homebuyer may exercise his or her option to purchase the home on or
after the date of occupancy, but only if the homebuyer has met all
obligations under the MHO agreement. The homebuyer may obtain
financing, from the IHA or an outside source, at any time, to cover the
remaining purchase price. The financing may be provided using such
methods as a mortgage or a loan agreement. If the homebuyer is able to
obtain financing from an outside source, the IHA will release the
homebuyer from the MHO agreement and terminate the homebuyer's
participation in this program. For acquisition under methods other than
under the MHO agreement, see Sec. 950.443.
(b) Purchase price and purchase price schedule. (1) Initial
purchase price. The initial purchase price of a home for a homebuyer
shall be determined by the IHA.
(2) Purchase price schedule. Promptly after execution of the
construction contract, the IHA shall furnish to the homebuyer a
statement of the initial purchase price of the home, and a purchase
price schedule that will apply, based on amortizing the balance
(purchase price less the MH contribution) over a period, not less than
15 years or more than 25 as determined by the IHA, at an interest rate
determined by the IHA. The IHA may choose to forego charging interest
and calculate the payment with an interest rate of zero.
(c) Purchase price schedule for subsequent homebuyer. (1) Initial
purchase price. When a subsequent homebuyer executes the Mutual Help
and Occupancy Agreement, the purchase price for the subsequent
homebuyer shall be determined by the IHA.
(2) Purchase price schedule. Each subsequent homebuyer shall be
provided with a purchase price schedule, showing the monthly declining
purchase price over a period, not less than 15 years or more than 25
years as determined by the IHA, at an interest rate determined by the
IHA.
(d) [Reserved].
(e) Conveyance of home. (1) Purchase procedure. In accordance with
the MHO agreement, the IHA shall convey title to the homebuyer when the
balance of the purchase price can be covered from the amount in the
equity account. The homebuyer may supplement the amount in the equity
account with reserves or any other funds of the homebuyer.
Notwithstanding the requirement for prompt conveyance, an IHA may delay
conveyance long enough to modernization a paid off unit in accordance
with its Comprehensive Plan or CIAP application.
(2) Amounts to be paid. The purchase price shall be the amount
shown on the purchase price schedule for the month in which the
settlement date falls.
(3) Settlement costs. Settlement costs shall be paid by the
homebuyer who may use equity accounts or reserves available for the
purchase in accordance with paragraph (e)(4) of this section.
(4) Disposition of homebuyer accounts and reserves. When the
homebuyer purchases the home, the net credit balances in the
homebuyer's equity account as described in Sec. 950.437), supplemented
by the nonrefundable MH reserve and then the refundable MH reserve,
shall be applied in the following order:
(i) For the initial payment for fire and extended coverage
insurance on the home after conveyance if the IHA finances purchase of
the home in accordance with Sec. 950.443;
(ii) For settlement costs, if the homebuyer so directs;
(iii) For the purchase price; and
(iv) The balance, if any, for refund to the homebuyer.
(5) Settlement. A home shall not be conveyed until the homebuyer
has met all the obligations under the MHO Agreement, except as provided
in Sec. 950.440(e)(8). The settlement date shall be mutually agreed
upon by the parties. On the settlement date, the homebuyer shall
receive the documents necessary to convey to the homebuyer the IHA's
right, title, and interest in the home, subject to any applicable
restrictions or covenants as expressed in such documents. The required
documents shall be approved by the attorneys representing the IHA, and
by the homebuyer or the homebuyer's attorney.
(6) IHA investment and use of purchase price payments. After
conveyance, all homebuyer funds held or received by the IHA from the
sale of a unit in a project financed with grants shall be held separate
from other project funds, and shall be used for purposes related to
low-income housing use, as approved by HUD. Homebuyer funds held or
received by the IHA from the sale to a homebuyer of a unit in a project
financed by loans are subject to loan forgiveness. Homebuyer funds
include the amount applied to payment of the purchase price from the
equity account), any cash paid by the homebuyer for application to the
purchase price and, if the IHA finances purchase of the home in
accordance with Sec. 950.446, any portion of the mortgage payments by
the homeowner attributable to payment of the debt service (principal
and interest) on the mortgage.
(7) Removal of home from MH program. When a home has been conveyed
to the homebuyer, whether or not with IHA financing, the unit is
removed from the IHA's MH project under its ACC with HUD.
(8) Homebuyers with delinquencies. (i) If a homebuyer has a
delinquency at the end of the amortization period, the unit is no
longer available for assistance from HUD or the IHA, even though the
unit has not been conveyed. The IHA must take action to terminate the
MHOA or to develop a repayment schedule for the remaining balance to be
completed in a reasonable period, but not longer than three years. The
payment should be equal to a monthly pro-rated share of the remaining
balance owed by the homebuyer, plus an administrative fee consisting of
the cost of insurance and the IHA's processing cost. If the homebuyer
fails to meet the requirements of the repayment schedule, the IHA
should proceed immediately with eviction.
(ii) Notwithstanding the requirements in paragraphs (e)(1) through
(8), an IHA may complete emergency and statutorily or regulatorily
required modernization work on a unit which is paid off but not
conveyed, during the term of the repayment schedule.
(iii) Upon repayment of the total delinquency, the IHA may, in
accordance with Sec. 950.602(b)(2), complete non-emergency
modernization work on a unit prior to conveyance.
Sec. 950.443 IHA homeownership financing.
(a) Eligibility. The IHA may offer a form of homeownership
financing, similar to a purchase money mortgage. The IHA shall set
standards for determining eligibility, developing promissory notes,
mortgages and other financial instruments necessary to carry out the
transaction. Further guidance is provided in HUD Handbooks.
(b) HUD review and approval. Unless HUD has issued a corrective
action order with respect to this function, in accordance with
Sec. 950.135, the IHA may proceed with providing IHA financing without
prior HUD approval. IHAs without prior experience in IHA financing
should consult with the HUD Field Office.
Sec. 950.446 Termination of MHO agreement.
(a) Termination upon breach. (1) In the event the homebuyer fails
to comply with any of the obligations under the MHO agreement, the IHA
may terminate the MHO agreement by written notice to the homebuyer,
enforced by eviction procedures applicable to landlord-tenant
relationships. Foreclosure is an inappropriate method for enforcing
termination of the homeownership agreement, which constitutes a lease
(with an option to purchase). The homebuyer is a lessee during the term
of the agreement and acquires no equitable interest in the home until
the option to purchase is exercised.
(2) Misrepresentation or withholding of material information in
applying for admission or in connection with any subsequent
reexamination of income and family composition constitutes a breach of
the homebuyer's obligations under the MHO agreement. ``Termination'',
as used in the MHO agreement, does not include acquisition of ownership
by the homebuyer.
(b) Notice of termination of MHO agreement by the IHA, right of
homebuyer to respond. Termination of the MHO agreement by the IHA for
any reason shall be by written notice of termination. Such notice shall
be in compliance with the terms of the MHO agreement and, in all cases,
shall afford a fair and reasonable opportunity to have the homebuyer's
response heard and considered by the IHA. Such procedures shall comply
with the Indian Civil Rights Act, if applicable, and shall incorporate
all the steps and provisions needed to comply with State, local, or
Tribal law, with the least possible delay. (See Sec. 950.340.)
(c) Termination of MHO agreement by homebuyer. The homebuyer may
terminate the MHO Agreement by giving the IHA written notice in
accordance with the agreement. If the homebuyer vacates the home
without notice to the IHA, the homebuyer shall remain subject to the
obligations of the MHO agreement, including the obligation to make
monthly payments, until the IHA terminates the MHO agreement in
writing. Notice of the termination shall be communicated by the IHA to
the homebuyer to the extent feasible and the termination shall be
effective on the date stated in the notice.
(d) Disposition of funds upon termination of the MHO agreement. If
the MHO agreement is terminated, the balances in the homebuyer's
accounts and reserves shall be disposed of as follows:
(1) The MEPA shall be charged with:
(i) Any maintenance and replacement cost incurred by the IHA to
prepare the home for the next occupant;
(ii) Any amounts the homebuyer owes the IHA, including required
monthly payments;
(iii) The required monthly payment for the period the home is
vacant, not to exceed 60 days from the date of receipt of the notice of
termination, or if the homebuyer vacates the home without notice to the
IHA, for the period ending with the effective date of termination by
the IHA; and
(iv) The cost of securing a vacant unit, the cost of notification
and associated termination tasks, and the cost of storage and/or
disposition of personal property.
(2) If, after making the charges in accordance with paragraph
(d)(1) of this section, there is a debit balance in the MEPA, the IHA
shall charge that debit balance, first to the refundable MH reserve;
and second, to the nonrefundable MH reserve, to the extent of the
credit balances in these reserves and account. If the debit balance in
the MEPA exceeds the sum of the credit balances in these reserves and
account, the homebuyer shall be required to pay to the IHA the amount
of the excess.
(3) If, after making the charges in accordance with paragraph
(d)(1) of this section, there is a credit balance in the MEPA, this
amount shall be refunded.
(4) Any credit balance remaining in the refundable MH reserve after
making the charges described in paragraph (d)(2) of this section shall
be refunded to the homebuyer.
(5) Any credit balance remaining in the nonrefundable MH reserve
after making the charges described in paragraph (d)(2) of this section
shall be retained by the IHA for use by the subsequent homebuyer.
(e) Settlement upon termination. (1) Time for settlement.
Settlement with the homebuyer following a termination shall be made as
promptly as possible after all charges provided in paragraph (d) of
this section have been determined and the IHA has given the homebuyer a
statement of such charges. The homebuyer may obtain settlement before
determination of the actual cost of any maintenance required to put the
home in satisfactory condition for the next occupant, if the homebuyer
is willing to accept the IHA's estimate of the amount of such cost. In
such cases, the amounts to be charged for maintenance shall be based on
the IHA's estimate of the cost thereof.
(f) Responsibility of IHA to terminate. (1) The IHA is responsible
for taking appropriate action with respect to any noncompliance with
the MHO agreement by the homebuyer. In cases of noncompliance that are
not corrected as provided further in this paragraph, it is the
responsibility of the IHA to terminate the MHO agreement in accordance
with the provisions of this section and to institute eviction
proceedings against the occupant.
(2) As promptly as possible after a noncompliance comes to the
attention of the IHA, the IHA shall discuss the matter with the
homebuyer and give the homebuyer an opportunity to identify any
extenuating circumstances or complaints which may exist. A plan of
action shall be agreed upon that will specify how the homebuyer will
come into compliance, as well as any actions by the IHA that may be
appropriate. This plan shall be in writing and signed by both parties.
(3) Compliance with the plan shall be checked by the IHA not later
than 30 days from the date thereof. In the event of refusal by the
homebuyer to agree to such a plan or failure by the homebuyer to comply
with the plan, the IHA shall issue a notice of termination of the MHO
agreement and evict the homebuyer in accordance with the provisions of
this section on the basis of the noncompliance with the MHO agreement.
(4) A record of meetings with the homebuyer, written plans of
action agreed upon and all other related steps taken in accordance with
paragraph (f) of this section shall be maintained by the IHA for
inspection by HUD.
(g) Subsequent use of unit. After termination of a homebuyer's
interest in the unit, it remains as part of the MH project under the
ACC. The IHA must follow its policies for selection of a subsequent
homebuyer for the unit under the MH program. (See Sec. 950.449(g) for
use of unit if no qualified subsequent homebuyer is available.)
Sec. 950.449 Succession.
(a) Definition of ``event.'' ``Event'' means the death, mental
incapacity, or other conditions as determined by the IHA, of all of the
persons who have executed the MHO agreement as homebuyers.
(b) Designation of successor by homebuyer. A homebuyer may
designate a successor who, at the time of the ``event'', would assume
the status of homebuyer, provided that at the time of the event, the
successor meets the conditions established by the IHA which shall
include satisfying program eligibility requirements. The designation
may be made at the time of execution of the MHO agreement, and the
homebuyer may change the designation at any later time by written
notice to the IHA.
(c) Succession by persons designated by homebuyer. Upon occurrence
of an ``event'', the person designated as the successor shall succeed
to the former homebuyer's rights and responsibilities under the MHO
agreement if the designated successor meets the criteria established by
the IHA which shall include program eligibility requirements.
(d) Designation of successor by IHA. If at the time of the event
there is no successor designated by the homebuyer, the IHA may
designate, in accordance with its occupancy policy, any person who
qualifies under paragraph (c) of this section.
(e) Occupancy by appointed guardian. If at the time of the event
there is no qualified successor designated by the homebuyer or by the
IHA in accordance with paragraphs (a) through (d) of this section, and
a minor child or children of the homebuyer are living in the home, the
IHA may, in order to protect their continued occupancy and opportunity
for acquiring ownership of the home, approve as occupant of the home an
appropriate adult who has been appointed legal guardian of the children
with a duty to perform the obligations of the MHO agreement in their
interest and behalf.
(f) Succession and occupancy on trust land. In the case of a home
on trust land subject to restrictions on alienation under federal law
(including federal trust or restricted land and land subject to trust
or restriction under State law), or under State or Tribal law where
such laws do not violate federal statutes, a person who is prohibited
by law from succeeding to the IHA's interest on such land may,
nevertheless, continue in occupancy with all the rights, obligations
and benefits of the MHO agreement, modified to conform to these
restrictions on succession to the land.
(g) Termination in absence of qualified successor. If there is no
qualified successor in accordance with the IHA's approved Admissions
and Occupancy policy, the IHA shall terminate the MHO agreement and
select a subsequent homebuyer from the top of the waiting list to
occupy the unit under a new MHO agreement. If a new homebuyer is
unavailable or if the home cannot continue to be used for low-income
housing in accordance with the Mutual Help program, the IHA may submit
an application to HUD to convert the unit to the Rental program in
accordance with Sec. 950.458 or to approve a disposition of the home,
in accordance with subpart M of this part.
Sec. 950.452 Miscellaneous.
(a) Annual statement to homebuyer. The IHA shall provide an annual
statement to the homebuyer that sets forth the credits and debits to
the homebuyer equity accounts and reserves during the year and the
balance in each account at the end of each IHA fiscal year. The
statement shall also set forth the remaining balance of the purchase
price.
(b) Insurance before transfer of ownership, repair or rebuilding.
(1) Insurance. The IHA shall carry all insurance prescribed by HUD,
including fire and extended coverage insurance upon the home.
(2) Repair or rebuilding. In the event the home is damaged or
destroyed by fire or other casualty, the IHA shall consult with the
homebuyers as to whether the home shall be repaired or rebuilt. The IHA
shall use the insurance proceeds to have the home repaired or rebuilt
unless there is good reason for not doing so. In the event the IHA
determines that there is good reason why the home should not be
repaired or rebuilt and the homebuyer disagrees, the matter shall be
submitted to the HUD Field Office for final determination. If the final
determination is that the home should not be repaired or rebuilt, the
IHA shall terminate the MHO agreement, and the homebuyer's obligation
to make required monthly payments shall be deemed to have terminated as
of the date of the damage or destruction.
(3) Suspension of payments. In the event of termination of a MHO
Agreement because of damage or destruction of the home, or if the home
must be vacated during the repair period, the IHA will use its best
efforts to assist in relocating the homebuyer. If the home must be
vacated during the repair period, required monthly payments shall be
suspended during the vacancy period.
(c) Notices. Any notices by the IHA to the homebuyer required under
the MHO Agreement or by law shall be delivered in writing to the
homebuyer personally or to any adult member of the homebuyer's family
residing in the home, or shall be sent by certified mail, return
receipt requested, properly addressed, postage prepaid. Notice to the
IHA shall be in writing and either delivered to an IHA employee at the
office of the IHA, or sent to the IHA by certified mail, return receipt
requested, properly addressed, postage prepaid.
Sec. 950.453 Counseling of homebuyers.
(a) General. (1) The IHA shall provide counseling to Homebuyers in
accordance with this section. The purpose of the counseling program
shall be to develop:
(i) A full understanding by homebuyers of their responsibilities as
participants in the MH Project;
(ii) Ability on their part to carry out these responsibilities; and
(iii) A cooperative relationship with the other Homebuyers.
(2) All homebuyers shall be required to participate in and
cooperate fully in all official pre-occupancy and post-occupancy
counseling activities. Failure without good cause to participate in the
program shall constitute a breach of the MHO Agreement.
(b) The IHA shall submit to the local HUD Office a copy of its
counseling program with its request for funding for approval.
(c) Progress reports. Unless otherwise required in a corrective
action order, IHAs shall submit an annual progress report with the
annual budget submission to the HUD Field Office.
(d) Termination of counseling program. If HUD determines that an
IHA's counseling program is not being properly implemented, the program
may be terminated after notice to the IHA stating the deficiencies in
program implementation, and giving the IHA 90 days from the date of
notification to take corrective action, and in the event of termination
the amount included in the Development Cost Budget for the program
shall be reduced so as not to exceed expenses already incurred at the
time of termination.
Sec. 950.455 Conversion of rental projects.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the local HUD Office for approval to convert any or
all of the units in an existing rental project to the MH program. Any
conversion of existing units shall not affect in any way the IHA's
status for funding for new development.
(b) Minimum requirements. (1) In order to be eligible for
conversion, the units must be single family detached homes, or
apartment/row houses for conversion to condominium/cooperative
ownership. In addition, the units must have individually metered
utilities and be in decent, safe and sanitary condition. The project(s)
which possess the proposed conversion units must have received an
approved actual development cost certificate.
(2) Tenants or other applicants to be homebuyers of the proposed
conversion units must qualify for the program under Sec. 950.416(b).
The entire MH contribution required of the homebuyer must be made
before the rental unit occupied by a tenant can be converted to the MH
program.
(3) In the case of conversion of apartments or rowhouses to
condominium or cooperative ownership, all units in a structure must be
converted, with all occupants at the time of the application qualified,
in accordance with paragraph (b)(2) of this section. Any occupants who
do not qualify or desire to convert must be satisfactorily relocated
and replaced with qualified occupants before application for conversion
of the structure.
(c) Application process. The IHA's application must be in the form
required by HUD, including all necessary documentation. The local HUD
Office shall review the application for legal sufficiency; Tribal
acceptance; demonstration of family interest; evidence units are
habitable, safe and sanitary; family qualifications as discussed in
paragraph (b)(2) of this section; and financial feasibility. Where not
all units in a project are proposed for conversion, the IHA's ability
to operate the remaining rental units must not be adversely affected.
Sec. 950.458 Conversion of Mutual Help projects to Rental Program.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the local HUD Office for approval to convert any or
all Mutual Help project units to the rental program, wherever or
whenever a homebuyer or homebuyers have lost the potential for
ownership because of the inability to meet the cost of their homebuyer
responsibilities.
(b) Minimum requirements. (1) In order to be eligible for
conversion, the project must have received an approved ADCC.
(2) The remaining balances in any reserve accounts shall be
accounted for individually for each unit converted in a manner
consistent with project intent and in a manner prescribed by HUD.
(3) The balance remaining in the MEPA, if any, is applied first to
outstanding tenant accounts receivable, then to repair of homebuyer
maintenance items, and finally returned to the homebuyer.
(c) Application process. The IHA's application must be in the form
required by HUD, including all necessary documentation. The local HUD
Office shall review the application for legal sufficiency; Tribal
acceptance; demonstration of family interest; and financial
feasibility. Where not all units in a project are proposed for
conversion, the IHA's ability to operate the remaining units must not
be adversely affected.
Subpart F--Self-Help Development in the Mutual Help Homeownership
Program
Sec. 950.470 Purpose and applicability.
(a) Purpose. The purpose of the Self-Help program is to provide an
alternate method of developing dwelling units that will be less costly
than other methods of development, will engender community pride and
cooperation, and will provide training in construction skills that will
have lasting value to participants. If an IHA is interested in pursuing
Self-Help development, it organizes a small group of families (six to
ten) to build a substantial portion of the homes for all the families
in the group, with technical assistance and supervision and materials
provided by the IHA, augmented by skilled labor obtained under
contract. The participants are individuals and/or families who qualify
for participation in the Mutual Help Homeownership Opportunity program
who have the ability to furnish their share of the required labor and
who agree to participate in the cooperative effort to build homes for
all members of the group.
(b) Applicability. Any IHA eligible for development funds may
submit an application for a Self-Help Mutual Help Homeownership
Opportunity project.
Sec. 950.475 Basic requirements.
(a) Contracts. A Self-Help Mutual Help Homeownership Opportunity
project also involves three basic contracts in a form approved by HUD:
an ACC for a Mutual Help project executed by HUD and the IHA after
approval of the SH project application and after HUD approval of the
development program, a Self-Help agreement executed by the
participating families and the IHA before construction begins, and a
Mutual Help and Occupancy agreement executed by the participating
families and the IHA after construction completion. In addition, there
may be organizational documents for the organization created by the
participating families.
(b) Family participation. The project is to be organized so that a
small number of families (six to ten) build a substantial portion of
their homes and contract for other skilled labor and supplies. Each
family must show the desire to work with other families in building
their own homes and must have the time to contribute the labor
necessary to perform a substantial number of the tasks required in the
construction of the homes. Each family must sign a Self-Help agreement
with the IHA.
(c) IHA capacity. The IHA must have the capacity to provide for the
financial, legal, administrative, and technical responsibilities of the
program. The IHA is required to provide assurance that the project will
be completed, in the form of a letter of credit or its equivalent in an
amount equal to ten percent of the estimated Total Development Cost
Standard. The IHA may manage the project itself if it has staff with
the necessary background and proven ability to perform responsibly in
the field of mutual self-help and in construction; or it may contract
with an organization that has this type of experience and ability for a
fee that fits within the Total Development Cost Standard. Once an IHA
has experience with this method of development, it is encouraged to
have several groups of families participating in its Self-Help program
for more cost-effective use of the construction supervisors, although
each family will work only on the homes of its group.
(d) Funding. The funding for technical training and supervision of
participating families will be provided through development funds, and
the cost will be included in the Total Development Cost of the project.
The cost of construction supervision and technical assistance shall
generally be no more than 15 percent, but may not exceed 20 percent of
the TDC of these self-help homes.
(e) Applicability of Indian preference. In the selection of
contractors to perform construction supervision, skilled labor, or
other work under this program, the provisions concerning preference for
Indians (Sec. 950.165) apply. In the selection of participating
families, the provisions of Sec. 950.416 apply.
(f) Building code. The building code used by the IHA in accordance
with Sec. 950.255 will apply to the homes constructed under this
program.
Sec. 950.480 Self-Help agreement.
(a) Timing. The obligations under the Self-Help agreement, executed
by the IHA and the families in a group selected by the IHA to
participate in a Self-Help program, will be contingent upon approval of
the development program by HUD. Each family will be obligated to be
available to commence work at a time that fits the IHA's schedule for
completion of prior tasks by skilled labor, but generally within 120
days of approval of the IHA's Self-Help project development program by
HUD and to complete the work within a period not to exceed two years.
(b) Pre-construction period. The Self-Help agreement will provide
that, before construction begins, the participating families will be
required to organize themselves, with the assistance of the IHA, and to
participate in construction skills training.
(c) Labor contribution. (1) The Self-Help agreement will specify
the construction tasks to be performed by the participating families as
their labor contribution and the construction tasks to be performed
under contract by skilled laborers. The number of tasks to be performed
by the participating families must constitute the vast majority of the
tasks. Generally, the construction will be done in stages, with each
stage of construction finished with respect to all the homes in the
project before moving to the next stage.
(2) The labor performed is not subject to the labor standards
specified in section 12 of the United States Housing Act of 1937 (42
U.S.C. 1437j).
(3) The Self-Help agreement will specify the circumstances under
which it may be terminated.
(d) Insurance requirements. The families are working for
themselves, and not the IHA, during the performance of their labor
contribution. The Self-Help agreement will provide that the families
waive any liability claim against the IHA for any injury that might
occur during the development of the project. It is in the best
interests of participating families to have their own insurance
coverage to cover the possibility of injury. If the IHA is able to
obtain insurance coverage at reasonable cost with reimbursement from
the families, at their request, to cover this risk, it is encouraged to
do so.
(e) Standard provisions. The Self-Help agreement will include
provisions prohibiting kickbacks and conflict of interest.
(f) Completion. The Self-Help agreement will provide that upon
successful completion of the family's obligations under it, the family
and the IHA will execute a Mutual Help and Occupancy agreement.
Sec. 950.485 Application.
(a) General. The application for a Self-Help development method of
Mutual Help project must comply with the general requirements of
Sec. 950.225.
(b) Need for Self-Help housing. Evidence of the need for Self-Help
housing must be submitted, including the following:
(1) The names, addresses, number of persons in the household, and
annual incomes of the families selected to participate;
(2) The Self-Help agreement;
(3) Certification by the IHA that the participating families are
believed to have the time and ability to fulfill their obligations
under the Self-Help agreement; and
(4) Such information as the incomes and sizes of other interested
families who appear to be eligible.
(c) Ability of IHA to administer Self-Help housing. The IHA must
demonstrate its ability to administer the program by identifying the
staff members who will supervise construction and provide technical
assistance, and describe their experience. If the IHA plans to contract
with an outside entity to perform these functions, it must follow the
requirements concerning Indian preference. Regardless of the identity
of the firm selected to perform this function, the IHA should identify
the firm and briefly describe its experience. The IHA also must
demonstrate its capacity to administer the program, in accordance with
Sec. 950.475.
Sec. 950.490 Development program.
(a) In addition to complying with the requirements of Sec. 950.260,
the IHA's development program for a Self-Help project submitted to HUD
must include the following:
(1) IHA coordination plan. The plan for organizing and implementing
the development, including elements comparable to those covered in the
standard Mutual Help construction contract, and the method of
coordinating work of participating families and skilled contractors.
(2) Difference in cost. A description of how the development cost
differs from the cost for a project constructed under a construction
contract. This difference should reflect the labor contribution, after
considering the construction supervision cost.
(3) Special provisions for acquisition with rehabilitation
projects. A description of the repair or rehabilitation work needed on
each home to be acquired. The work needed on all the homes should be
reasonably comparable in the amount of labor exchange that is required.
The estimated number of hours of labor and a description of the work to
be done must be provided.
(4) Certification of participation. Certification by the IHA that
the participating families have signed the Self-Help agreement and
remain able to fulfill their obligations under the Self-Help agreement.
(5) Changes since application stage. Statement of any changes in
the data submitted in the application.
(b) HUD will review the development program submitted by an IHA for
a Self-Help project with particular attention to the elements listed in
paragraph (a) of this section.
Sec. 950.495 Default of self-help agreement.
(a) Default in a Self-Help project. (1) If the IHA determines that
a participating family is failing to provide its labor contribution, as
required in accordance with its Self-Help agreement, it shall counsel
the family about its obligations and encourage fulfillment of its
responsibilities. If the failure of the family is jeopardizing the
progress of the project, the IHA shall declare the family in default
and terminate its participation in the project. Upon termination of the
participation of one family, the IHA shall move expeditiously to select
an alternate family to take over the responsibilities of the terminated
family. If another qualified family cannot be found to assume the
responsibilities of the terminated family, the unit may be converted to
some other development method (e.g., force account, conventional bid,
etc.) under the Mutual Help Homeownership Opportunity program.
(2) If the IHA determines that an entire group is unable to
continue its work to completion of construction, the IHA shall first
counsel the group about its obligations and encourage fulfillment of
its responsibilities. If counseling is unsuccessful in bringing about
satisfactory progress toward completion, the IHA shall declare the
families in default and convert the project to a regular Mutual Help
Homeownership Opportunity project. The IHA's plan for completing the
project must be submitted to HUD for review and consul prior to
terminating the self-help project. Availability of additional HUD
funding for this purpose is not assured.
(b) [Reserved].
Subpart G--Turnkey III Program
Sec. 950.501 Introduction.
(a) Purpose. This subpart sets forth the essential elements of the
HUD Homeownership Opportunities Program for low income families, which
is administered by HUD as part of the Indian Housing Program under the
United States Housing Act of 1937. In its present form, this part
covers only those matters pertinent to the management, operation,
conversion and sale of existing Turnkey III homes that remain in Indian
housing authority (IHA) ownership. IHAs are encouraged to consider the
conversion of Turnkey III units to some other form of operation where
compliance with the requirements of the Turnkey III Program has become
infeasible.
(b) Applicability. (1) This part is applicable to the operation of
all Turnkey III developments operated by IHAs.
(2) Program framework. All Turnkey III projects shall be operated
in accordance with an executed Annual Contributions Contract (ACC),
which includes the ``Special Provisions for Turnkey III Homeownership
Opportunity Project'' and Homebuyer Ownership Opportunity Agreements
(Homebuyer Agreement) between the IHA and the Homebuyer.
(3) A Turnkey III development may only include units that are to be
operated for the purpose of providing homeownership opportunities for
eligible low-income families pursuant to this part and the special
Turnkey III provisions of the ACC including units occupied temporarily
by former homebuyers who, as a result of losing homeownership
potential, have been transferred to rental status in place, pending the
availability of a suitable rental unit. If for any reason it is
determined that certain units should be converted to operation as
conventional rental units, Mutual Help units, or some other form of
operation, such units must be made a part of a conventional rental
project, Mutual Help project, or such other project. However, when a
homebuyer is converted to rental status while remaining in the same
unit, pending availability of a satisfactory rental unit or approval of
a request to convert the unit in accordance with Sec. 950.503, the unit
remains under the Turnkey III project.
(4) An IHA may, at its discretion and without HUD approval,
establish for its Turnkey III developments any policies, procedures and
requirements that are not contrary to the ACC, this part, other
applicable Federal, State, and local statutes and regulations, and the
rights of homebuyers under existing homebuyer agreements.
(5) Program overview. The Turnkey III Program allows IHAs to
provide homeownership opportunities for eligible low-income families
who meet the specified standard for homeownership potential, through
purchase of homes in those Indian housing developments that were
established by certain IHAs under the Turnkey III Program. The program
uses a lease-purchase arrangement, whereby the homebuyer family
initially takes occupancy on a rental basis, under a homebuyer
agreement that constitutes a lease with an option to purchase the home
as soon as the family reaches the point where they can afford to buy
and assume the responsibilities of homeownership. The purchase price is
set at the time of initial occupancy, and then, for a subsequent
homebuyer who takes occupancy after turnover. The purchase price for a
subsequent homebuyer is determined by the IHA. During the period of
rental tenancy, the homebuyer makes monthly rental payments based on an
affordable percentage of family income and is responsible for routine
maintenance. A portion of the homebuyer monthly payment is used to
establish an Earned Home Payments Account (EHPA) and a Nonroutine
Maintenance Reserve (NRMR). To the extent that these funds are not used
by the IHA to perform maintenance relating to the home, the funds will
be available to apply to the purchase price at the time the homebuyer
is in a position to exercise the option to purchase. At closing, the
homebuyer pays the IHA the balance of the purchase price due (or may be
permitted by the IHA to finance all or a portion of that amount through
a purchase-money mortgage) and the IHA deeds the home over to the
homebuyer. The home becomes the privately-owned property of the
homebuyer (now a homeowner), no longer Indian housing, and subject only
to a restriction on the amount of resale profit that the homeowner is
permitted to keep if the property is resold in five years.
(c) [Reserved].
(d) Contracts, agreements, other documents. All contracts,
agreements and other documents referred to in this subpart must be in a
form approved by HUD and changes must be made with the approval of the
ONAP Field Office. Contracts, agreements and other documents include
but are not limited to:
(1) The Annual Contributions Contract (ACC), including the Special
Provisions for Turnkey III Projects;
(2) The Homebuyer Ownership Opportunity Agreement (Homebuyer
Agreement);
(3) Certification of Homebuyer Status;
(4) Promissory Note for Payment Upon Resale by Homebuyer at Profit;
(5) Articles of Incorporation and By-Laws of the Homebuyer
Association (HBA), if any; and
(6) Recognition Agreement Between Indian Housing Authority and the
Homebuyer Association, if any.
Sec. 950.503 Conversion of Turnkey III developments.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the HUD Field Office for approval to convert any or
all of the units in an existing Turnkey III development to the rental
or MH program. Any conversion of existing units shall not affect in any
way the IHA's status for funding for new development.
(b) Minimum requirements. (1) In order to be eligible for
conversion, the units must be single family detached homes, or
apartment/row houses for conversion to condominium/cooperative
ownership. In addition, the units must have individually metered
utilities and be decent, safe and sanitary condition. If the units are
not decent, safe and sanitary, the IHA shall submit a plan to correct
unit deficiencies. The developments which possess the proposed
conversion units must have received and approved actual development
cost certificate.
(2) For conversion to MH, applicants must qualify for the program
under Sec. 950.416(b). The entire MH contribution required of the
homebuyer must be made before the Turnkey III unit occupied by a tenant
can be converted to the MH program. In determining the purchase price,
the homebuyer may receive credit for the period of time they have been
residing in a Turnkey III homeownership unit.
(c) Application process. The IHA's application must be in the form
required by HUD, including all necessary documentation. The HUD Field
Office shall review the application for legal sufficiency; Tribal
acceptance; demonstration of family interest; evidence units are
habitable, safe and sanitary; family qualifications as discussed in
paragraph (b)(2) of this section; and financial feasibility. Where not
all units in a development are proposed for conversion, the IHA's
ability to operate the remaining Turnkey III units must not be
adversely affected.
Sec. 950.505 Eligibility and selection of Turnkey III homebuyers.
(a) Applications. The availability of housing under Turnkey III
shall be announced to the community at large, unless there is already a
sufficient number of eligible applicants on the IHA's Turnkey III
waiting list. Families who wish to be considered for Turnkey III,
including, but not limited to existing occupants of the IHA's rental
housing units and those on the waiting list for IHA rental housing must
apply specifically for that program and a separate list of eligible
applicants for Turnkey III shall be maintained. Applications shall be
dated as received. The submission of an application for Turnkey III by
a family which is also an applicant for conventional rental public
housing or is an occupant of such housing shall in no way affect its
status with regard to such rental housing. A family shall not lose its
place on the waiting list until it is selected for Turnkey III and
shall not receive any different treatment or consideration with respect
to other rental housing programs because of its having applied for
Turnkey III. In order to be considered for selection, a family must be
determined to meet at least all of the following standards of potential
for homeownership:
(1) Sufficient income to cover the EHPA, NRMR, and the estimated
cost of utilities with its required monthly payment (see Sec. 950.315);
(2) Ability to meet all obligations under the Homebuyer Agreement;
and
(3) At least one member who is gainfully employed, or who has an
established source of continuing income.
(b) Selection and notification of homebuyers. Homebuyers shall be
selected from those families determined to have potential for
homeownership. Such selection shall be made in sequence from the
waiting list.
Sec. 950.507 Homebuyer Ownership Opportunity Agreements (HOOA).
(a) General. The HOOA must be executed between the IHA and the
homebuyer as a condition for occupancy of a Turnkey III unit. The HOOA
is a lease agreement which also provides the homebuyer with an option
to purchase the home, subject to the homebuyer's compliance with
certain conditions. The homebuyer acquires no equity in the home before
purchase.
(b) Pre-Existing Agreements. (1) Turnkey III Projects in operation
on the effective date of this subpart shall be governed by this
subpart, except to the extent that the terms of any pre-existing
Homebuyer Agreements shall govern the relationship of an IHA and
occupant until the termination or cancellation of such agreement(s). If
the agreement establishes a maximum or a minimum monthly payment, the
terms of the agreement shall govern. However, in no event will the
monthly payment charged exceed the Total Tenant Payment determined in
accordance with subpart D of this part.
(2) Pre-existing Homebuyer Agreements that determined the required
monthly payment in accordance with a ``Schedule'' developed by the IHA
and approved by HUD should continue to determine the monthly payment in
accordance with the schedule. This schedule is determined as follows:
(i) The operating budget for the project is based on estimated
expenses for a given period of time. The amount needed to operate a
particular project is called the breakeven amount. This is comprised of
the Operating Expenses, the total amount needed for EHPA, and the total
needed for NRMR.
(ii) The aggregate of all homebuyers' incomes is determined. (If no
definition of income is stated in the homebuyer's contract, the
definition in subpart A of this part is used.)
(iii) The percentage of aggregated income needed to cover 110
percent of the breakeven amount is determined. This percentage is the
one that appears in the schedule.
Sec. 950.509 Responsibilities of homebuyer.
(a) Repair, maintenance and use of home. The homebuyer shall be
responsible for the routine maintenance of the home to the satisfaction
of the HBA and the IHA. This routine maintenance includes the work
(labor and materials) of keeping the dwelling structure, grounds, and
equipment in good repair, condition, and appearance. In addition, the
home must conform with the requirements of local housing codes and
applicable regulations and guidelines of HUD. It includes repairs
(labor and materials) to the dwelling structure, plumbing fixtures,
dwelling equipment (such as range and refrigerator), shades and
screens, water heater, heating equipment, and other component parts of
the dwelling. It also includes all interior painting and the
maintenance of grounds (lot) on which the dwelling is located. It does
not include maintenance and replacements provided for by the NRMR.
(b) Repair of damage. In addition to the obligation for routine
maintenance, the homebuyer shall be responsible for repair of any
damage caused by the homebuyer, other occupants, or visitors.
(c) Care of home. A homebuyer shall keep the home in a sanitary
condition; cooperate with the IHA and the HBA in keeping and
maintaining the common areas and property, including fixtures and
equipment, in good condition and appearance; and follow all rules of
the IHA and of the HBA concerning the use and care of the dwellings and
the common areas and property.
(d) Inspections. A homebuyer shall agree to permit officials,
employees, or agents of the IHA and of the HBA to inspect the home at
reasonable hours and intervals in accordance with rules established by
the IHA and the HBA.
(e) Use of home. (1) A homebuyer shall not:
(i) Sublet the home without the prior written approval of the IHA;
(ii) Use or occupy the home for any unlawful purpose nor for any
purpose deemed hazardous by insurance companies on account of fire or
other risks; or
(iii) Provide accommodations (unless approved by the HBA and the
IHA) to boarders or lodgers.
(2) The homebuyer shall agree to use the home primarily as a place
to live for the family (as identified in the initial application or by
subsequent amendment with the approval of the IHA), for children
thereafter born to or adopted by members of such family, and for aged
or widowed parents of the homebuyer or spouse who may join the
household.
(f) Obligations with respect to other persons and property. Neither
the homebuyer nor any other member of the family shall interfere with
rights of other occupants of the development, or damage the common
property or the property of others, or create physical hazards.
(g) Structural changes. A homebuyer shall not make any structural
changes in or additions to the home unless the IHA has first determined
in writing that such change would not:
(1) Impair the value of the unit, the surrounding units, or the
development as a whole; or
(2) Affect the use of the home for residential purposes; or
(3) Violate HUD requirements as to construction and design.
(h) Statements of condition and repair. When each homebuyer moves
in, the IHA shall inspect the home and shall give the homebuyer a
written statement, to be signed by the IHA and the homebuyer, of the
condition of the home and the equipment in it. Should the homebuyer
vacate the home, the IHA shall inspect it and give the homebuyer a
written statement of the repairs and other work, if any, required to
put the home in good condition for the next occupant. The homebuyer or
the homebuyer's representative and a representative of the HBA may join
in any inspections by the IHA.
(i) Maintenance of common property. The homebuyer may participate
in nonroutine maintenance of the home and in maintenance of common
property.
(j) Assignment and survivorship. Until such time as the homebuyer
obtains title to the home, the following conditions apply:
(1) A homebuyer shall not assign any right or interest in the home
or any interest under the Homebuyer Ownership Opportunity Agreement
without the prior written approval of the IHA;
(2) In the event of death or mental incapacity, the person
designated as the successor in the Homebuyer Ownership Opportunity
Agreement shall succeed to the rights and responsibilities under the
agreement if that person is a family member and is determined by the
IHA to meet all of the standards of potential for homeownership,
including the requirement to make the home the person's principal
residence. Such person shall be designated by the homebuyer at the time
the Homebuyer Ownership Opportunity Agreement is executed. This
designation may be changed by the homebuyer at any time. If there is no
such designation, or the designee is not a family member or does not
meet the standards of potential for homeownership, the IHA may consider
as the homebuyer any family member who meets the standards of potential
for homeownership;
(3) If there is no qualified successor in accordance with paragraph
(j)(2) of this section, and no minor child of the homebuyer's family is
in occupancy, the IHA shall terminate the agreement and another family
shall be selected. Where a minor child or children of the homebuyer's
family is in occupancy, and an appropriate adult(s) who has been
appointed legal guardian of the children is able and willing to perform
the obligations of the Homebuyer Ownership Opportunity Agreement in
their interest and on their behalf, then in order to protect continued
occupancy and opportunity for acquisition of ownership of the home, the
IHA may approve the guardian(s) as occupants of the unit with a duty to
fulfill the homebuyer obligations under the agreement.
(Approved by the Office of Management and Budget under control
number 2577-0114)
Sec. 950.511 Homebuyers' association (HBA).
(a) General. (1) The homebuyers' association (HBA) is an
incorporated organization composed of all homebuyers and homeowners.
Except where the homes are on scattered sites (noncontiguous lots
throughout a multi-block area with no common property), or where the
number of homes in the development may be too few to support an HBA,
each Turnkey III development shall have an HBA. For such cases, a
modified form of homebuyers association may be called for or a less
formal organization may be desirable. This decision shall be made
jointly by the IHA and the homebuyers, acting on the recommendation of
HUD.
(2) The functions of the HBA shall be set forth in its articles of
incorporation and by-laws. The IHA shall assist the HBA in its
organization and operation to the extent possible.
(b) Funding. The IHA may provide non-cash contributions to the HBA,
such as office space, as well as cash contributions, which shall be
provided for in the annual operating budgets of the IHA. The cash
contributions shall be in an amount provided for in the IHA budget and
approved by HUD and shall be subject to any HUD restrictions on
funding.
Sec. 950.512 Homeowner's association (HOA).
A homeowners' association means an association comprised of
homeowners, to which the IHA conveys ownership of common property, and
which thereafter has responsibilities with respect to the common
property. Only residents who have acquired title to their homes are
members of the HOA.
Sec. 950.513 Breakeven amount and application of monthly payments.
(a) Definition. The term ``break-even amount'' as used herein means
the minimum average monthly amount required to provide funds for the
amounts budgeted for operating expenses, the EHPA, and the NRMR. A
separate breakeven amount is established for each size and type of
dwelling unit, as well as for the project as a whole. The breakeven
amount for EHPA and NRMR will vary by size and type of dwelling unit.
Similar variations may occur for operating expenses. The breakeven
amount does not include the monthly allowance for utilities for which
the homebuyer pays directly.
(b) Application of monthly payments. The IHA shall apply the
homebuyer's monthly payment as follows:
(1) To the credit of the homebuyer's EHPA;
(2) To the credit of the homebuyer's NRMR; and
(3) For payment of monthly operating expense, including
contributions to the operating reserve.
(c) Excess over breakeven. When the homebuyer's required monthly
payment exceeds the applicable breakeven amount, the excess shall
constitute additional project income and shall be deposited and used in
the same manner as other project income.
(d) Deficit in monthly payment. When the homebuyer's required
monthly payment is less than the applicable breakeven amount, the
deficit shall be applied as a reduction of that portion of the monthly
payment designated for operating expense (i.e., as a reduction of
project income). In all cases, the homebuyer payment must be sufficient
to cover the EHPA and the NRMR, which shall be credited with the amount
included in the breakeven amount for these accounts.
Sec. 950.515 Monthly operating expense.
(a) Definition and categories of monthly operating expense. The
term ``monthly operating expense'' means the monthly amount needed for
the following purposes:
(1) Administration. Administrative salaries, travel, legal
expenses, office supplies, etc.;
(2) Homebuyer services. IHA expenses in the achievement of social
goals, including costs such as salaries, publications, payments to the
HBA to assist its operation, contract and other costs;
(3) Utilities. Those utilities (such as water), if any, to be
furnished by the IHA as part of operating expense;
(4) Routine maintenance--common property. For community building,
grounds and other common areas, if any. The amount required for routine
maintenance of common property depends upon the type of common property
included in the development and the extent of the IHA's responsibility
for maintenance;
(5) Protective services. The cost of supplemental protective
services paid by the IHA for the protection of persons and property;
(6) General expense. Premiums for fire and other insurance,
payments in lieu of taxes to the local taxing body, collection losses,
payroll taxes, etc.;
(7) Nonroutine maintenance--common property (contribution to
operating reserve). Extraordinary maintenance of equipment applicable
to the community building and grounds, and unanticipated items for non-
dwelling structures.
(b) Monthly operating expense rate. (1) The monthly operating
expense rate to be included in the breakeven amount for each fiscal
year shall be established on the basis of the IHA's HUD-approved
operating budget for that fiscal year. The operating budget may be
revised during the course of the fiscal year in accordance with HUD
regulations, contracts, and handbooks.
(2) If it is subsequently determined that the actual operating
expense for a fiscal year was more or less than the amount provided by
the monthly operating expense established for that fiscal year, the
rate of monthly operating expenses to be established for the next
fiscal year may be adjusted to account for the differences.
(c) Posting of monthly operating expense statement. A statement
showing the budgeted monthly amount allocated in the current operating
expense category shall be provided to the HBA and copies shall be
provided to homebuyers upon request.
Sec. 950.517 Earned Home Payments Account (EHPA).
(a) Credits to the account. The IHA shall establish and maintain a
separate EHPA for each homebuyer. Since the homebuyer is responsible
for maintaining the home, a portion of the required monthly payment
equal to the IHA's estimate, of the monthly cost for such routine
maintenance, taking into consideration the relative type and size of
the homeowner's home, shall be set aside in the EHPA. In addition, this
account shall be credited with:
(1) Any voluntary payments made pursuant to paragraph (f) of this
section; and
(2) Any amount earned through the performance of maintenance as
provided in paragraph (c) of this section.
(b) Charges to the account. (1) If for any reason the homebuyer is
unable or fails to perform any item of required maintenance, the IHA
shall arrange to have the work done in accordance with the procedures
established by the IHA and the HBA, and the cost thereof shall be
charged to the homebuyer's EHPA. Inspections of the home shall be made
jointly by the IHA and HBA.
(2) To the extent NRMR expense is attributable to the negligence of
the homebuyer as determined by the HBA and approved by the IHA (see
Sec. 950.519), the cost thereof shall be charged to the EHPA.
(c) Additional equity through maintenance of common property.
Homebuyers may earn addition EHPA credits by providing in whole or in
part any of the maintenance necessary to the common property of the
development. When such maintenance is to be provided by the homebuyer,
this may be done and credit earned therefore only pursuant to a prior
written agreement between the homebuyer and the IHA (or the homeowners'
association, depending on who has responsibility for maintenance of the
property involved), covering the nature and scope of the work and the
amount of credit the homebuyer is to receive. In such cases, the agreed
amount shall be charged to the appropriate maintenance account and
credited to the homebuyer's EHPA upon completion of the work.
(d) Investment of excess. (1) When the aggregate amount of all EHPA
balances exceeds the estimated reserve requirements for 90 days, the
IHA shall notify the HBA and shall invest the excess in federally
insured savings accounts, federally insured credit unions, and/or
securities approved by HUD and in accordance with any recommendations
made by the HBA. If the HBA wishes to participate in the investment
program, it should submit periodically to the IHA a list of HUD-
approved securities, bonds, or obligations which the association
recommends for investment by the IHA of the funds in the EHPAs.
Interest earned on the investment of such funds shall be prorated and
credited to each homebuyer's EHPA in proportion to the amount in each
such reserve account.
(2)(i) Periodically, but not less often than annually, the IHA
shall prepare a statement showing:
(A) The aggregate amount of all EHPA balances;
(B) The aggregate amount of investments (savings accounts and/or
securities) held for the account of all the homebuyers' EHPAs; and
(C) The aggregate uninvested balance of all the homebuyers' EHPAs.
(ii) This statement shall be made available to any authorized
representative of the HBA.
(e) Voluntary payments. To enable the homebuyer to acquire title to
the home within a shorter period than anticipated under the original
schedule, the homebuyer may, either periodically or in a lump sum,
voluntarily make payments over and above the required monthly payments.
Such voluntary payments shall be credited to the homebuyer's EHPA.
(f) Delinquent monthly payments. Under exceptional circumstances as
determined by the HBA and the IHA, a homebuyer's EHPA may be used to
pay the delinquent required monthly payments, provided the amount used
for this purpose does not seriously deplete the account and provided
that the homebuyer agrees to cooperate in such counseling as may be
made available by the IHA or the HBA.
(g) Annual statement to homebuyer. The IHA shall provide an annual
statement to each homebuyer specifying at least the amounts in the
EHPA, and the NRMR. Any maintenance or repair done on the dwelling by
the IHA which is chargeable to the EHPA or to the NRMR shall be
accounted for through a work order, a copy of which shall be sent to
the homebuyer.
(h) Withdrawal and assignment. The homebuyer shall have no right to
assign, withdraw, or in any way dispose of the funds in its EHPA except
as provided in this section or in Sec. 950.525.
(i) Application of EHPA upon vacating of dwelling. (1) In the event
a homebuyer agreement is terminated the IHA shall charge against the
homebuyer's EHPA the amounts required to pay:
(i) The amount due the IHA, including the monthly payments the
homebuyer is obligated to pay up to the date the homebuyer vacates;
(ii) The monthly payment for the period the home is vacant, not to
exceed 60 days from the date of notice of intention to vacate, or, if
the homebuyer fails to give notice of intention to vacate, 60 days from
the date the home is put in good condition for the next occupant; and
(iii) The cost of any routine maintenance, and of any nonroutine
maintenance attributable to the negligence of the homebuyer, required
to put the home in good condition for the next occupant.
(2) If the EHPA balance is not sufficient to cover all of these
charges, the IHA shall require the homebuyer to pay the additional
amount due. If the amount in the account exceeds these charges, the
excess shall be paid to the homebuyer.
(3) Settlement with the homebuyer shall be made promptly after the
actual cost of repairs to the dwelling has been determined provided
that the IHA shall make every effort to make such settlement within 30
days from the date the homebuyer vacates.
Sec. 950.519 Nonroutine Maintenance Reserve (NRMR).
(a) Purpose of reserve. The IHA shall establish and maintain a
separate NRMR for each home, using a portion of the homebuyer's monthly
payment. The purpose of the NRMR is to provide funds for the nonroutine
maintenance of the home, which consists of the infrequent and costly
items of maintenance and replacement shown on the Nonroutine
Maintenance Schedule for the home. Such maintenance may include the
replacement of dwelling equipment (such as range and refrigerator),
replacement of roof, exterior painting, major repairs to heating and
plumbing systems, etc. The NRMR shall not be used for nonroutine
maintenance of common property, or for nonroutine maintenance relating
to the home to the extent such maintenance is attributable to the
Homebuyer's negligence or to defective materials or workmanship.
(b) Amount of reserve. The amount of the monthly payments to be set
aside for NRMR shall be determined by the IHA, on the basis of the
Nonroutine Maintenance Schedule showing the amount likely to be needed
for nonroutine maintenance of the home during the term of the Homebuyer
Ownership Opportunity Agreement, taking into consideration the type of
construction and dwelling equipment. This schedule shall be prepared by
the IHA and reexamined annually.
(c) Charges to NRMR. (1) The IHA shall provide the nonroutine
maintenance necessary for the home and the cost thereof shall be funded
as provided in paragraph (c)(2) of this section. Such maintenance may
be provided by the homebuyer but only pursuant to a prior written
agreement with the IHA covering the nature and scope of the work and
the amount of credit the homebuyer is to receive. The amount of any
credit shall, upon completion of the work, be credited to the
homebuyer's EHPA and charged as provided in paragraph (c)(2) of this
section.
(2) The cost of nonroutine maintenance shall be charged to the NRMR
for the home except that:
(i) To the extent such maintenance is attributable to the fault or
negligence of the homebuyer, the cost shall be charged to the
homebuyer's EHPA after consultation with the HBA if the homebuyer
disagrees, and
(ii) To the extent such maintenance is attributable to defective
materials or workmanship not covered by the warranty, or even though
covered by the warranty if not paid for thereunder through no fault or
negligence of the homebuyer, the cost shall be charged to the
appropriate operating expense account of the Project.
(3) In the event the amount charged against the NRMR exceeds the
balance therein, the difference (deficit) shall be made up from
continuing monthly credits to the NRMR based upon the homebuyer's
monthly payments. If there is still a deficit when the homebuyer
acquires title, the homebuyer shall pay such deficit at settlement (see
paragraph (d)(2) of this section).
(d) Transfer of NRMR. (1) In the event the homebuyer agreement is
terminated, the homebuyer shall not receive any balance or be required
to pay any deficit in the NRMR. When a subsequent homebuyer moves in, a
credit balance in the NRMR shall continue to be applicable to the home
in the same amount as if the preceding homebuyer had continued in
occupancy.
(2) In the event the homebuyer purchases the home, and there
remains a balance in the NRMR, the IHA shall pay such balance to the
homeowner at settlement. In the event the homebuyer purchases and there
is a deficit in the NRMR, the homebuyer shall pay such deficit to the
IHA at settlement.
(e) Investment of excess. (1) When the aggregate amount of the NRMR
balances for all the homes exceeds the estimated reserve requirements
for 90 days the IHA shall invest the excess in federally insured
savings accounts, federally insured credit unions, and/or securities
approved by HUD. Income earned on the investment of such funds shall be
prorated and credited to each homebuyer's NRMR in proportion to the
amount in each reserve account.
(2)(i) Periodically, but not less often than annually, the IHA
shall prepare a statement showing:
(A) The aggregate amount of all NRMR balances;
(B) The aggregate amount of investments (savings accounts and/or
securities) held for the account of the NRMRs; and
(C) The aggregate uninvested balance of the NRMRs.
(ii) A copy of this statement shall be made available to any
authorized representative of the HBA.
Sec. 950.521 Operating reserve.
(a) Purpose of the reserve. To the extent that total operating
receipts (including subsidies for operations) exceed total operating
expenditures of the project, the IHA shall establish an operating
reserve in connection with its approval of the annual operating budgets
for the project. The purpose of this reserve is to provide funds for:
(1) The infrequent but costly items of nonroutine maintenance and
replacements of common property, taking into consideration the types of
items which constitute common property, such as nondwelling structures
and equipment, and in certain cases, common elements of dwelling
structures;
(2) Nonroutine maintenance for the homes to the extent such
maintenance is attributable to defective materials or workmanship not
covered by warranty;
(3) Working capital, including funds to cover a deficit in a
homebuyer's NRMR until such deficit is offset by future monthly
payments by the homeowner or a settlement in the event the homebuyer
should purchase; and
(4) A deficit in the operation of the project for a fiscal year,
including any deficit resulting from monthly payments totaling less
than the breakeven amount for the project; and
(5) Funds needed for nonroutine maintenance of vacated homes with
insufficient NRMR balances to put them in suitable condition for
reoccupancy by subsequent homeowners.
(b) Nonroutine maintenance--common property (contribution to
operating reserve. The amount under this heading to be included in
operating expense (and in the breakeven amount) established for the
fiscal year shall be determined by the IHA, on the basis of estimates
of the monthly amount needed to accumulate an adequate reserve for the
items described in paragraph (a)(1) of this section. This amount shall
be subject to revision in the light of experience. This contribution to
the operating reserve shall be made only during the period the IHA is
responsible for the maintenance of any common property; and during such
period, the amount shall be determined on the basis of the requirements
of all common property in the development.
(c) Transfer to homeowners' association. Where a Turnkey III
development includes common property, the IHA shall be responsible for
and shall retain custody of the operating reserve until the homeowners
acquire voting control of the homeowners' association. When the
homeowners acquire voting control, the homeowners' association shall
then assume full responsibility for management and maintenance of
common property under a plan, agreed upon by the IHA and the homeowners
association and there shall be transferred to the homeowners'
association a portion of the operating reserve then held by the IHA.
This provision shall not apply where there is no common property or
where there is no duly organized and functioning homeowners
association.
(d) Disposition of reserve. If, at the end of a fiscal year, there
is an excess over the maximum operating reserve, this excess shall be
applied to the operating deficit of the project, if any, and any
remainder shall be used for such purposes as approved by HUD under an
ACC. Following the end of the fiscal year in which the last home has
been conveyed by the IHA, the balance of the operating reserve held by
the IHA shall be paid to HUD, or retained by the IHA in a replacement
reserve if an ACC amendment has been executed implementing loan
forgiveness, provided that the aggregate amount of payments by the IHA
under this paragraph shall not exceed the aggregate amount of annual
contributions paid by HUD with respect to the development.
Sec. 950.523 Operating subsidy.
Operating subsidy may be paid by HUD, subject to the availability
of funds for this purpose and at HUD's sole discretion, to cover an
operating deficit as approved by HUD in an operating budget submitted
by an IHA for a Turnkey III project. However, operating subsidy or
project funds may not be used to establish or maintain the homebuyer
reserve accounts. Project funds may be used on a temporary basis to pay
the cost of utilities for an individual unit by way of a utility
reimbursement when a homebuyer has insufficient tenant income to cover
even the utilities. In such a case, the inability of the homebuyer to
pay utilities constitutes a loss of homeownership potential and
continuing eligibility for the Turnkey III program.
Sec. 950.525 Purchase price and methods of purchase.
(a) Purchase price. The purchase price for the initial and
subsequent homebuyer shall be determined by the IHA.
(b) Purchase price schedule. On the date when the homebuyer
agreement is signed, the IHA shall provide the homebuyer with a
Purchase Price Schedule, showing the monthly declining purchase price
over the term of the HOOA agreement (a period not less than 15 years or
more than 25 as determined by the IHA, at an interest rate determined
by the IHA.) The IHA may choose to forego charging interest and
calculate the payment with an interest rate of zero.
(c) Methods of purchase. (1) The homebuyer may achieve ownership
when the amount in the EHPA, plus such portion of the NRMR as the
homebuyer wishes to use for the purchase, is equal to the unamortized
balance purchase price as shown at that time on the homebuyer's
purchase price schedule plus all incidental costs (the costs incidental
to acquiring ownership, including, but not limited to, the costs for a
credit report, field survey, title examination, title insurance, and
inspections, the fees for attorneys other than the IHA's attorney,
mortgage application, closing and recording, and the transfer taxes and
loan discount payment, if any). If for any reason title to the home is
not conveyed to the homebuyer during the month in which the combined
total in the EHPA and designated portion of the NRMR equals the
purchase price, the balance of the purchase price shall be fixed as the
amount specified for that month and the homebuyer shall be refunded:
(i) The net additions, if any, credited to the EHPA after that
month, and
(ii) Such part of the monthly payments made by the homebuyer after
the balance of the purchase price has been fixed which exceeds the
breakeven amount attributable to the unit.
(2) Where the sum of the unamortized balance of the purchase price
and incidental costs is greater than the amounts in the homebuyer's
EHPA and NRMR, the homebuyer may achieve ownership by obtaining
financing for or otherwise paying the excess amount. The unamortized
balance of the purchase price shall be the amount shown on the
homebuyer's purchase price schedule for the month in which the
settlement date for the purchase occurred.
(3) Period required to achieve ownership. The maximum period for
achieving ownership shall be 30 years, but depending upon increases in
the homebuyer's income and the amount of credit which the homebuyer can
accumulate in the EHPA and NRMR the period may be shortened
accordingly.
(4) Residual receipts. After payment in full of the IHA's debt, if
there are any subsequent homebuyers who have not acquired ownership of
their homes, the IHA shall retain all residual receipts from the
operation of the development in a replacement reserve.
(5) IHA financing. The IHA may, at its discretion, provide
financing for purchases by homebuyers, or assist with financing, by
such methods and on such terms and conditions as be agreeable to the
IHA and the homebuyer, without any requirement for prior HUD approval.
The financing may be provided using such methods as a mortgage or a
loan agreement.
(6) Transfer of title to homebuyer. When the homebuyer is to obtain
ownership, a closing date shall be mutually agreed upon by the parties.
On the closing date the homebuyer shall pay the required amount of
money to the IHA, sign the promissory note in accordance with
Sec. 950.527, and receive a deed for the home.
Sec. 950.527 Payment upon resale at profit.
(a) Promissory note. (1) When a homebuyer achieves ownership, the
homebuyer shall sign a note obligating him or her to make payment to
the IHA, subject to the provisions of paragraph (a)(2) of this section,
in the event the homebuyer resells the home at a profit within five
years of actual residence in the home after becoming a homeowner. If,
however, the homeowner should purchase and occupy another home within
one year (18 months in the case of a newly constructed home) of the
resale of the Turnkey III home, the IHA shall refund to the homeowner
the amount previously paid under the note, less the amount, if any, by
which the resale price of the Turnkey III home exceeds the acquisition
price of the new home, provided that application for such refund shall
be made no later than 30 days after the date of acquisition of the new
home.
(2)(i) The note to be signed by the homebuyer pursuant to paragraph
(a)(1) of this section shall be a noninterest-bearing promissory note
to the IHA. The note shall be executed at the time the homebuyer
becomes a homeowner and shall be secured by a second mortgage. The
initial amount of the note shall be computed by taking the appraised
value of the home at the time the homebuyer becomes a homeowner and
subtracting:
(A) The homebuyer's purchase price plus incidental costs (as
described in Sec. 950.525(c);) and
(B) The increase in value of the home as determined by appraisal,
caused by improvements paid for by the homebuyer with funds from
sources other than the EHPA or NRMR.
(ii) The note shall provide that this initial amount shall be
automatically reduced by 20 percent thereof at the end of each year of
residency as a homeowner, with the note terminating at the end of the
five-year period of residency, as determined by the IHA. To protect the
homeowner, the note shall provide that the amount payable under it
shall in no event be more than the net profit on the resale, that is,
the amount by which the resale price exceeds the sum of:
(A) The homebuyer's purchase price plus incidental costs,
(B) The costs of the resale, including commissions and mortgage
prepayment penalties, if any, and
(C) The increase in value of the home, determined by appraisal, due
to improvements paid for as a homebuyer (with funds from sources other
than the EHPA or NRMR) or as a homeowner.
(3) Amounts collected by the IHA under such notes shall be retained
by the IHA for use in making refunds pursuant to paragraph (a)(1) of
this section. After expiration of the period for the filing of claims
for such refunds, any remaining amounts shall be used for such purposes
as may be authorized or approved by HUD under such Annual Contributions
Contract as the IHA may then have with HUD.
(b) Residency requirements. The five-year note period does not end
if the homeowner rents or otherwise does not use the home as the
homeowner's principal place of residence for any period within the
first five years after achieving ownership. Only the actual amount of
time the homeowner is in residence is counted, and the note shall be in
effect until a total of five years time of residence has elapsed, at
which time the homeowner may request that the IHA release him or her
from the note, and the mortgage securing the note. The IHA shall
release the homeowner upon such a request.
(c) Death of homeowner. In the event of the death of the homeowner,
or last surviving co-owner, prior to the end of the five-year period of
the promissory note, the IHA may, at its sole discretion, cancel the
note and release the encumbrance of the mortgage, in whole or in part.
Sec. 950.529 Termination of Homebuyer Ownership Opportunity Agreement.
(a) Termination by IHA. (1) In the event the homebuyer should
breach the Homebuyer Ownership Opportunity Agreement by failure to make
the required monthly payment within ten days after its due date, by
misrepresentation or withholding of information in applying for
admission or in connection with any subsequent reexamination of income
and family composition, by failure to comply with any of the other
homebuyer obligations under the agreement, by loss of homeownership
potential (beyond a temporary, unforeseen change in circumstances) (see
Sec. 950.503(c)(3)), an income that requires outright purchase (see
Sec. 950.525(b)), the IHA may terminate the agreement 30 days after
giving the homebuyer notice of its intention to do so in accordance
with paragraph (a)(2) of this section.
(2) Notice of termination by the IHA shall be in writing. Such
notice shall state:
(i) The reason for termination;
(ii) That the homebuyer may respond to the IHA, in writing or in
person, within a specified reasonable period of time regarding the
reason for termination;
(iii) That in such response the homebuyer may be represented by the
HBA;
(iv) That the IHA will consult the HBA concerning this termination;
(v) That unless the IHA rescinds or modifies the notices, the
termination shall be effective at the end of the 30-day notice period;
and
(vi) That, in the case of termination as a result of loss of
homeownership potential when the homebuyer is otherwise in compliance
with the agreement, the family will be offered a transfer to a rental
unit (whether or not in concert with a conversion of that unit to the
rental program). If a rental unit of appropriate size is available, the
family will be notified of a transfer to that unit. If no other unit is
then available and the homebuyer's current unit is not to be converted
to rental, the family will be notified that it may remain in place
until an appropriate rental unit becomes available (in which case the
unit remains under the Turnkey III project). Otherwise, the notice
shall state that the transfer shall occur as soon as a suitable rental
unit is available for occupancy, but no earlier than 30 days from the
date of the notice. The notice shall also state that if the homebuyer
should refuse to move under such circumstances, the family may be
required to vacate the homebuyer unit, without further notice.
(b) Termination by the homebuyer. The homebuyer may terminate the
Homebuyer Ownership Opportunity Agreement by giving the IHA 30 days
notice in writing of this intention to terminate and vacate the home.
In the event that the homebuyer vacates the home without notice to the
IHA, the agreement shall be terminated automatically and the IHA may
dispose of, in any manner deemed suitable by it, any items of personal
property left by the homebuyer in the home.
(c) Transfer to the rental program. In the event of termination of
the Homebuyer Ownership Opportunity Agreement by the IHA or by the
homebuyer with adequate notice, the homebuyer may be transferred to a
suitable unit in the rental program, in accordance with
Sec. 950.503(c)(3)(ii) or terminated from occupancy. If the homebuyer
is transferred to the rental program, the amount in the homeowner's
EHPA shall be paid in accordance with Sec. 950.517(i).
* * * * *
Subpart I--Modernization Program
General Provisions
Sec. 950.600 Purpose and applicability.
(a) Purpose. The purpose of this section is to set forth the
policies and procedures for the Modernization program, authorizing HUD
to provide financial assistance to Indian Housing Authorities (IHAs)
to:
(1) Improve the physical condition and upgrade the management and
operation of existing Indian housing developments;
(2) Assure that such developments continue to be available to serve
low-income families;
(3) Assess the risks of lead-based paint poisoning through the use
of professional risk assessments that include dust and soil sampling
and laboratory analysis in all developments constructed before 1980
that are, or will be occupied by families; and
(4) Take effective interim measures to reduce and contain the risks
of lead-based paint poisoning recommended in such professional risk
assessments.
(b) Applicability. (1) The undesignated heading entitled, General
Provisions, applies to all modernization under this subpart. The
undesignated heading entitled, Comprehensive Improvement Assistance
Program (CIAP), sets forth the requirements and procedures for the CIAP
for IHAs that own or operate fewer than 250 Indian housing units. An
IHA that qualifies for participation in the CGP is not eligible to
participate in the CIAP. The undesignated heading entitled,
Comprehensive Grant program (CGP), sets forth the requirements and
procedures for the CGP for IHAs that own or operate 250 or more Indian
housing units. For purposes of the 250 or more unit threshold for
participation in the CGP, and for the formula allocation under
Sec. 950.601, an existing rental, Mutual Help or section 23 bond-
financed unit under the ACC shall count as one unit; and a unit under
the Turnkey III program shall count as one-fourth of a unit. An IHA
that has already qualified to participate in the CGP because it owns or
operates 250 or more units, may elect to continue to participate in the
CGP so long as it owns or operates at least 200 units.
(2) This subpart applies to IHA-owned low-income Indian housing
developments (including developments managed by a Resident Management
Corporation pursuant to a contract with the IHA), and to section 23
Leased Housing Bond-Financed developments, for which IHAs request
assistance under the CIAP or CGP. This subpart also applies to the
implementation of modernization programs which were approved before FFY
1992. Rental developments that are planned for conversion to
homeownership under sections 5(h), 21, or 301 of the Act, but which
have not yet been sold by an IHA, continue to qualify for assistance
under this part. This subpart does not apply to developments under the
section 23 Leased Housing Non-Bond Financed program, the section 10(c)
Leased program, or the section 23 or section 8 Housing Assistance
Payments programs.
(c) Transition. Any amount that HUD has obligated to an IHA under
CIAP must be used for the purposes for which the funding was provided,
or for purposes consistent with an approved action plan submitted by
the IHA under the CGP, as the IHA determines to be appropriate.
(d) Other. See subpart A of this part for applicable requirements,
other than the Act, that apply to modernization under this subpart.
Sec. 950.601 Allocation of funds under section 14.
(a) General. This section describes the process for allocating
modernization funds to the aggregate of IHAs and PHAs participating in
the CIAP (i.e., agencies that own or operate fewer than 250 units), and
to individual IHAs and PHAs participating in the CGP (i.e., agencies
that own or operate 250 or more units). The program requirements
governing PHA participation in the CIAP and CGP are contained in 24 CFR
part 968.
(b) Set-aside for emergencies and disasters. For each FFY, HUD
shall reserve from amounts approved in the appropriation act for grants
under this part and 24 CFR part 968, $75 million (which shall include
unused reserve amounts carried over from previous FFYs), which shall be
made available to IHAs and PHAs for modernization needs resulting from
natural and other disasters, and from emergencies. HUD shall replenish
this reserve at the beginning of each FFY so that it always begins with
a $75 million balance. Any unused funds from previous years will remain
in the reserve until allocated. The requirements governing the reserve
for disasters and emergencies and the procedures by which an IHA may
request such funds, are set forth in Sec. 950.667.
(c) Set-aside for credits for mod troubled PHAs under 24 CFR part
968, subpart C. (1) General. After deducting amounts for the reserve
for natural and other disasters and for emergencies under paragraph (b)
of this section, HUD shall set aside no more than five percent of the
remaining amount for the purpose of providing credits to PHAs under 24
CFR part 968 (subpart C) that were formerly designated as mod troubled
agencies under the Public Housing Management Assessment program
(``PHMAP'') at 24 CFR part 901. The purpose of this set-aside is to
compensate such PHAs for amounts previously withheld by HUD because of
their prior designation as a mod troubled agency.
(2) Nonapplicability to IHAs. Since 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. Hence, IHAs
are not subject to any reduction in funding under section 14(k)(5)(a)
of the Act, nor do they participate in the set-aside of credits
established under paragraph (c)(1) of this section.
(d) Formula allocation based on relative needs. After determining
the amounts to be reserved under paragraphs (b) and (c) of this
section, HUD shall allocate the amount remaining pursuant to the
formula set forth in paragraphs (e) and (f) of this section, which is
designed to measure the relative backlog and accrual needs of IHAs and
PHAs.
(e) Allocation for backlog needs. HUD shall allocate half of the
formula amount under paragraph (d) of this section based on the
relative backlog needs of IHAs and PHAs, as follows:
(1) Determination of backlog need. (i) Statistically reliable data.
Where HUD determines that the data concerning the categories of backlog
need identified under paragraph (e)(4) of this section are
statistically reliable for individual IHAs and PHAs with 250 or more
units, or the aggregate of IHAs and PHAs with fewer than 250 units not
participating in the formula funding portion of the modernization
program, it will base its allocation on direct estimates of the
statutory categories of backlog need, based on the most recently
available, statistically reliable data.
(ii) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of backlog need identified under paragraph (e)(4) of this section are
not available for individual IHAs and PHAs with 250 or more units, it
will base its allocation of funds under this section on estimates of
the categories of backlog need using:
(A) The most recently available data on the categories of backlog
need under paragraph (e)(4) of this section;
(B) Objectively measurable data concerning the following IHA or
PHA, community and development characteristics:
(1) The average number of bedrooms in the units in a development.
(Weighted at 2858.7);
(2) The proportion of units in a development available for
occupancy by very large families. (Weighted at 7295.7);
(3) The extent to which units for families are in high-rise
elevator developments. (Weighted at 5555.8);
(4) The age of the developments, as determined by the DOFA date
(date of full availability). In the case of acquired developments, HUD
will use the DOFA date unless the IHA provides HUD with the actual date
of construction, in which case HUD will use the age of the development
(or, for scattered sites, the average age of all the buildings),
subject to a 50 year cap. (Weighted at 206.5);
(5) In the case of a large agency, the number of units with 2 or
more bedrooms. (Weighted at .433);
(6) The cost of rehabilitating property in the area. (Weighted at
27544.3);
(7) For family developments, the extent of population decline in
the unit of general local government determined on the basis of the
1970 and 1980 censuses. (Weighted at 759.5); and
(C) An equation constant of 1412.9.
(2) Calibration of backlog need for developments constructed prior
to 1985. The estimated backlog need, as determined under either
paragraphs (e)(1)(i) or (e)(1)(ii) of this section, shall be adjusted
upward for developments constructed prior to 1985 by a constant ratio
of 1.5 to more accurately reflect the costs of modernizing the
categories of backlog need under paragraph (e)(4) of this section, for
the Indian housing stock as of 1991.
(3) Deduction for prior modernization. HUD shall deduct from the
estimated backlog need, as determined under either paragraphs (e)(1)(i)
or (e)(1)(ii) of this section, amounts previously provided to an IHA or
PHA for modernization, using one of the following methods:
(i) Standard deduction for prior CIAP and MROP. HUD shall deduct 60
percent of the CIAP funds made available on an IHA-wide or PHA-wide
basis from FFY 1984 to 1991, and 40 percent of the funds made available
on a development-specific basis for the Major Reconstruction of
Obsolete Projects (MROP) (not to exceed the estimated formula need for
the development), subject to a maximum fifty percent deduction of an
IHA's or PHA's total need for backlog funding;
(ii) Newly constructed units. Units with a DOFA date of October 1,
1991 or thereafter will be considered to have a zero backlog; or
(iii) Acquired developments. Developments acquired by an IHA with
major rehabilitation, with a DOFA date of October 1, 1991 or thereafter
will be considered to have a zero backlog.
(4) Categories of backlog need. The most recently available data to
be used under either paragraphs (e)(1)(i) or (e)(1)(ii) of this section
must pertain to the following categories of backlog need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments;
(ii) Items that must be added to developments to meet HUD's
modernization standards under Sec. 950.603, and State, local and Tribal
codes; and
(iii) Items that are necessary or highly desirable for the long-
term viability of a development, in accordance with HUD's modernization
standards.
(f) Allocation for accrual needs. HUD shall allocate the other half
remaining under the formula allocation under paragraph (d) of this
section based upon the relative accrual needs of IHAs and PHAs,
determined as follows:
(1) Statistically reliable data. Where HUD determines that
statistically reliable data are available concerning the categories of
need identified under paragraph (f)(3) of this section for individual
IHAs and PHAs with 250 or more units and for the aggregate of IHAs and
PHAs with fewer than 250 units it shall base its allocation of
assistance under this section on the needs that are estimated to have
accrued since the date of the last objective measurement of backlog
needs under paragraph (e)(1)(i) of this section; or
(2) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of need identified under paragraph (f)(3) of this section are not
available for individual IHAs and PHAs with 250 or more units, it shall
base its allocation of assistance under this section on estimates of
accrued need using:
(i) The most recently available data on the categories of backlog
need under paragraph (f)(3) of this section;
(ii) Objectively measurable data concerning the following IHA or
PHA, community, and development characteristics:
(A) The average number of bedrooms in the units in a development.
(Weighted at 100.1);
(B) The proportion of units in a development available for
occupancy by very large families. (Weighted at 356.7);
(C) The age of the developments. (Weighted at 10.4);
(D) The extent to which the buildings in developments of an agency
average fewer than 5 units. (Weighted at 87.1.);
(E) The cost of rehabilitating property in the area. (Weighted at
679.1);
(F) The total number of units of each IHA or PHA that owns or
operates 250 or more units. (Weighted at .0144); and
(iii) An equation constant of 602.1.
(3) Categories of need. The data to be provided under either
paragraph (f)(1) or (f)(2) of this section must pertain to the
following categories of need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments; and
(ii) Items that must be added to developments to meet HUD's
modernization standards under Sec. 950.603, and State, local and Tribal
codes.
(g) Allocation for CIAP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs and PHAs with fewer
than 250 units shall be allocated to IHAs in accordance with the
requirements of the undesignated heading under this subpart entitled,
``Comprehensive Improvement Assistance Program,'' (CIAP) and to PHAs in
accordance with the requirements of 24 CFR part 968 (subpart B).
(h) Allocation for CGP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs with 250 or more units
shall be allocated in accordance with the requirements of the
undesignated heading under this subpart entitled, ``Comprehensive Grant
Program,'' and for PHAs in accordance with the requirements of 24 CFR
part 968 (subpart C). An IHA that is eligible to receive a grant under
the CGP may appeal the amount of its formula allocation under this
section in accordance with the requirements set forth in
Sec. 950.669(b). An IHA which is eligible to receive modernization
funds under the CGP because it owns or operates 250 or more units, is
disqualified from receiving assistance under the CIAP under this part.
(i) Use of formula allocation. Any amounts allocated to an IHA
under paragraphs (e) and (f) of this section may be used for any
eligible activity under this subpart, notwithstanding that the
allocation amount is determined by allocating half based on the
relative backlog needs and half based on the relative accrual needs of
IHAs and PHAs.
(j) Calculation of number of units. For purposes of determining
under this section the number of units owned or operated by an IHA or
PHA, and the relative modernization needs of IHAs and PHAs, HUD shall
count as one unit each existing rental, Mutual Help and section 23
Bond-Financed unit under the ACC, except that it shall count as one-
fourth of a unit each existing unit under the Turnkey III program. New
development units that are added to an IHA's or PHA's inventory will be
added to the overall unit count so long as they are under ACC amendment
and have reached DOFA by the first day in the FFY in which the formula
is being run. Any increase in units (reaching DOFA and under ACC
amendment) as of the beginning of the FFY shall result in an adjustment
upwards in the number of units under the formula. New units reaching
DOFA after this date will be counted for formula purposes as of the
following FFY.
(k) Demolition, disposition and conversion of units. (1) General.
Where an existing unit under an ACC is demolished, disposed of, or
converted into a larger or smaller unit, HUD shall not adjust the
amount the IHA or PHA receives under the formula, unless more than one
percent of the units are affected on a cumulative basis. Where more
than one percent of the existing units are demolished, disposed of, or
converted, HUD shall reduce the formula amount for the IHA or PHA over
a 3-year period to reflect removal of the units from the ACC.
(2) Determination of one percent cap. In determining whether more
than one percent of the units are affected on a cumulative basis, HUD
will compare the units eligible for funding in the initial year under
formula funding with the number of units eligible for funding for
formula funding purposes for the current year, and shall base its
calculations on the following:
(i) Increases in the number of units resulting from the conversion
of existing units will be added to the overall unit count so long as
they are under ACC amendment by the first day of the FFY in which the
formula is being run;
(ii) Units which are lost as a result of demolition, disposition or
conversion shall not be offset against units subsequently added to an
IHA's or PHA's inventory;
(iii) For purposes of calculating the number of converted units,
HUD shall regard the converted size of the unit as the appropriate unit
count (e.g., a unit that originally was counted as one unit under
paragraph (j) of this section, but which later was converted into two
units, shall be counted as two units under the ACC).
(3) Phased-in reduction of units. (i) Reduction less than one
percent. If HUD determines that the reduction in units under paragraph
(k)(2) of this section is less than one percent, the IHA or PHA will be
funded as though no change had occurred.
(ii) Reduction greater than one percent. If HUD determines that the
reduction in units under paragraph (k)(2) of this section is greater
than one percent, the number of units on which formula funding is based
will be the number of units reported as eligible for funding for the
current program, plus two thirds of the difference between the initial
year and the current year in the first year, plus one third of the
difference in the second year, and at the level of the current year in
the third year.
(iii) Exception. A unit that is conveyed under the Mutual Help or
Turnkey III programs will result in an automatic (rather than a phased-
in) reduction in the unit count.
(4) Subsequent reductions in unit count. (i) Once an IHA's or PHA's
unit count has been fully reduced under paragraph (k)(3)(ii) of this
section to reflect the new number of units under the ACC, this new
number of units will serve as the base for purposes of calculating
whether there has been a one-percent reduction in units on a cumulative
basis.
(ii) A reduction in formula funding, based upon additional
reductions to the number of an IHA's or PHA's units, will also be
phased in over a three-year period, as described in paragraph (k)(2) of
this section.
Sec. 950.602 Special requirements for Turnkey III and Mutual Help
developments.
(a) Modernization costs. Modernization work on a Mutual Help or
Turnkey III unit shall not increase the purchase price or amortization
period of the home.
(b) Paid off units. (1) Turnkey III units. Modernization work on
any Turnkey III units that have been paid off, even though not
conveyed, by the time the CIAP application or CGP annual statement is
submitted is ineligible. However, modernization work on any Turnkey III
units that have not been paid off at the time the CIAP application or
CGP annual statement is submitted and that is included in the CIAP
application or annual statement is eligible even where the units are
subsequently paid off before the work is completed. Notwithstanding
this requirement, work which is necessary to meet statutory and
regulatory requirements (e.g., handicapped accessibility, lead-based
paint testing, interim containment, professional risk assessment, and
abatement) may be performed on paid off Turnkey III units so long as
the work is completed prior to conveyance.
(2) Mutual Help units. An IHA may use CIAP or CGP funds under this
subpart for the purposes of modernizing a Mutual Help unit which is
paid off though not conveyed, and may do so only with a unit which the
IHA has identified in its CIAP application or Comprehensive Plan
(including its action plan and work statement). In accordance with the
provisions of Sec. 950.440(e)(8)(iii), an IHA may perform non-emergency
work on a paid off Mutual Help unit only after all delinquencies are
repaid.
(c) Other. The homebuyer family must be in compliance with its
financial obligations under its homebuyer agreement in order to be
eligible for non-emergency physical improvements, with the exception of
work necessary to meet statutory and regulatory requirements, (e.g.,
handicapped accessibility, lead-based paint testing, interim
containment, professional risk assessment, and abatement) and the
correction of development deficiencies. Notwithstanding the above
requirement, an IHA may, with prior HUD Field Office approval, complete
non-emergency physical improvements on any homeownership unit where the
IHA demonstrates that, due to economies of scale or geographic
constraints, substantial cost savings may be realized by completing all
necessary work in a development at one time.
Sec. 950.603 Modernization and energy conservation standards.
(a) All improvements funded under this subpart, which may include
alterations, betterments, additions, replacements or non-routine
maintenance, shall meet the HUD modernization standards, described in
paragraph (b) of this section, comply with lead-based paint testing and
abatement requirements in subpart H of this part, and provide decent,
safe, and sanitary living conditions in IHA-owned and IHA-operated
housing. All improvements funded under this part shall meet the HUD-
energy conservation standards for cost-effective energy conservation
measures in such developments, described in paragraphs (c) and (d) of
this section.
(b) The modernization standards are comprised of both mandatory and
development-specific standards. The mandatory standards are intended to
provide decent, safe, and sanitary living conditions in Indian housing,
including corrections of violations of basic health and safety codes,
and to address all deficiencies, including those related to deferred
maintenance. The development-specific standards permit an IHA to
undertake improvements that are necessary or highly desirable for the
long-term physical and social viability of a development, which
includes site and building security. The modernization standards are
contained in HUD Handbook 7485.2, as revised, Public and Indian Housing
Modernization Standards, and in other documents cited in the Handbook.
(c) The energy conservation standards are standards for the
installation of cost-effective energy conserving improvements,
including solar energy systems. The energy conservation standards
provide for the conducting or updating of energy audits, including
cost-benefit analyses of energy saving opportunities, in order to
determine which measures will be cost effective in conserving energy.
The energy conservation standards are contained in the HUD Workbook,
Energy conservation for Housing, and in other documents cited in the
Workbook.
(d) Life-cycle cost-effective energy performance standards
established by HUD to reduce the operating costs of Indian housing
developments over the estimated life of the buildings shall apply to
developments modernized under this subpart. These standards are
contained in HUD Handbook 7418.1, as revised, Life-Cycle Cost Analysis
for Utility Combinations.
(Approved by the Office of Management and Budget under control
number 2577-0024.)
Comprehensive Improvement Assistance Program (For IHAs that Own or
Operate Fewer than 250 Indian Housing Units)
Sec. 950.609 Purpose.
The purpose of the undesignated heading entitled, Comprehensive
Improvement Assistance Program (CIAP), is to set forth the policies and
procedures for the CIAP under which IHAs that own or operate fewer than
250 units of Indian housing may receive financial assistance for the
modernization of Indian housing developments, including Emergency and
Other Modernization. Funding for this program is provided under section
5(c) of the Act (42 U.S.C. 1437c(c)), pursuant to section 14(k) of the
Act (42 U.S.C. 1437l(k)) (see Sec. 950.601 for the formula allocation
process for the aggregate of CIAP agencies under this subpart).
Sec. 950.615 Eligible costs.
(a) Demonstration of viability. Except in the case of emergency
work, an IHA shall only expend funds on a development for which the IHA
has determined, and HUD agrees, that the completion of the improvements
and replacements will reasonably ensure the long-term physical and
social viability of the development at a reasonable cost, as defined in
Sec. 950.102.
(b) Physical improvement costs for rental and Mutual Help
developments. Eligible costs include alterations, betterments, non-
dwelling additions, replacements, and non-routine maintenance that are
necessary to meet the modernization and energy conservation standards
prescribed in Sec. 950.603. The modernization standards include
mandatory and development specific work. The mandatory standards may be
exceeded only when the IHA and HUD determine that it is necessary or
highly desirable for the long-term physical and social viability of the
individual development. If demolition or disposition is proposed, the
IHA shall comply with subpart M of this part.
(c) Turnkey III developments. (1) General. Eligible physical
improvement costs for existing Turnkey III developments are limited to
work items under Emergency Modernization or Other Modernization which
are not the responsibility of the homebuyer families, and which are
related to health and safety, correction of development deficiencies,
physical accessibility, energy audits and cost-effective energy
conservation measures, or lead-based paint testing, interim
containment, professional risk assessment and abatement. In addition,
eligible costs include management improvements under the modernization
type of Other Modernization.
(2) Ineligible costs. Nonroutine maintenance or replacements,
dwelling additions, and items that are the responsibility of the
homebuyer families are ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units.
(i) Notwithstanding the requirements of paragraph (c)(1) of this
section, an IHA may carry out Other Modernization in a Turnkey III
development, whenever a Turnkey III unit becomes vacant or is occupied
by a non-homebuyer family. An IHA that intends to use funds under this
paragraph must identify in its CIAP application, the estimated number
of units proposed for Other Modernization and subsequent sale. In
addition, an IHA must certify that the IHA has homebuyers who are both
eligible for homeownership, in accordance with the requirements of this
part, and who have demonstrated their intent to be placed into each of
the Turnkey III units proposed for Other Modernization.
(ii) Before an IHA may be approved for Other Modernization of a
unit under this paragraph, it must first deplete any Earned Home
Payments Account (EHPA), or Non-Routine Maintenance Reserve (NRMR)
pertaining to the unit, and request the maximum operating subsidy. Any
increase in the value of a unit caused by its Other Modernization under
this paragraph shall be reflected solely by its subsequent appraised
value, and not by an automatic increase in its purchase price.
(d) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or non-dwelling facilities, where
the demolition is approved by HUD under subpart M of this part, and
related costs, such as clearing and grading the site after demolition
and subsequent site improvement to benefit the remaining portion of the
existing development; and
(2) Conversion of existing dwelling units to different bedroom
sizes or to non-dwelling use.
(e) Management improvement costs. (1) General. Management
improvements that are development-specific or IHA-wide in nature are
eligible costs where needed to upgrade the operation of the IHA's
developments, sustain physical improvements at those developments or
correct management deficiencies. Management improvements and planning
costs may be funded as a single modernization project.
(2) Ineligible costs. An IHA's ongoing operating expenses,
including direct provision of social services through either contract
or force account labor, are ineligible management improvement costs. In
addition, where an approved modernization program includes management
improvements which involve ongoing costs, HUD is not obligated to
provide continued funding or additional operating subsidy after the end
of the implementation period of the management improvements. An IHA is
responsible for finding other funding sources, reducing its ongoing
management costs, or terminating the management activities.
(3) Eligible costs. Eligible costs include:
(i) General management costs. Eligible general management costs
include, but are not limited to: Management, financial, and accounting
control systems of the IHA, rent collection and maintenance.
(ii) Economic development costs. Economic development activities,
such as job training and resident employment, for the purpose of
carrying out activities related to the eligible management and physical
improvements are eligible costs, as approved by HUD. HUD encourages
IHAs, to the greatest extent feasible, to hire residents as trainees,
apprentices, or employees to carry out the modernization program under
this subpart.
(iii) Resident management costs. Technical assistance to a resident
council or resident management corporation (RMC), as defined in subpart
O of this part, in order to determine the feasibility of the resident
management entity or assist in its formation is an eligible cost.
(iv) Resident homeownership costs. The study of the feasibility of
converting rental to homeownership units, as well as the preparation of
an application for conversion to homeownership, is an eligible cost.
(f) Drug elimination costs. Drug elimination activities involving
management or physical improvements are eligible costs, as specified by
HUD.
(g) Administrative costs. Administrative costs necessary for the
planning (planning costs can be funded as a single modernization
project), design, implementation and monitoring of the physical and
management improvements are eligible costs, and include the following:
(1) The salaries of nontechnical and technical IHA personnel
assigned full-time or part-time to modernization are eligible costs
only where the scope and volume of the work are beyond that which could
reasonably be expected to be accomplished by such personnel in the
performance of their non-modernization duties. An IHA shall properly
apportion to the appropriate program budget any direct charges for the
salaries of assigned full- or part-time staff (e.g., to the CIAP or
operating budget);
(2) IHA contributions to employee benefit plans on behalf of
nontechnical and technical IHA personnel are eligible costs in direct
proportion to the amount of salary charged to the CIAP; and
(3) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(h) Architectural/engineering and consultant fees. Fees for
planning, preparation of needs assessments and other required
documents, detailed design work, assistance in the preparation of
construction and bid documents, lead-based paint professional risk
assessments and testing are eligible costs.
(i) Relocation and moving costs. Relocation and other relocation
assistance for permanent and temporary relocation are eligible costs,
where this assistance is required by Sec. 950.117.
(j) Cost limitations. (1) Management improvements. Management
improvement costs shall not exceed 10 percent of the CIAP funds
available to an Indian Field Office in a particular FFY.
(2) Planning costs. Planning costs are costs incurred before HUD
approval of the CIAP application and which are related to developing
the CIAP application or carrying out eligible modernization planning,
such as detailed design work, preparation of solicitations, and lead-
based paint professional risk assessment and testing. Planning costs
may be funded as a single modernization project. If an IHA incurs
planning costs without prior HUD approval, an IHA does so with the full
understanding that the costs may not be reimbursed upon approval of the
CIAP application. Planning costs shall not exceed 5 percent of the CIAP
funds available to an Indian Field Office in a particular FFY.
(3) Program benefit. Where the physical or management improvement
will benefit programs other than Indian Housing, such as Section 8,
local renewal, eligible costs are limited to the amount directly
attributable to the Indian Housing Program.
(k) Ineligible costs. An IHA shall not make luxury improvements, or
carry out any other ineligible activities, as specified by HUD.
Sec. 950.618 Procedures for obtaining approval of a modernization
program.
(a) HUD notification. After modernization funds for a particular
FFY become available, HUD shall publish in the Federal Register a
notice of funding availability (NOFA) and the time frame for submission
of applications.
(b) IHA consultation with local officials and residents/homebuyers.
An IHA shall develop the application in consultation with local
officials and resident and homebuyers, as set forth in Sec. 950.624.
(c) IHA application. An IHA shall submit to HUD an application, in
a form prescribed by HUD, which shall include:
(1) A general description of IHA development(s) (including the
current physical condition, for each development for which the IHA is
requesting funds, or for all the IHA's developments) and physical and
management improvement needs (to meet the Secretary's standards in
Sec. 950.603), general description of major work categories (e.g.,
kitchens, bathrooms) required to correct identified deficiencies and
estimated costs, including a statement concerning consultation with
local officials and residents and viability of the development(s). The
application will also identify a cost estimate for the equipment
systems or structural elements which would normally be replaced over
the remaining period of the annual contributions contract or during the
30-year period beginning on the date of submission of the application.
(2) For management improvements, the application must identify the
management improvement need, including a general description of the
work required for correction and an estimated cost. Management areas
for which needs should be identified include, but are not limited to,
the following:
(i) The management, financial, and accounting control systems of
the IHA;
(ii) The adequacy and qualifications of personnel employed by such
IHA (in the management and operation of such developments) for each
category of employment; and
(iii) The adequacy and efficacy of resident programs and services
in such developments, the security of each such development and its
residents, policies and procedures of the IHA for the selection and
eviction of residents in such developments, and other policies and
procedures of such IHA relating to such developments, as specified by
the Secretary; and
(3) Any other documents, as may be required by HUD.
(d) Completeness review. To be eligible for selection, an
application must be received by the Field Office within the time period
specified in the NOFA and must be complete. In order to determine
whether an application is complete, responsive to the NOFA and
acceptable for technical processing, the Field Office shall perform an
initial completeness review upon receipt of the application. To make
the above determination, the Field Office shall use the following
criteria:
(1) The application was received by HUD at the appropriate address
by the date and time specified in the NOFA and was complete and
responsive (excluding exhibits which are certifications); or
(2) If an application is determined to be incomplete or to have
missing certifications, the IHA shall be advised in writing of any
deficiencies or any inconsistencies. The missing information is to be
submitted within a specified period of time from the date of HUD's
written notification. This is not additional time to substantially
revise the application. Deficiencies which may be corrected at this
time are inadvertently omitted documents or clarifications of
previously submitted material and other changes which are not of such a
nature as to improve the competitive position of the application. The
IHA must acceptably correct deficiencies (including furnishing missing
certifications) within the time specified in the NOFA.
(e) Eligibility review. (1) Eligibility for processing. To be
eligible for processing, based on the general description of its
developments' condition and general statement of physical and
management improvement needs, and the Field Office's knowledge of the
development's conditions, the work items, particularly emergency work
items, must appear to be eligible and needed.
(2) Eligibility review on reduced scope. When the following
conditions exist, the IHA will be reviewed on a reduced scope:
(i) Where the IHA owes funds to HUD as a result of excess
development, modernization or operating funds previously provided and
the IHA has not repaid the funds, or has not entered into a repayment
agreement, or is not meeting its obligations under a repayment
agreement, the IHA is eligible for processing for Emergency
Modernization only.
(ii) Where the IHA has not complied with Fair Housing and Equal
Opportunity (FHEO) requirements as set forth in Sec. 950.115, as
evidenced by an action, finding or determination as described in
paragraphs (e)(2)(ii)(A) through (E) of this section, unless the IHA is
implementing a voluntary compliance agreement or settlement agreement
designed to correct the area(s) of noncompliance, the IHA is eligible
for processing only for Emergency Modernization or for work needed to
remedy civil rights deficiencies.
(A) A pending proceeding against the IHA based upon a charge of
discrimination issued under the Fair Housing Act. A charge of
discrimination is a charge under section 810(g)(2) of the Fair Housing
Act (42 U.S.C. 3610(g)(2)), issued by the HUD's General Counsel or
legally authorized designee;
(B) A pending civil rights suit against the IHA, referred by the
HUD's General Counsel and instituted by the Department of Justice;
(C) Outstanding HUD findings of IHA noncompliance with civil rights
statutes and executive orders under Sec. 950.115, or implementing
regulations, as a result of formal administrative proceedings, unless
the IHA is implementing a HUD-approved resident selection and
assignment plan or compliance agreement designed to correct the area(s)
of noncompliance;
(D) A deferral of the processing of applications from the IHA
imposed by HUD under title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d) and Sec. 950.115, the Attorney General's Guidelines (28
CFR 50.3) and HUD's title VI regulations (24 CFR 1.8) and procedures
(HUD Handbook 8040.1), or under section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794) and HUD's implementing regulations (24 CFR
8.57); or
(E) An adjudication of a violation under any of the authorities
under Sec. 950.115 in a civil action filed against the IHA by a private
individual, unless the IHA is implementing a HUD-approved resident
selection and assignment plan or compliance agreement designed to
correct the area(s) of noncompliance.
(3) FHEO Division review. The processing office shall request the
appropriate FHEO Division of the Field or Regional Office to identify
any IHAs with equal opportunity-related problems. After consulting with
Regional FHEO, as appropriate, and reviewing its own files, the FHEO
Division shall identify each IHA by the following categories and
provide any other relevant information within the requested time frame:
(i) There are no known equal opportunity-related problems;
(ii) There are known equal opportunity-related problems, as
identified; or
(iii) There are circumstances as set forth in paragraph (e)(2) of
this section.
(f) Technical processing. When an application is determined to be
complete and responsive to the NOFA and eligible for processing,
technical processing, consisting of the following, shall be
accomplished:
(1) The Field Office shall categorize the eligible IHAs and their
developments into two processing groups: Group 1 for Emergency
Modernization; and Group 2 for Other Modernization. IHA developments
may be included in both groups and the same development may be in each
group. The IHA only needs to submit one application which includes
needs which the Field Office will process under Group 1 or Group 2.
However, the IHA can submit Emergency Modernization applications
whenever needed. Group 2 developments are subject to the long-term
viability and reasonable cost analysis. Preference will be given to
IHAs which request assistance for developments having conditions which
threaten the health or safety of the residents or having a significant
number of vacant, substandard units; and which have demonstrated a
capability of carrying out the activities proposed. Within Group 2, the
Secretary may give priority to compliance with statutory, regulatory,
and court-ordered deadlines.
(2) The Field Office will evaluate the Group 2 IHAs and
developments to determine eligibility and acceptability based on the
technical review factors in paragraph (g) of this section. Based on
these factors, the Field Office shall determine the applications which,
in its judgment, are approvable. Selections then shall be made in
accordance with paragraph (h) of this section.
(g) Technical review factors. The technical review factors for
assistance include:
(1) Extent and urgency of need, including need to comply with
statutory, regulatory, or court-ordered deadlines;
(2) Extent of vacancies;
(3) IHA's modernization capability;
(4) IHA's management capability;
(5) Degree of resident involvement in IHA operations;
(6) Degree of IHA activity in resident initiatives, including
resident management, economic development, and drug elimination
efforts;
(7) Degree of resident employment;
(8) Local government support for proposed modernization; and
(9) Such additional factors as the Secretary determines necessary
and appropriate.
(h) Rating and ranking. The Field Office shall rate and rank each
application in Group 2 on the basis of its assessment of the
application using the technical review factors set forth in paragraph
(g) of this section and in the NOFA. The Field Office shall identify
for joint review selection the highest IHA ranking applications in
Group 2 in descending order and other Group 2 HAs with lower ranking
applications but with high priority needs, which most reasonably
approximate the amount of modernization which can be funded. High
priority needs are non-emergency needs, but related to: health or
safety; vacant, substandard units; structural or system integrity; or
compliance with statutory, regulatory or court-ordered deadlines. All
Group 1 applications would be automatically selected for joint review.
(i) Joint review. HUD shall notify each IHA whose application has
been selected for further processing as to whether the joint review
will be conducted on-site or off-site (e.g., by telephone or in-office
meeting). The purpose of the joint review is to discuss the proposed
modernization program, as set forth in the application, and determine
the size of the grant, if any, to be awarded. Where the IHA has not
included all its developments in the CIAP application, HUD may not, as
a result of joint review consider funding any non-emergency work at
excluded developments or subsequently approve use of leftover funds at
excluded developments. An IHA shall prepare for the joint review by
preparing a draft CIAP budget, and reviewing the other items to be
covered during the joint review, as prescribed by HUD. If conducted on-
site, the joint review may include an inspection of the proposed
physical work. IHAs not selected for joint review will be advised in
writing of the reasons for nonselection.
(j) HUD awards. Upon completion of the joint review, HUD shall
adjust the amounts to be awarded, as necessary, based on information
obtained at Joint Review, including the information received as a
result of the FHEO review and completion of the environmental review,
and announce the IHAs selected for CIAP grants (subject to their
submission of an approvable CIAP budget and any other required
documents). HUD would request the funded IHA to submit a CIAP budget,
including an implementation schedule, a resolution by the IHA Board of
Commissioners (approving the CIAP budget and containing certifications
required by HUD), and any other necessary documents.
(k) ACC amendment. After HUD approval of the CIAP budget, HUD and
the IHA shall enter into an ACC amendment in order for the IHA to
requisition modernization funds. The ACC amendment shall require low-
income use of the housing for not less than 20 years from the date of
the ACC amendment (subject to sale of homeownership units in accordance
with the terms of the ACC). HUD has the authority to condition an ACC
amendment (e.g., to require an IHA to hire a modernization coordinator
or contract administrator to a administer its modernization program).
(l) Declaration of trust. An IHA shall execute and file for record
a Declaration of Trust as provided under the ACC to protect the rights
and interests of HUD throughout the 20-year period during which the IHA
is obligated to operate its developments in accordance with the ACC,
the Act, and HUD regulations and requirements. A Declaration of Trust
is not required for Mutual Help units.
Sec. 950.624 Resident and homebuyer participation.
(a) Resident participation. For a rental development only, the IHA
shall establish a Partnership Process, as defined in Sec. 950.102, to
develop, implement and monitor the CIAP. Before submission of the
application, an IHA shall consult with the residents, the resident
organization or the RMC (see subpart O of this part) of the development
being proposed for modernization regarding its intent to submit an
application for CIAP funds. An IHA shall give residents a reasonable
opportunity to present their views on the proposed modernization
program and alternatives to it, and give full and serious consideration
to resident recommendations. An IHA shall respond in writing to the
residents, the resident organization or the RMC, indicating its
acceptance or rejection of resident recommendations, consistent with
HUD requirements and the IHA's own determination of efficiency,
economy, and need. After HUD approval of the modernization program, an
IHA shall inform the residents, the resident organization or the RMC of
the approved work items and its progress during implementation. Where
HUD does not approve the modernization program, an IHA shall so inform
the residents, the resident organization or the RMC.
(b) Homebuyer participation: Turnkey III and Mutual Help. For a
homeownership development only, before submission of the application,
an IHA shall consult with the homebuyer families of the development
proposed for modernization regarding its intent to submit an
application for CIAP funds. An IHA shall give the homebuyer families a
reasonable opportunity to present their views on the proposed
modernization program and alternatives to it, and give full and serious
consideration to their recommendations. An IHA shall respond in writing
to the homebuyer families, indicating its acceptance or rejection of
their recommendations, consistent with HUD requirements and the IHA's
own determination of efficiency, economy, and need. After HUD approval
of the modernization program, an IHA shall inform the homebuyer
families of the approved work items and its progress during
implementation. Where HUD does not approve the modernization program,
an IHA shall so inform the homebuyer families.
Sec. 950.635 Initiation of modernization activities.
After HUD has approved the modernization program and entered into
an ACC amendment with the IHA, an IHA shall undertake the modernization
activities and expenditures set forth in its approved CIAP budget in a
timely, efficient and economical manner, subject to the following
requirement. An IHA shall ensure that there is no duplication between
the activities carried out with CIAP funds and the activities carried
out with other funds.
Sec. 950.639 Fund requisitions.
An IHA shall requisition modernization funds against the approved
CIAP budget in accordance with procedures prescribed by HUD.
Sec. 950.642 Contracting requirements.
An IHA shall comply with the prevailing wage rate requirements in
Secs. 950.120 and 950.172, as well as the Indian Preference
requirements in Sec. 950.175. In addition, an IHA shall comply with
State, Tribal and local laws and Federal requirements, as set forth in
24 CFR part 85, except as follows:
(a) Architect/engineer and other professional services contracts.
Notwithstanding 24 CFR 85.36(g), an IHA shall comply with HUD
requirements to either:
(1) Where the proposed contract amount exceeds the HUD-established
threshold, submit the contract for prior HUD approval before execution
or issuance; or
(2) Where the proposed contract amount does not exceed the HUD-
established threshold, certify that the scope of work is consistent
with any agreements reached with HUD, and that the amount is
appropriate and does not exceed the HUD-approved CIAP budget amount.
(b) Assurance of completion. For each construction contract over
$25,000, the contractor shall furnish a performance and payment bond
for 100 percent of the contract price or, notwithstanding 24 CFR
85.36(h), a twenty percent cash escrow, or a twenty-five percent letter
of credit or, as may be required by law, separate performance and
payment bonds, each for fifty percent or more of the contract price.
(c) Construction solicitations. Notwithstanding 24 CFR 85.36(g), an
IHA shall comply with HUD requirements to either:
(1) Where the estimated contract amount exceeds the HUD-established
threshold, submit a complete construction solicitation for prior HUD
approval before issuance; or
(2) Where the estimated contract amount does not exceed the HUD-
established threshold, certify receipt of the required architect's/
engineer's certification that the construction documents accurately
reflect HUD-approved work and meet the modernization and energy
conservation standards and that the construction solicitation is
complete and includes all mandatory items.
(d) Contract awards. An IHA shall obtain HUD approval of the
proposed award of a contract if the award exceeds the HUD-approved CIAP
budget amount or if the procurement meets the criteria set forth in 24
CFR 85.36(g)(2) (i) through (iv). In all other instances, an IHA shall
make the award without HUD approval after the IHA has certified that:
(1) The solicitation and award procedures were conducted in
compliance with State, Tribal and local laws and Federal requirements;
(2) The award does not exceed the approved CIAP budget amount and
does not meet the criteria in 24 CFR 85.36(g)(2) (i) through (iv) for
prior HUD approval;
(3) The contractor is not on the Lists of Parties Excluded from the
Federal Procurement or Nonprocurement Programs; and
(e) Contract modifications. Notwithstanding 24 CFR 85.36(g), except
in an emergency endangering life or property, an IHA shall comply with
HUD requirements to either:
(1) Where the proposed contract modification exceeds the HUD-
established threshold, submit the proposed modification for prior HUD
approval before issuance; or
(2) Where the proposed contract modification does not exceed the
HUD-established threshold, certify that the proposed modification is
within the scope of the contract and that any additional costs are
within the latest HUD-approved CIAP budget or otherwise approved by
HUD.
(f) Construction requirements. An IHA may be required to submit to
HUD periodic progress reports and construction completion documents for
prior HUD approval above a HUD-specified amount.
(g) Previous participation. An IHA shall ensure that the contractor
is not on the GSA List of Parties Excluded from Federal Procurement and
Nonprocurement Programs.
Sec. 950.645 On-site inspections.
It is the responsibility of the IHA, not HUD, to provide, by
contract or otherwise, adequate and competent supervisory and
inspection personnel during modernization, whether work is performed by
contract or force account labor and with or without the services of an
architect/engineer, to assure work quality and progress.
Sec. 950.648 Budget revisions.
An IHA shall not incur any modernization cost in excess of the
total HUD-approved CIAP budget. An IHA shall submit a budget revision,
in a form prescribed by HUD, if the IHA plans (within the total
approved CIAP budget) to incur modernization costs in excess of the
approved CIAP budget amount for any development. An IHA also shall
comply with HUD requirements to either:
(a) Submit the proposed CIAP budget revision for prior HUD approval
if the IHA plans to delete or substantially revise approved work items,
add new work items, or incur modernization costs in excess of the HUD-
established threshold; or
(b) Certify that the revisions are necessary to carry out the
approved work and do not result in the approved CIAP budget amount for
any development being exceeded.
Sec. 950.651 Progress reports.
For each six-month period, beginning October 1, until completion of
the modernization program or expenditure of all funds, an IHA shall
submit a report, in a form prescribed by HUD, to the HUD Field Office.
Where HUD determines that an IHA is having implementation problems, HUD
may require more frequent reporting. The report shall include:
(a) Modernization fund obligations and expenditures and progress
against the approved implementation schedule(s); and
(b) Management improvement progress, where applicable.
Sec. 950.654 HUD review of IHA performance.
HUD shall periodically review IHA performance in carrying out its
approved modernization program to determine compliance with HUD
requirements, the quality of an IHA's inspections as evidenced by the
quality of work, and the timeliness of the work. Where deficiencies are
noted, an IHA shall take corrective action, as directed by HUD.
Sec. 950.657 Fiscal closeout.
Upon completion or termination of a modernization program, the IHA
shall submit the actual modernization cost certificate, in a form
prescribed by HUD, to HUD for review, audit verification, and approval.
An IHA shall immediately remit any excess funds provided by HUD. The
audit shall follow the guidelines prescribed in 24 CFR part 44, Non-
Federal Government Audit Requirements. If the audited modernization
cost certificate indicates that there are still excess funds, an IHA
shall immediately remit the excess funds as directed by HUD. If the
audited modernization cost certificate discloses unauthorized or
ineligible expenditures, an IHA shall take such corrective actions as
HUD may direct.
Comprehensive Grant Program (For IHAs That Own or Operate 250 or More
Indian Housing Units)
Sec. 950.660 Purpose.
(a) The purpose of the Comprehensive Grant Program (CGP) under this
subpart is:
(1) To provide modernization assistance to IHAs that own or operate
a total of 250 or more units of Indian Housing on a reliable and more
predictable basis, to enable them to operate, upgrade, modernize, and
rehabilitate Indian housing developments, to ensure their continued
availability for low income families as decent, safe, and sanitary
housing;
(2) To provide considerable discretion to IHAs to decide the
specific improvements, the manner of their execution, and the timing of
the expenditure of funds;
(3) To simplify significantly the program of Federal assistance for
capital improvements in Indian Housing developments;
(4) To provide increased opportunities and incentives for more
efficient management of Indian housing developments; and
(5) To give IHAs greater control in planning and expending funds
for modernization, rehabilitation, maintenance, and improvement of
Indian housing developments to benefit low income families.
(b) The purpose of the sections under the undesignated heading
entitled, Comprehensive Grant Program (CGP), is to set forth the
policies and procedures for the CGP under which IHAs that own and
operate a total of 250 or more units of Indian housing receive
financial assistance on a formula grant basis in accordance with
Sec. 950.601(e) and (f) for the modernization of Indian housing
developments.
Sec. 950.666 Eligible costs.
(a) General. An IHA may use financial assistance received under the
CGP for the following eligible costs:
(1) Undertaking activities described in its approved action plan
under Sec. 950.672(d)(5);
(2) Carrying out emergency work, whether or not the need is
indicated in the IHA's approved Comprehensive Plan (including Five-Year
Action Plan) or Annual Submission;
(3) Funding a replacement reserve to carry out eligible activities
in future years, subject to the restrictions set forth in paragraph (f)
of this section;
(4) Preparing the Comprehensive Plan and action plan under
Sec. 950.672, including reasonable costs necessary to assist residents
to participate in a meaningful way in the planning, implementation and
monitoring process; and
(5) Carrying out an audit, in accordance with 24 CFR part 44 and
Sec. 950.120.
(b) Demonstration of viability. Except in the case of emergency
work, an IHA shall only expend funds on a development for which the IHA
has demonstrated that completion of the improvements and replacements
identified in the Comprehensive Plan will reasonably ensure the long-
term physical and social viability of the development at a reasonable
cost.
(c) Physical improvement costs for rental and Mutual Help
developments. Eligible costs include alterations, betterments,
additions, replacements, and non-routine maintenance that are necessary
to meet the modernization and energy conservation standards prescribed
in Sec. 950.603. These mandatory standards may be exceeded only when
the IHA determines that it is necessary or highly desirable for the
long-term physical and social viability of the individual development.
Such development specific work may include property purchases. If
demolition or disposition is proposed, the IHA shall comply with
subpart M of this part.
(d) Costs for Turnkey III developments. (1) Eligible costs.
Eligible physical improvement costs for existing Turnkey III
developments are limited to work items which are not the responsibility
of homebuyer families and which are related to health and safety,
correction of development deficiencies, physical accessibility, energy
audits and cost-effective energy conservation measures, and lead-based
paint testing and abatement. In addition, management improvements are
eligible modernization costs for existing homeownership developments.
(2) Ineligible costs. Nonroutine maintenance or replacements,
additions, and items that are the responsibility of the homebuyer
families are ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units. (i) Notwithstanding the requirements of paragraph (d)(2) of this
section, an IHA may substantially rehabilitate a Turnkey III
development whenever a unit becomes vacant or is occupied by a non-
homebuyer family. An IHA that intends to use funds under this paragraph
must identify in its needs assessment the estimated number of units
that the IHA is proposing for substantial rehabilitation and subsequent
sale. In addition, an IHA must demonstrate in its needs assessment
that: the IHA has homebuyers who are both eligible for homeownership,
in accordance with the requirements of subpart G of this part, and who
have demonstrated their intent to be placed into each of the Turnkey
III units proposed to be substantially rehabilitated.
(ii) Before an IHA may be approved for the substantial
rehabilitation of a unit under this paragraph, it must first deplete
any Earned Home Payments Account (EHPA) or Non-Routine Maintenance
Reserve (NRMR) pertaining to the unit, and request the maximum amount
of operating subsidy. Any increase in the value caused by its
substantial rehabilitation under this paragraph shall be reflected
solely by its subsequent appraised value, and not by an automatic
increase in its selling price.
(e) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or nondwelling facilities, where
the demolition is approved by HUD under subpart M of this part, and
related costs, such as clearing and grading the site after demolition
and subsequent site improvement to benefit the remaining portion of the
existing development; and
(2) Conversion of existing dwelling units to different bedroom
sizes.
(f) Replacement reserve costs. (1) Funding a replacement reserve to
carry out eligible activities in future years is an eligible cost,
subject to the following restrictions:
(i) Annual CGP funds are not needed for existing needs, as
identified by the IHA in its needs assessments; or
(ii) A physical improvement requires more funds than the IHA would
receive under its annual formula allocation; or
(iii) A management improvement requires more funds than the IHA may
use under its 20 percent limit for management improvements, and the IHA
needs to save a portion of subsequent year(s) grants, to fund the work
item;
(2) The IHA shall invest replacement reserve funds so as to
generate a return equal to or greater than the average 91-day Treasury
bill rate;
(3) Interest earned on funds in the replacement reserve will not be
added to the IHAs income in the determination of an IHA's operating
subsidy eligibility, but must be used for eligible modernization costs;
(4) To the extent that its annual formula allocation and any
unobligated balances of modernization funds are not adequate to meet
emergency needs, an IHA must first use its replacement reserve, where
funded, to meet emergency needs, before requesting funds from the $75
million reserve. An IHA is not required to use its replacement reserve
for natural and other disasters.
(g) Management improvement costs. Management improvements that are
needed to upgrade the operation of the IHA's developments, sustain
physical improvements at those developments or correct management
deficiencies identified by the IHA in its Comprehensive Plan are
eligible costs. An IHA's ongoing operating expenses, including direct
provision of social services through either contract or force account
labor, are ineligible management improvement costs.
(1) Economic development activities costs. Economic development
activities such as job training, resident employment and resident
businesses, for the purpose of carrying out activities related to the
eligible management and physical improvements are eligible costs, as
approved by HUD. HUD encourages IHAs, to the greatest extent feasible,
to hire residents as trainees or employees to carry out the
modernization program under this subpart, and to contract with
resident-owned businesses for modernization work.
(2) Resident management costs. Technical assistance to a resident
council or resident management corporation (RMC), as defined in
Sec. 950.455, in order to determine the feasibility of the resident
management entity or assist in its formation is an eligible cost.
(3) Resident homeownership costs. The study of the feasibility of
converting rental to homeownership units, as well as the preparation of
an application for conversion to homeownership, is an eligible cost.
(h) Drug elimination costs. Drug elimination activities involving
management or physical improvements are eligible costs, as specified by
HUD.
(i) Administrative costs. Administrative costs necessary for the
planning, design, implementation and monitoring of the physical and
management improvements are eligible costs and include the following:
(1) The salaries of nontechnical and technical IHA personnel
assigned full-time or part-time to modernization are eligible costs
only where the scope and volume of the work are beyond that which could
be reasonably expected to be accomplished by such personnel in the
performance of their nonmodernization duties. The IHA shall properly
apportion to the appropriate program budget any direct charges for the
salaries of assigned full- or part-time staff (e.g., to the CIAP, CGP
or operating budgets);
(2) IHA contributions to employee benefit plans on behalf of
nontechnical and technical IHA personnel are eligible costs in direct
proportion to the amount of salary charged to the CGP; and
(3) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(j) Audit costs.
(k) Architectural/engineering and consultant fees. Fees for
planning, preparation of needs assessments and required documents,
detailed design work, preparation of construction and bid documents,
lead-based paint testing, etc., are eligible costs.
(l) Relocation costs. Relocation costs as a direct result of
rehabilitation, demolition or acquisition for a CGP-funded activity are
eligible costs, as required by Sec. 950.117.
(m) Cost limitation. (1) Notwithstanding the full fungibility of
work items in Sec. 950.675(c), an IHA shall not use more than a total
of 20 percent of its annual grant for management improvement costs in
account 1408, unless specifically approved by HUD, or unless the IHA is
determined by the Field Office to be high performing and have
administrative capacity under Sec. 950.135.
(2) Notwithstanding the full fungibility of work items in
Sec. 950.675(c), an IHA shall not use more than a total of 7 percent of
its annual grant on administrative costs in account 1410, excluding any
costs related to in-house lead-based paint or asbestos testing, in-
house architectural/engineering (A/E) work, or other special
administrative costs required by state, tribal or local law, unless
specifically approved by HUD. In the case of an IHA whose jurisdiction
covers an unusually large geographic area, an additional two percent of
the annual grant may be spent on costs related to travelling to the
IHA's developments for CGP-related business, as specifically approved
by HUD. (For purposes of this paragraph (m)(2), ``an unusually large
geographic area'' means an area served by an IHA whose offices are
physically separated from the majority of its developments by distances
that require overnight travel and/or travel by air or other commercial
carriers, e.g., a statewide IHA with developments in multiple
localities; a regional IHA with developments in multiple counties or
states; or an Alaska IHA with developments in multiple villages.);
(3) Where the physical or management improvement will benefit
programs other than Indian Housing, such as Section 8, local renewal,
etc., eligible costs are limited to the amount directly attributable to
the Indian Housing Program.
(n) Ineligible costs. An IHA (or an RMC acting on behalf of an IHA)
shall not make luxury improvements, or carry out any other ineligible
activities, as specified by HUD.
Sec. 950.667 Reserve for emergencies and disasters.
(a) Emergencies. (1) Eligibility for assistance. An IHA (including
an IHA that is not considered to be administratively capable under
Sec. 950.135) may obtain funds at any time, for any eligible emergency
work item as defined in Sec. 950.102 (for IHAs participating in CGP) or
for any eligible emergency work item (described as emergency
modernization in Sec. 950.102) (for IHAs participating in CIAP), from
the reserve established under Sec. 950.601(b). However, emergency
reserve funds may not be provided to an IHA participating in CGP that
has the necessary funds available from any other source, including its
annual formula allocation under Sec. 950.601(e) and (f), other
unobligated modernization funds, and its replacement reserves under
Sec. 950.666. Emergency reserve funds may not be provided to an IHA
participating in CIAP that has the necessary funds available from any
other source, including unobligated CIAP (and no CIAP modernization is
available for the remainder of the fiscal year) and residual receipts.
IHAs participating in CIAP must also have the emergency modernization
work under contract within 6 months after receiving HUD's approval of
emergency reserve funds. An IHA is not required to have an approved
Comprehensive Plan under Sec. 950.672 before it can request emergency
assistance from this reserve.
(2) Procedure. To obtain emergency funds, an IHA must submit a
request, in a form to be prescribed by HUD, which demonstrates that
without the requested funds from the set-aside under this section, the
IHA does not have adequate funds available to correct the conditions
which present an immediate threat to the health or safety of the
residents. HUD will immediately process a request for such assistance
and, if it determines that the IHA's request meets the requirements of
paragraph (a)(1) of this section, it shall approve the request, subject
to the availability of funds in the reserve.
(3) Repayment. An IHA that receives assistance for its emergency
needs from the reserve under Sec. 950.601(b) must repay such assistance
from its future allocations of assistance, where available. For HAs
participating in the CGP, HUD shall deduct up to 50 percent of an IHA's
succeeding year's formula allocation under Sec. 950.601(e) and (f) to
repay emergency funds previously provided by HUD to the IHA. The
remaining balance, if any, shall be deducted from an IHA's succeeding
years' formula allocations.
(b) Natural and other disasters. (1) Eligibility for assistance. An
IHA (including an IHA which has been determined by HUD not to be
administratively capable under Sec. 950.135) may request assistance at
any time from the reserve under Sec. 950.601(b) for the purpose of
permitting the IHA to respond to a natural or other disaster. To
qualify for assistance, the disaster must pertain to an extraordinary
event affecting only one or a few IHAs, such as an earthquake or
hurricane. Any disaster declared by the President (or which HUD
determines would qualify for a Presidential declaration if it were on a
larger scale) qualifies for assistance under this paragraph. An IHA may
receive funds from the reserve regardless of the availability of other
modernization funds or reserves, but only to the extent its needs are
in excess of its insurance coverage. An IHA is not required to have an
approved Comprehensive Plan under Sec. 950.672 before it can request
assistance from the reserve under Sec. 950.601(b).
(2) Procedure. To obtain funding for natural or other disasters
under Sec. 950.601(b), an IHA must submit a request, in a form
prescribed by HUD, which demonstrates that it meets the requirements of
paragraph (b)(1) of this section. HUD will immediately process a
request for such assistance and, if it determines that the request
meets the requirements under paragraph (b)(1) of this section, it will
approve the request, subject to the availability of funds in the
reserve.
(3) Repayment. Funds provided to an IHA under paragraph (b)(1) of
this section for natural and other disasters shall be in the form of a
grant, and are not required to be repaid.
Sec. 950.669 Allocation of assistance.
(a) Submission of formula characteristics report. (1) Formula
characteristics report. In its first year of participation in the CGP,
each IHA shall verify and provide data to HUD, in a form and at a time
to be prescribed by HUD, concerning IHA and development
characteristics, so that HUD can develop the IHA's annual funding
allocation under the CGP in accordance with Sec. 950.601(e) and (f). If
an IHA fails to submit to HUD the formula characteristics report by the
prescribed deadline, HUD will use the data which it has available
concerning IHA and development characteristics for purposes of
calculating the IHA's formula share. After its first year of
participation in the CGP, an IHA is required to respond to data
transmitted by HUD if there have been changes to its inventory from
that previously reported, or where requested by HUD. On an annual
basis, HUD will transmit to the IHA the formula characteristics report
which reflects the data that will be used to determine the IHA's
formula share. The IHA will have 30 days to review and advise HUD of
errors in this HUD report. Necessary adjustments will be made to the
IHA's data before the formula is run for the current FFY.
(b) HUD notification of formula amount; appeal rights. (1) Formula
amounts notification. After HUD determines an IHA's formula allocation
under Sec. 950.601 (e) and (f) based upon the IHA, development, and
community characteristics, it shall notify the IHA of its formula
amount and provide instruction on annual submission in accordance with
Secs. 950.672(a) and 950.678.
(2) Appeal based upon unique circumstances. An IHA may appeal in
writing HUD's determination of its formula amount within 60 calendar
days of the date of HUD's determination on the basis of ``unique
circumstances.'' The IHA must indicate what is unique, and specify the
manner in which it is different from all other IHAs participating in
the CGP, and provide any necessary supporting documentation. HUD shall
render a written decision on an IHA's appeal under this paragraph
within 60 calendar days of the date of its receipt of the IHA's request
for an appeal. HUD shall publish in the Federal Register a description
of the facts supporting any successful appeals based upon ``unique
circumstances.'' Any adjustments resulting from successful appeals in a
particular FFY under this paragraph shall be made from the subsequent
years' allocation of funds under this part.
(3) Appeal based upon error. An IHA may appeal in writing HUD's
determination of its formula amount within 60 calendar days of the date
of HUD's determination on the basis of an error. The IHA may appeal on
the basis of error the correctness of data in the formula
characteristics report. The IHA must describe the nature of the error,
and provide any necessary supporting documentation. HUD shall respond
to the IHA's request within 60 calendar days of the date of its receipt
of the IHA's request for an appeal. Any adjustment resulting from
successful appeals in a particular FFY under this paragraph shall be
made from subsequent years' allocation of funds under this part.
(c) IHAs determined to be high risk. If an IHA is determined to
have serious deficiencies in accordance with Sec. 950.135, or if the
IHA fails to meet, or to make reasonable progress toward meeting, the
goals previously established in its management improvement plan under
Sec. 950.135, HUD may designate the IHA high risk. If the IHA is
designated high risk with respect to modernization, HUD may withhold
some or all of the IHA's annual grant; HUD may declare a breach of the
grant agreement with respect to all or some of the IHA's functions so
that the IHA or a particular function of the IHA may be administered by
another entity; or HUD may take other sanctions authorized by law or
regulation.
(d) Obligation of formula funding. All formula funding should be
obligated within two years of allocation or such longer period approved
by HUD. If the IHA fails to obligate funds within this period, they may
be subject to an alternative management strategy which may involve
third-party oversight or administration of the modernization function.
HUD would only require such action after a corrective action order had
been issued under Sec. 950.687 and the IHA failed to comply with the
order. HUD could then issue an alternative management strategy in a
correction action order. An IHA may appeal in writing the corrective
action order imposing an alternative management strategy within 60 days
of that order. HUD Headquarters shall render a written decision on an
IHA's appeal within 60 calendar days of the date of its receipt of the
IHA's appeal.
Sec. 950.672 Comprehensive Plan (including Five-Year Action Plan).
(a) Submission. HUD shall notify IHAs of the requested date for
submitting or updating a Comprehensive Plan. For planning purposes,
IHAs may use the amount they received under CGP in the prior year in
developing their Comprehensive Plan or they may wait for the annual HUD
notification of formula amount under Sec. 950.669(b)(1).
(b)(1) Resident participation. An IHA is required to develop,
implement, monitor and annually amend portions of its Comprehensive
Plan in consultation with residents of the developments covered by the
Comprehensive Plan, and with democratically elected resident groups. In
addition, the IHA must also consult with resident management
corporations (RMCs) to the extent that an RMC manages a development
covered by the Comprehensive Plan. The IHA, in partnership with the
residents, must develop and implement a process for resident
participation which ensures that residents are involved in a meaningful
way in all phases of the CGP. Such involvement shall involve
implementing the Partnership Process as a critical element of the CGP.
(2) Establishment of Partnership Process. The IHA, in partnership
with the residents of the developments covered by the plan, and with
democratically elected resident groups, must establish a Partnership
Process to develop and implement the goals, needs, strategies and
priorities identified in the Comprehensive Plan. After residents have
organized to participate in the CGP, they may decide to establish a
volunteer advisory group of experts in various professions to assist
them in the CGP Partnership Process. The Partnership Process shall be
designed to achieve the following:
(i) To assure that residents are fully briefed and involved in
developing the content of, and monitoring the implementation of, the
Comprehensive Plan including, but not limited to, the physical and
management needs assessments, viability analysis, Five-Year Action
Plan, and Work Statements for each year. If necessary, the IHA shall
develop and implement capacity building strategies to ensure meaningful
resident participation in CGP. Such technical assistance efforts for
residents are eligible management improvement costs under CGP;
(ii) To enable residents to participate, on an IHA-wide or area-
wide basis, in ongoing discussions of the Comprehensive Plan and
strategies for its implementation, and in all meetings necessary to
ensure meaningful participation.
(3) Public notice. Within a reasonable amount of time before the
advance meeting for duly elected resident organizations under paragraph
(b)(4) of this section, and the public hearing under paragraph (b)(5)
of this section, the IHA shall provide public notice of the advance
meeting and the public hearing in a manner determined by the IHA and
which ensures notice to all duly elected resident organizations. The
public notice shall also include a summary of activities of the
previous year (uses of past funding) and progress update, estimated
funding level (i.e., current year funding or formula amount, whichever
the IHA elects); a summary of the CGP requirements; the estimated time
frames for completion of the required CGP documents; and the
requirement for resident participation in the planning, development and
monitoring of modernization activities under the CGP;
(4) Advance meeting for duly elected resident organizations. The
IHA shall hold, within a reasonable amount of time before the public
hearing under paragraph (b)(5) of the section, a meeting for residents
and duly elected resident organizations at which the IHA shall explain
the components of the Comprehensive Plan. The meeting shall be open to
all residents and duly elected resident organizations;
(5) Public hearing. The IHA shall hold at least one public hearing,
and any appropriate number of additional hearings, to ensure ample
opportunity for residents, duly elected resident organizations, local
government officials, and other interested parties, to express their
priorities and concerns. The IHA shall give full consideration to the
comments and concerns of residents, local government officials, and
other interested parties.
(c) Local government participation. An IHA shall consult with
appropriate local government officials with respect to the development
of the Comprehensive Plan. In the case of an IHA with developments in
multiple jurisdictions, the IHA may meet this requirement by consulting
with an advisory group representative of all the jurisdictions. At a
minimum, such consultation must include providing such officials with:
(1) Advance written notice of the public hearing required under
paragraph (b)(5) of this section;
(2) A copy of the summary of total preliminary estimated costs to
address physical needs by each development and management/operations
needs IHA-wide and a specific description of the IHA's process for
maximizing the level of participation by residents.
(d) Contents of Comprehensive Plan. The Comprehensive Plan shall
identify all of the physical and management improvements needed for an
IHA and all of its developments, and that represent needs eligible for
funding under Sec. 950.666. The plan shall also include preliminary
estimates of the total cost of these improvements. The plan shall set
forth general strategies for addressing the identified needs, and
highlight any special strategies, such as major redesign or partial
demolition of a development, that are necessary to ensure the long-term
physical and social viability of the development. Each Comprehensive
Plan shall contain the following elements:
(1) Summaries. An IHA shall include as part of its Comprehensive
Plan the following summaries:
(i) A summary of total preliminary estimated costs to address
physical needs by each development and management needs IHA-wide; and
(ii) A specific description of the IHA's process for maximizing the
level of participation by residents during the development,
implementation and monitoring of the Comprehensive Plan, a summary of
the general issues raised on the plan by residents and others during
the public comment process and the IHA's response to the general issue.
IHA records, such as minutes of planning meetings or resident surveys,
shall be maintained in the IHA's files and made available to residents,
duly elected resident organizations, and other interested parties, upon
request.
(2) Physical needs assessment. (i) Requirements. The physical needs
assessment identifies all of the work that an IHA would need to
undertake to bring each of its developments up to the modernization and
energy conservation standards, as required by section 14(e)(1)(A)(ii)
of the Act, to comply with lead-based paint testing and abatement
requirements under Sec. 950.120(i), and to comply with other program
requirements under Sec. 950.120. The physical needs assessment is
completed without regard to the availability of funds, and shall
include the following information with respect to each of an IHA's
developments:
(A) A brief summary of the physical improvements necessary to bring
each development to a level at least equal to the modernization
standards contained in HUD Handbook 7485.2 (Public and Indian Housing
Modernization Standards), and to the energy conservation and life-cycle
cost-effective performance standards, as required in Sec. 950.603, and
to comply with the Lead-Based Testing and Abatement requirements under
Sec. 950.120(i), and the relative urgency of need also must be
indicated. If the IHA has no physical improvement needs at a particular
development at the time it completes its Comprehensive Plan, it must so
indicate. Similarly, if the IHA intends to demolish, partially
demolish, convert, or dispose of a development (or units within a
development) it must so indicate in the summary of physical
improvements;
(B) The replacement needs of equipment systems and structural
elements that will be required to be met (assuming routine and timely
maintenance is performed) during the period covered by the action plan;
(C) A preliminary estimate of the cost to complete the physical
work;
(D) The projected FFY in which the IHA anticipates that the
development will meet the modernization and energy conservation
standards;
(E) In addition, the IHA shall provide with respect to vacant or
non-homebuyer-occupied Turnkey III units, the estimated number of units
that the IHA is proposing for substantial rehabilitation and subsequent
sale, in accordance with Sec. 950.666(d)(3).
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
physical needs assessment under this paragraph, and shall retain such
source documents in its files.
(3) Management needs assessment. (i) Requirements. The plan shall
include a comprehensive assessment of the improvements needed to
upgrade the management and operation of the IHA and of each viable
development so decent, safe and sanitary living conditions will be
provided. The management needs assessment shall include the following,
with the relative urgency of need indicated:
(A) An identification of the most current needs related to the
following areas (to the extent that any of these needs is addressed in
a HUD-approved management improvement plan, the IHA may simply include
a cross-reference to these documents);
(1) The management, financial, and accounting control systems of
the IHA;
(2) The adequacy and qualifications of personnel employed by the
IHA in the management and operation of its developments, for each
significant category of employment;
(3) The adequacy and efficacy of:
(i) Resident programs and services;
(ii) Resident and development security;
(iii) Resident selection and eviction;
(iv) Occupancy;
(v) Maintenance;
(vi) Resident management and resident capacity building programs;
(vii) Resident opportunities for employment and business
development and other self-sufficiency opportunities for residents; and
(viii) Homeownership opportunities for residents.
(B) Any additional deficiencies identified through audits and HUD
monitoring reviews which are not addressed under paragraph (d)(3)(i)(A)
of this section. To the extent that any of these is addressed in a HUD-
approved management improvement plan, the IHA may include a cross-
reference to these documents;
(C) Any other management and operations needs which the IHA wants
to address at the IHA-wide or development level;
(D) An IHA-wide preliminary cost estimate for addressing all the
needs identified in the management needs assessment, without regard to
the availability of funds; and
(E) The projected FFY in which the IHA anticipates that all
identified management deficiencies will be corrected.
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
management needs assessment under this paragraph, and shall retain such
source documents in its files.
(4) Demonstration of long-term physical and social viability.
(i) General. The plan shall include, on a development-by-
development basis, an analysis of whether completion of the
improvements and replacements identified under paragraphs (d)(2) and
(d)(3) of this section will reasonably ensure the long-term physical
and social viability of the development at a reasonable cost. The IHA
shall keep documentation in its files to support its reasonable cost
determinations of each major work item (e.g., kitchen cabinets,
exterior doors). HUD will review cost reasonableness as part of its
review of the Annual Submission and the Performance and Evaluation
Report. Where necessary, HUD will review the IHA's documentation in
support of its cost reasonableness;
(ii) Determination of non-viability. Where an IHA's analysis of a
development, under paragraph (d) of this section, establishes that
completion of the identified improvements and replacements will not
result in the long-term physical and social viability of the
development at a reasonable cost, the IHA shall not expend CGP funds
for the development, except for emergencies and essential non-routine
maintenance necessary to maintain habitability until residents can be
relocated. The IHA shall specify in its Comprehensive Plan the actions
it proposes to take with respect to the non-viable development (e.g.,
demolition or disposition under subpart M of this part).
(5) Five-Year Action Plan. (i) General. The Comprehensive Plan
shall include a rolling Five-Year Action Plan to carry out the
improvements and replacements (or a portion thereof) identified under
paragraphs (d)(2) and (d)(3) of this section. In developing its Five-
Year Action Plan, the IHA shall assume that the current year funding or
formula amount will be available for each year of its Five-Year Action
Plan, whichever the IHA is using for planning purposes, plus the IHA's
estimate of the funds that will be available from other sources, such
as State, local and tribal governments. All activities specified in an
IHA's Five Year Action Plan are contingent upon the availability of
funds, and the work items are fungible, i.e., interchangeable;
(ii) Requirements. Under the action plan, an IHA must indicate how
it intends to use the funds available to it under the CGP to address
the deficiencies, or a portion of the deficiencies, identified under
its physical and management needs assessments, as follows:
(A) Physical condition. With respect to the physical condition of
an IHA's developments, an IHA must indicate in its action plan how it
intends to address, over a five-year period, the deficiencies (or a
portion of the deficiencies) identified in its physical needs
assessment so as to bring each of its developments up to a level at
least equal to the modernization and energy conservation standards.
This would include specifying the work to be undertaken by the IHA in
major work categories (e.g., kitchens, electrical systems, etc.);
establishing priorities among the major work categories by development
and year based upon the relative urgency of need; and estimating the
cost of each of the identified major work categories. In addition, an
IHA must estimate the FFY in which it anticipates that the development
will meet the modernization and energy conservation standards. In
developing its action plan, an IHA shall give priority to the
following:
(1) Activities required to correct emergency conditions;
(2) Activities required to meet statutory (or other legally
mandated) requirements;
(3) Activities required to meet the needs identified in the Section
504 needs assessment within the regulatory timeframes; and
(4) Activities required to complete lead-based paint testing and
abatement requirements by December 6, 1994.
(B) Management and operations. An IHA must address in its action
plan the management and operations deficiencies (or a portion of the
deficiencies) identified in its management needs assessment, as
follows:
(1) With respect to the management and operations needs of the IHA,
the IHA must identify how it intends to address with CGP funds, if
necessary, the deficiencies (or a portion thereof) identified in its
management needs assessment, including work identified through audits,
the ACA, HUD monitoring reviews, and self-assessments (this would
include establishing priorities based upon the relative urgency of
need);
(2) A preliminary IHA-wide cost estimate, by major work category.
(iii) Procedure for maintaining current Five-Year Action Plan. The
IHA shall maintain a current Five-Year Action Plan by annually amending
its Five-Year Action Plan, in conjunction with the Annual Submission;
(6) Local government statement. The Comprehensive Plan shall
include a statement signed by the chief executive officer of the
appropriate governing body (or, in the case of an IHA with developments
in multiple jurisdictions, from the CEO of each such jurisdiction),
certifying as to the following:
(i) The IHA developed the Comprehensive Plan/Five-Year Action Plan
or amendments thereto in consultation with officials of the appropriate
governing body and with development residents covered by the
Comprehensive Plan/Five-Year Action Plan, in accordance with the
requirements of Sec. 950.672(b) and (c);
(ii) The Comprehensive Plan/Five-Year Action Plan or amendments
thereto are consistent with the appropriate governing body's assessment
of its low-income housing needs and that the appropriate governing body
will cooperate in providing resident programs and services; and
(iii) The IHA's proposed drug elimination activities are
coordinated with, and supportive of, local drug elimination strategies
and neighborhood improvement programs, if applicable.
(7) IHA resolution. The plan shall include a resolution adopted by
the IHA Board of Commissioners, and signed by the Board Chairman of the
IHA, approving the Comprehensive Plan or any amendments thereto and
certifying that:
(i) The IHA will comply with all policies, procedures, and
requirements prescribed by HUD for modernization, including
implementation of the modernization in a timely, efficient, and
economical manner;
(ii) IHA has established controls to assure that any activity
funded by the CGP is not also funded by any other HUD program, thereby
preventing duplicate funding of any activity;
(iii) The IHA will not provide to any development more assistance
under the CGP than is necessary to provide affordable housing, after
taking into account other government assistance provided;
(iv) The proposed physical work will meet the modernization and
energy conservation standards under Sec. 950.603;
(v) The proposed activities, obligations and expenditures in the
Five-Year Action Plan/Annual Submission are consistent with the
proposed or approved Comprehensive Plan of the IHA;
(vi) The IHA will comply with applicable civil rights requirements
under Sec. 950.115, and, where applicable, will carry out the
Comprehensive Plan in conformity with title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619),
and section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794);
(vii) The IHA will, to the greatest extent feasible, give
preference to the award of modernization contracts to Indian
organizations and Indian-owned economic enterprises under Sec. 950.165;
(viii) The IHA has provided to HUD any documentation that HUD has
requested to carry out its review under the National Environmental
Policy Act (NEPA) and other related authorities in accordance with
Sec. 950.120(a) and (b), and will not obligate, in any manner, the
expenditure of CGP funds, or otherwise undertake the activities
identified in its Comprehensive Plan/Annual Submission, until the IHA
receives written notification from HUD indicating that HUD has complied
with its responsibilities under NEPA and other related authorities;
(ix) The IHA will comply with the wage rate requirements under
Sec. 950.120 (c) and (d);
(x) The IHA will comply with the relocation assistance and real
property acquisition requirements under Sec. 950.117;
(xi) The IHA will comply with the requirements for physical
accessibility under Sec. 950.120(f);
(xii) The IHA will comply with the requirements for access to
records and audits under Sec. 950.120(g);
(xiii) The IHA will comply with the uniform administrative
requirements under Sec. 950.120(h);
(xiv) The IHA will comply with lead-based paint testing and
abatement requirements under Sec. 950.120(i);
(xv) The IHA has complied with the requirements governing tribal
government and resident participation in accordance with
Secs. 950.672(b), 950.678(d), and 950.684, and has given full
consideration to the priorities and concerns of tribal government and
residents, including comments which were ultimately not adopted, in
preparing the Comprehensive Plan/Five-Year Action Plan and any
amendments thereto;
(xvi) The IHA will comply with the special requirements of
Sec. 950.666(d) with respect to a homeownership development; and
(xvii) The IHA will comply with the special requirements of
Sec. 950.633 with respect to a Section 23 leased housing bond-financed
development.
(xviii) The IHA will comply with section 3 of the Housing and Urban
Development Act of 1968, as amended (12 U.S.C. 1701u), and make best
efforts, consistent with existing Federal, State, and local laws and
regulations, to give low- and very low-income persons, training and
employment opportunities generated by CGP assistance, and to make best
efforts, consistent with existing Federal, State, and local laws and
regulations, to award contracts for work to be performed in connection
with CGP assistance to business concerns that provide economic
opportunities for low- and very low-income persons.
(e) Amendments to the Comprehensive Plan. (1) Extension of time for
performance. An IHA shall have the right to amend its Comprehensive
Plan (including the action plan) to extend the time for performance
whenever HUD has not provided the amount of assistance set forth in the
Comprehensive Plan or has not provided the assistance in a timely
manner.
(2) Amendments to needs assessments. The IHA must amend its plan by
revising its needs assessments whenever it proposes to carry out
activities in its Five-Year Action Plan or Annual Submission, that are
not reflected in its current needs assessments (except in the case of
emergencies). If the bases for the needs assessment have changed
substantially, an IHA may propose an amendment to its needs
assessments, in connection with the submission of its Annual Submission
(see Sec. 950.678(b), or at any other time. These amendments shall be
reviewed by HUD in accordance with Sec. 950.675;
(3) Six-year revision of Comprehensive Plan. The physical and
management needs assessments, and the summaries listed in
Sec. 950.672(d)(1) are required to be revised only every sixth year,
although the IHA may elect to revise some or all of these more
frequently. Every sixth year, an IHA must submit to HUD, as a part of
its Annual Submission, a complete revision of its Comprehensive Plan.
(4) Annual revision of Five-Year Action Plan. Annually, the IHA
shall submit to HUD, with its Annual Submission, an update of its Five-
Year Action Plan. Notwithstanding the new fifth year, the IHA shall
identify changes in work categories from the previous year Five-Year
Action Plan when making this annual submission.
(5) Required submissions. Any amendments to the Comprehensive Plan
under this section must be submitted with the IHA resolution under
Sec. 950.672(d)(7).
(f) Prerequisite for receiving assistance. (1) Prohibition of
assistance. No financial assistance, except for emergency work to be
funded under Secs. 950.601(b) and 950.666(a)(2), and for modernization
needs resulting from disasters under Sec. 950.601(b), may be made
available under this subpart unless HUD has approved a Comprehensive
Plan submitted by the IHA which meets the requirements of Sec. 950.672.
An IHA that has failed to obtain approval of its Comprehensive Plan by
the end of the FFY shall have its formula allocation for that year
(less any formula amounts provided to the IHA for emergencies) added to
the subsequent year's appropriation of funds for grants under this
part. HUD shall allocate such funds to IHAs and PHAs participating in
the CGP in accordance with the formula under Sec. 950.601(e) and (f) in
the subsequent FFY. An IHA which elects in any FFY not to participate
in the CGP under this subpart may participate in the CGP in subsequent
FFYs. (2) Requests for emergency assistance. An IHA may receive funds
from its formula allocation to address emergency modernization needs
where HUD has not approved an IHA's Comprehensive Plan. To request such
assistance, an IHA shall submit to HUD a request for funds in such form
as HUD may prescribe, including any documentation necessary to support
its claim that an emergency exists. HUD shall review the request and
supporting documentation to determine if it meets the definition of
``emergency work,'' as set forth in Sec. 950.102.
Sec. 950.675 HUD review and approval of Comprehensive Plan (including
action plan).
(a) Submission of Comprehensive Plan. (1) Upon receipt of a
Comprehensive Plan from an IHA, HUD shall determine whether:
(i) The plan contains each of the required components specified at
Sec. 950.672(d); and
(ii) Where applicable, the IHA has submitted any additional
information or assurances required as a result of HUD monitoring,
findings of inadequate IHA performance, audit findings, or civil rights
compliance findings.
(2) Acceptance for review. If the IHA has submitted a Comprehensive
Plan (including the action plan) which meets the criteria specified in
paragraph (a)(1) of this section, HUD shall accept the Comprehensive
Plan for review, within 14 calendar days of its receipt in the Field
Office. The IHA shall be notified in writing that the plan has been
accepted by HUD, and that the 75-day review period is proceeding.
(3) Time period for review. A Comprehensive Plan that is accepted
by HUD for review shall be considered to be approved unless HUD
notifies the IHA in writing, postmarked within 75 calendar days of the
date of HUD's receipt of the Comprehensive Plan for review, that HUD
has disapproved the plan. HUD shall not disapprove a Comprehensive Plan
on the basis that it cannot complete its review within the 75-day
deadline.
(4) Rejection of Comprehensive Plan. If an IHA has submitted a
Comprehensive Plan (including the action plan), which does not meet the
requirements of paragraph (a)(1) of this section, HUD shall notify the
IHA within 14 calendar days of its receipt that HUD has rejected the
plan for review. In such case, HUD shall indicate the reasons for
rejection, the modifications required to qualify the Comprehensive Plan
for HUD review, and the deadline date for receipt of any modifications.
(b) HUD approval of Comprehensive Plan (including action plan). (1)
A Comprehensive Plan (including the action plan) that is accepted by
HUD for review in accordance with paragraph (a) of this section shall
be considered to be approved, unless HUD notifies the IHA in writing,
postmarked within 75 days of the date of HUD's receipt of the
Comprehensive Plan for review, that HUD has disapproved the plan,
indicating the reasons for disapproval, and the modifications required
to make the Comprehensive Plan approvable. The IHA must re-submit the
Comprehensive Plan to HUD, in accordance with the deadline established
by HUD, which may allow up to 75 calendar days before the end of the
FFY for HUD review. If the revised plan is disapproved by HUD following
its resubmission, or the IHA fails to resubmit the plan by the deadline
established by HUD, any funds that would have been allocated to the IHA
shall be added to the subsequent year's appropriation of funds for
grants under this subpart. HUD shall allocate such funds to IHAs and
PHAs participating in the CGP in accordance with the formula under 24
CFR 968.103 and Sec. 950.601. HUD shall not disapprove a Comprehensive
Plan on the basis that HUD cannot complete its review under this
section within the 75-day deadline.
(2) HUD shall approve the Comprehensive Plan except where it makes
a determination in accordance with one or more of the following:
(i) The Comprehensive Plan is incomplete in significant matters.
HUD determines that the IHA has failed to include all required
information or documentation in its Comprehensive Plan, e.g, the
physical needs assessment does not provide all of the information
required by HUD concerning all of its developments; or the IHA has
supplied incomplete data on the current condition and other
characteristics of its developments;
(ii) Identified needs are plainly inconsistent with facts and data.
On the basis of available significant facts and data pertaining to the
physical and operational condition of the IHA's developments or the
management and operations of the IHA, HUD determines that the IHA's
identification of modernization needs (see Sec. 950.672(d) (2) and (3))
is plainly inconsistent with such facts and data. HUD will take into
account facts and data such as those derived from recent HUD
monitoring, audits, and resident comments and will disapprove a
Comprehensive Plan based on such findings as:
(A) Identified physical improvements and replacement are
inadequate. The completion of the identified physical improvements and
replacements will not bring all of an IHA's developments to a level at
least equal to the modernization and energy conservation and life-cycle
cost-effective standards in Sec. 950.603 (except that a development
must meet the energy conservation standards under Sec. 950.603 only
when they are applicable to the work being performed);
(B) Identified management improvements are inadequate. The
identified management and operations improvement needs do not address
all of an IHA's areas of deficiency, or the completion of those
improvements would not result in each area of deficiency under an IHA's
management improvement plan under Sec. 950.135 being brought up to an
acceptable level of performance under the ACA and the Field Office
Monitoring of IHAs Handbook 7440.3; and
(C) Proposed physical and management improvements fail to address
identified needs. The proposed physical and management improvements in
the action plan are not related to the identified needs in the needs
assessments portion of the Comprehensive Plan, e.g., a heating plant
renovation is in the action plan, but it was not included in the needs
assessment for that development.
(iii) Action plan is plainly inappropriate to meeting identified
needs. On the basis of the Comprehensive Plan, HUD determines that the
action plan (see Sec. 950.672(d)(5)) is plainly inappropriate to meet
the needs identified in the Comprehensive Plan, e.g., the proposed work
item will not correct the need identified in the needs assessment. HUD
will take into account the availability of funds. In addition, HUD will
take into account whether the action plan fails to address work items
that are needed to correct known emergency conditions or which are
otherwise needed to meet statutory or other legally mandated
requirements, as identified by the IHA in its Comprehensive Plan.
(iv) Inadequate demonstration of long-term viability at reasonable
cost. HUD determines that the IHA has failed to demonstrate that
completion of improvements and replacements identified in the
Comprehensive Plan, as required by Sec. 950.672(d) (2) and (3), will
reasonably ensure long-term viability of one or more Indian housing
developments to which they relate at a reasonable cost, as required by
Sec. 950.672(d)(4).
(v) Contradiction of local government statement or IHA resolution.
HUD has evidence which tends to challenge, in a substantial manner, the
appropriate governing body's statement or IHA resolution contained in
the Comprehensive Plan, as required in Sec. 950.672(d) (6) and (7).
Such evidence may include, but is not necessarily limited to:
(A) Evidence that the IHA failed to implement the Partnership
Process and to meet the requirements for resident participation, as set
forth in Sec. 950.672(b). In such cases, HUD shall review the IHA's
resident participation process and any supporting documentation to
determine whether the standards for participation under Sec. 950.672(b)
were met;
(B) With respect to an IHA established under State law and
determined to be subject to the requirements of title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d) and the Fair Housing Act (42
U.S.C. 3601-3619), HUD shall also consider as such evidence the
following:
(1) A pending proceeding against the IHA based upon a charge of
discrimination pursuant to the Fair Housing Act. (For purposes of this
provision, ``a charge of discrimination'' means a charge, pursuant to
section 810(g)(2) of the Fair Housing Act (42 U.S.C. 3610(g)(2)),
issued by the HUD General Counsel, or his or her legally authorized
designee;)
(2) A pending civil rights suit against the IHA instituted by the
Department of Justice;
(3) Outstanding HUD findings, under Sec. 950.120, of IHA
noncompliance with civil rights statutes and executive orders or
implementing regulations, as a result of formal administrative
proceedings, unless the IHA is implementing a HUD-approved resident
selection and assignment plan or compliance agreement designed to
correct the area(s) of noncompliance;
(4) A deferral of the processing of applications from the IHA
imposed by HUD under title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d), the Attorney General's Guidelines (28 CFR 50.3) and
HUD's title VI regulations (24 CFR 1.8) and procedures (HUD Handbook
8040.1), or under section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794) and HUD's section 504 regulations (24 CFR 8.57); or
(5) An adjudication of a violation under any of the authorities
under Sec. 950.120(a) in a civil action filed against the IHA by a
private individual, unless the IHA is implementing a HUD-approved
resident selection and assignment plan or compliance agreement designed
to correct the area(s) of noncompliance.
(c) Effect of HUD approval of Comprehensive Plan. After HUD
approves the Comprehensive Plan (including the Five-Year Action Plan),
or any amendments to the plan, it shall be binding upon HUD and the
IHA, until such time as the IHA submits, and HUD approves, an amendment
to its plan. The IHA shall have full fungibility of work items (may
undertake any of the work items) identified in any of the five years of
the approved Five-Year Action Plan without further HUD approval. Actual
uses of the funds are to be reflected in the IHA annual Performance and
Evaluation Report for each grant. See Sec. 950.684. Except for
emergencies, the IHA shall consult, to the extent practicable, the
residents on significant changes (such as changes in scope of work)
whenever it moves work items within the approved Five-Year Action Plan.
Documentation of that consultation is to be retained in IHA files. If
HUD determines as a result of an audit or monitoring findings that an
IHA has provided false or substantially inaccurate data in its
Comprehensive Plan/Annual Submission or has circumvented the intent of
the program, HUD may condition the receipt of assistance, in accordance
with Sec. 950.687. Moreover, in accordance with 18 U.S.C. 1001, any
individual or entity who knowingly and willingly makes or uses a
document or writing containing any false, fictitious or fraudulent
statement or entry, in any matter within the jurisdiction of any
department or agency of the United States, shall be fined not more than
$10,000 or imprisoned for not more than five years, or both.
Sec. 950.678 Annual Submission of activities and expenditures.
(a) General. The Annual Submission consists of a Five-Year Action
Plan with a Work Statement for each of the five years and an
implementation schedule for the current year, local government
statement, materials demonstrating the partnership process, and other
miscellaneous documents outlined in this section. For planning
purposes, an IHA may use either the amount of funding received in the
current year or the formula amount provided in HUD's notification under
Sec. 950.669(b)(1) in developing the Five-Year Action Plan for
presentation at the resident meetings and public hearing. The Work
Statement for the first year of the Five-Year Action Plan is intended
to provide a statement of the activities and costs that the IHA plans
to undertake, in whole or in part, with the assistance to be provided
by HUD in that year. The Work Statements for all five years will be at
the same level of detail so that the IHA may interchange work items as
discussed in Sec. 950.672(d)(5)(i).
(b) Submission. After considering the amount of HUD assistance
under paragraph (a) of this section, and estimating how much funding
will be available from other sources, such as State and tribal
governments, and determining its activities and costs based on the
current FFY formula amount, the IHA shall submit its Annual Submission
in accordance with instructions provided by HUD.
(c) Acceptance for review. Upon receipt of an Annual Submission
from an IHA, HUD shall determine whether:
(1) It contains each of the required components; and
(2) The IHA has submitted any additional information or assurances
required as a result of HUD monitoring findings of inadequate IHA
performance, audit findings, and civil rights compliance findings. If
the IHA has submitted a complete Annual Submission and all required
information and assurances, HUD will accept the submission for review,
as of the date of receipt. If the IHA has not submitted all required
material, HUD will promptly notify the IHA that it has disapproved the
submission, indicating the reasons for disapproval, the modifications
required to qualify the Annual Submission for HUD review, and the date
by which such modifications must be received by HUD.
(d) Resident and local government participation. An IHA is required
to develop its Annual Submission, including any proposed amendments to
its Comprehensive Plan as provided in Sec. 950.672(e), in consultation
with officials of the appropriate governing body (or, in the case of an
IHA with developments in multiple jurisdictions, in consultation with
the CEO of each such jurisdiction or with an advisory group
representative of all jurisdictions) and with residents and especially
duly elected resident organizations of the developments covered by the
Comprehensive Plan, as follows:
(1) Public notice. Within a reasonable amount of time before the
advance meeting for residents under paragraph (d)(2) of this section,
and the public hearing under paragraph (d)(3) of this section, the IHA
shall provide public notice of the advance meeting and the public
hearing in a manner determined by the IHA and which ensures notice to
all duly elected resident organizations. The public notice shall also
include a summary of activities of the previous year (uses of past
funding) and progress update, estimated funding level (i.e., current
year funding or formula amount, whichever the IHA elects); a summary of
the CGP requirements; the estimated time frames for completion of the
required CGP documents; and the requirement for resident participation
in the planning, development and monitoring of modernization activities
under the CGP;
(2) Advance meeting with residents. The IHA shall at least annually
hold a meeting open to all residents and duly elected resident
organizations. The advance meeting shall be held within a reasonable
amount of time before the public hearing under paragraph (d)(3) of this
section. The IHA will provide residents with information concerning the
contents of the IHA's Five-Year Action Plan (and any proposed
amendments to the IHA's Comprehensive Plan to be submitted with the
Annual Submission) so that residents can comment adequately at the
public hearing on the contents of the Five-Year Action Plan and any
proposed amendments to the Comprehensive Plan.
(3) Public hearing. The IHA shall annually hold at least one public
hearing, and any appropriate number of additional hearings, to ensure
ample opportunity for residents of the developments covered by the
Comprehensive Plan, officials of the appropriate governing body, and
other interested parties, to express their priorities and concerns and
discuss the current status of prior approved programs. The IHA shall
give full consideration to the comments and concerns of residents,
local government officials, and other interested parties in developing
its Five-Year Action Plan, or any amendments to its Comprehensive Plan.
(4) Expedited scheduling. IHAs are encouraged to hold the meeting
with residents and duly elected resident organizations under paragraph
(d)(2) of this section, and the public hearing under paragraph (d)(3)
of this section between July 1 (i.e., after the end of the program
year--June 30) and September 30, using the formula amount for the
current FFY. If an IHA elects to use such expedited scheduling, it must
explain at the meeting with residents and duly elected resident
organizations and at the public hearing that the current FFY amount is
not the actual grant amount for the subsequent year, but is rather the
amount used for planning purposes and preparing the draft Performance
and Evaluation Report. It must also explain that the Five-Year Action
Plan will be adjusted when HUD provides notification of the actual
formula amount, and explain which items may be added or deleted to
adjust for the formula amount and that any added items will come from
the Five-Year Action Plan.
(e) Contents of Work Statement. The Work Statement for each year
must include, for each development or on an IHA-wide basis for
management improvements for which work is to be funded out of that
year's grant:
(1) A list of development accounts with a general description of
work items;
(2) The cost for each work item, as well as a summary of cost by
development account;
(3) The IHA-wide or development-specific management improvements to
be undertaken during the year;
(4) For each development and for or any management improvements not
covered by a HUD-approved management improvement plan, a schedule for
the use of current year funds, including target dates for the
obligation and expenditure of the funds. In general, HUD expects that
an IHA will obligate its current year's allocation of CGP funds (except
for its funded replacement reserves) within two years, and expend such
funds within three years, of the date of HUD approval, unless longer
time-frames are approved by HUD due to local differences;
(5) A summary description of the actions to be taken with non-CGP
funds to meet physical and management improvement needs which have been
identified by the IHA in its needs assessments;
(6) Any documentation that HUD needs to assist it in carrying out
its responsibilities under the National Environmental Policy Act (42
U.S.C. 4321) and other related authorities in accordance with
Sec. 950.120 (a) and (b);
(7) Other information, as specified by HUD; and
(8) An IHA resolution approving the Annual Submission or any
amendments thereto, as set forth in Sec. 950.672(d)(7).
(f) Additional submissions with Annual Submission. An IHA must
submit with the Annual Submission:
(1) Any amendments to the Comprehensive Plan, as set forth in
Sec. 950.672(e);
(2) A summary of the IHA's resident consultation activities,
including a summary of the general issues raised by residents and
others during the public comment process and the IHA's response to the
general issues; and
(3) Such additional information as may be prescribed by HUD. HUD
shall review any proposed amendments to the Comprehensive Plan in
accordance with review standards under Sec. 950.675(b).
(g) HUD review and approval of Annual Submission. (1) General. An
Annual Submission accepted in accordance with paragraph (a) of this
section shall be considered to be approved, unless HUD notifies the IHA
in writing, postmarked within 75 calendar days of the date that HUD
receives the Annual Submission for review under paragraph (c) of this
section, that HUD has disapproved the Annual Submission, indicating the
reasons for disapproval, the modifications required to make the Annual
Submission approvable, and the date by which such modifications must be
received by HUD. HUD shall not disapprove an Annual Submission on the
basis that HUD cannot complete its review under this section within the
75-day deadline;
(2) Bases for disapproval for Annual Submission. HUD shall approve
the Annual Submission, except where:
(i) Incomplete insignificant matters. HUD determines that the IHA
has failed to include all required information or documentation in its
Annual Submission;
(ii) Plainly inconsistent with Comprehensive Plan. HUD determines
that the activities and expenditures proposed in the Annual Submission
are plainly inconsistent with the IHA's approved Comprehensive Plan;
(iii) Contradiction of IHA resolution. HUD has evidence which tends
to challenge, in a substantial manner, the certifications contained in
the board resolution, as required by Sec. 950.672(d)(7).
(h) Amendments to Annual Submission. The IHA shall advise HUD of
all changes to the IHA's approved Work Statement for year one in its
Performance and Evaluation Report submitted under Sec. 950.684. Any
additional work items (changes which add work items), except for
emergency work, must be within the IHA's approved Five-Year Action Plan
or receive prior HUD approval.
(i) Extension of time for performance. An IHA may revise the target
dates for fund obligation and expenditure in the approved Annual
Submission whenever any valid delay outside the IHA's control occurs,
as specified by HUD. Such revision is subject to HUD review under
Sec. 950.687(a)(2) as to the IHA's continuing capacity. HUD shall not
review as to an IHA's continuing capacity any revisions to an IHA's
Comprehensive Plan and related statements where the basis for the
revision is that HUD has not provided the amount of assistance set
forth in the Annual Submission, or has not provided such assistance in
a timely manner.
(j) ACC Amendment. After HUD approval of each year's Annual
Submission, HUD and the IHA shall enter into an ACC amendment to obtain
modernization funds. The ACC amendment shall require low-income use of
housing for not less than 20 years from the date of the ACC amendment
(subject to sale of homeownership units in accordance with the terms of
the ACC).
(k) Declaration of Trust. An IHA shall execute and file for record
a Declaration of Trust as provided under the ACC to protect the rights
and interests of HUD throughout the 20-year period during which the IHA
is obligated to operate its developments in accordance with the ACC,
the Act, and HUD regulations and requirements. A Declaration of Trust
is not required for Mutual Help units.
Sec. 950.681 Conduct of modernization activities.
(a) Initiation of activities. After HUD has approved a Five-Year
Action Plan and entered into an ACC amendment or grant agreement with
the IHA for year one of the Plan, the IHA shall undertake the
modernization activities and expenditures set forth in its approved
Work Statement for year one or substitute work items from within the
approved Five-Year Action Plan, subject to the following requirements:
(1) The IHA may undertake the activities using force account or
contract labor, including contracting with an RMC. If the entirety of
modernization activity (including the planning and architectural design
of the rehabilitation) is administered by an RMC, the IHA shall not
retain for any administrative or other reason, any portion of the CGP
funds provided, unless the IHA and the RMC provide otherwise by
contract; and
(2) All activities shall be monitored by resident groups within the
framework and intent of the Partnership Process.
(b) Fund requisitions. To request modernization funds against the
approved Work Statement for year one, the IHA shall comply with
requirements prescribed by HUD.
(c) Contracting requirements. The IHA shall comply with the wage
rate requirements in Sec. 950.120. In addition, the IHA shall comply
with the requirements set forth in subpart B of this part, except as
follows:
(1) Assurance of completion. For each construction or equipment
contract over $25,000, the contractors shall furnish a performance and
payment bond for 100 percent of the contract price or, notwithstanding
24 CFR 85.36(h) and Sec. 950.170, a 20 percent cash escrow, or a 25
percent-letter of credit or, as may be required by law, separate
performance and payments bonds, each for 50 percent or more of the
contract price.
(2) Previous participation. An IHA shall ensure that the contractor
is not on the GSA List of Parties Excluded from Federal Procurement and
Nonprocurement Programs.
(d) Assurance of non-duplication. The IHA shall ensure that there
is no duplication between the activities carried out pursuant to the
CGP, and activities carried out with other funds.
(e) Fiscal closeout of a comprehensive grant. Upon expenditure by
an IHA of all funds, or termination by HUD of the activities funded by
each annual grant, the IHA shall submit the actual modernization cost
certificate, in a form prescribed by HUD, to HUD for review, audit
verification, and approval. The audit shall follow the guidelines
prescribed by 24 CFR part 44, Non-Federal Government Audit
Requirements. If the audited modernization cost certificate discloses
unauthorized expenditures, the IHA shall take such corrective actions
as HUD may direct.
Sec. 950.684 IHA Performance and Evaluation Report.
(a) Submission. For any FFY in which an IHA has received assistance
under this subpart, the IHA shall submit a Performance and Evaluation
Report, in a form and at a time to be prescribed by HUD, describing its
use of assistance in accordance with the approved Five-Year Action
Plan. The IHA must make reasonable efforts to notify residents and
officials of the appropriate governing body of the availability of the
draft report, make copies available to residents in the development
office, and provide residents with at least 30 calendar days in which
to comment on the report.
(b) Content. The report shall include the following:
(1) An explanation of how the IHA has used other funds, such as
Community Development Block Grant program assistance, State or Tribal
assistance, and private funding, for the needs identified in the IHA's
Comprehensive Plan and for the purposes of this subpart;
(2) An explanation of how the IHA has used the CGP funds to address
the needs identified in its Comprehensive Plan and to carry out the
activities identified in its approved Five-Year Action Plan, and shall
specifically address:
(i) Any funds used for emergency needs not set forth in its Five-
Year Action Plan, and
(ii) Any changes to the Annual Submission under Sec. 950.678(h);
(3) The results of the IHA's process for consulting with residents
on the implementation of the plan;
(4) The current status of the IHA's obligations and expenditures
and specifying how the IHA is performing with respect to its
implementation schedules, and an explanation of any necessary revision
to the planned target dates;
(5) A summary of resident, Tribal or local government comments
received on the report; and
(6) A resolution by the IHA Board of Commissioners approving the
Performance and Evaluation Report and containing a certification the
IHA has made reasonable efforts to notify residents in the
development(s) and local government officials of the opportunity to
review the draft and comment on it before its submission to HUD, and
that copies of the report were provided to residents in the development
office, to local government officials, or furnished upon their request.
Sec. 950.687 HUD review of IHA performance.
(a) HUD determination. At least annually, HUD shall carry out such
reviews of the performance of each IHA as may be necessary or
appropriate to make the determinations required by this paragraph,
taking into consideration all available evidence.
(1) Conformity with Comprehensive Plan. HUD will determine whether
the IHA has carried out its activities under this subpart in a timely
manner and in accordance with its Comprehensive Plan.
(i) In making this determination, HUD will review the IHA's
performance to determine whether the modernization activities
undertaken during the period under review conform substantially to the
activities specified in the approved Five-Year Action Plan. HUD will
also review an IHA's schedules which are provided with its Annual
Submission for purposes of determining whether the IHA has carried out
its modernization activities in a timely manner;
(ii) HUD will review an IHA's performance to determine whether the
activities carried out comply with the requirements of the Act,
including the requirement that the work carried out meets the
modernization and energy conservation standards in Sec. 950.603, this
part, and other applicable laws and regulations.
(2) Continuing capacity. HUD will determine whether the IHA has a
continuing capacity to carry out its Comprehensive Plan in a timely
manner. After the first full operational year of CGP, CIAP experience
will not be taken into consideration except where the IHA has not yet
had comparable experience under the CGP.
(i) The primary factors to be considered in arriving at a
determination that a recipient has a continuing capacity are those
described in paragraphs (a)(1) and (a)(3) of this section as they
relate to carrying out the Comprehensive Plan. HUD generally will
consider an IHA to have a continuing capacity if it determines that the
IHA has:
(A) Carried out its activities under the CGP program, as well as
the CIAP, in a timely manner, taking into account the level of funding
available and whether the IHA obligates its modernization funds within
two years from the execution of the ACC amendment and expends such
modernization funds within three years of ACC amendment execution, or
such longer period if agreed to by HUD in an implementation schedule,
except in circumstances beyond the IHA's reasonable control.
(B) Adequately inspected the funded modernization to assure that
the physical work is being carried out in accordance with the plans and
specifications and the modernization and energy conservation standards
(or, in the case of an IHA's performance under CIAP, whether the IHA
has carried out the physical work in accordance with the HUD-approved
budget and in conformance with the modernization and energy
conservation standards) and that any HUD monitoring findings relating
to the quality of the physical work have been, or are being, resolved);
(C) Established and maintained internal controls for its
modernization program in accordance with HUD requirements for financial
management and accounting, as determined by the fiscal audit;
(D) Administered its modernization contracts in accordance with a
HUD-approved procurement policy, which meets the requirements of 24 CFR
85.36(a) and Sec. 950.160;
(E) Carried out its activities in accordance with its Comprehensive
Plan and HUD requirements; and
(F) Has satisfied, or made reasonable progress toward satisfying,
the performance standards prescribed in paragraph (a)(3) of this
section as they relate to activities under the CGP program;
(ii) HUD will give particular attention to IHA efforts to
accelerate the progress of the program and to prevent the recurrence of
past deficiencies or noncompliance with applicable laws and
regulations.
(3) Reasonable progress. HUD shall determine whether the IHA has
satisfied, or has made reasonable progress towards satisfying, the
following performance standards:
(i) With respect to the physical condition of each development,
whether the work items being carried out by the IHA are in conformity
with the modernization and energy conservation standards in
Sec. 950.603, and whether the IHA has brought, or is making reasonable
progress toward bringing, all of its developments to these standards,
in accordance with its physical needs assessment; and
(ii) With respect to the management condition of the IHA, whether
the IHA is making reasonable progress in implementing, the work items
(specified in its annual submission and Five-Year Action Plan),
necessary to eliminate the deficiencies identified in its management
needs assessment; and
(iii) In determining whether the IHA has made reasonable progress,
HUD will take into account the level of funding available and whether
the IHA obligates its modernization funds within two years from the
execution of the ACC amendment and expends such modernization funds
within three years of ACC amendment execution, or such longer period if
agreed to by HUD in an implementation schedule. The IHA must
demonstrate to HUD's satisfaction that any lack of timeliness (beyond
the time periods specified in this paragraph or date specified in a HUD
approved implementation schedule) has resulted from factors beyond the
IHA's reasonable control.
(b) Notice of deficiency. Based on HUD reviews of IHA performance
and findings of any of the deficiencies in paragraph (d) of this
section, HUD may issue to the IHA a notice of deficiency stating the
specific program requirements which the IHA has violated and requesting
the IHA to take any of the actions in paragraph (e) of this section.
(c) Corrective action order. (1) Based on HUD reviews of IHA
performance and findings of any of the deficiencies paragraph (d) of
this section, HUD may issue to the IHA a corrective action order,
whether or not a notice of deficiency has previously been issued in
regard to the specific deficiency on which the corrective action order
is based. HUD may order corrective action at any time by notifying the
IHA of the specific program requirements which the IHA has violated,
and specifying that any of the corrective actions listed in paragraph
(e) of this section must be taken. HUD shall design corrective action
to prevent a continuation of the deficiency, mitigate any adverse
effects of the deficiency to the extent possible, or prevent a
recurrence of the same or similar deficiencies.
(2) Before ordering corrective action, HUD will notify the IHA and
give it an opportunity to consult with HUD regarding the proposed
action.
(3) Any corrective action ordered by HUD shall become a condition
of the grant agreement.
(4) If HUD orders corrective action by an IHA in accordance with
this section, the IHA's Board of Commissioners must notify affected
residents of HUD's determination, the bases for the determination, the
conditioning requirements imposed under this paragraph, and the
consequences to the IHA if it fails to comply with HUD's requirements.
(d) Basis for corrective action. HUD may order an IHA to take
corrective action only if HUD determines:
(1) The IHA has not submitted a performance and evaluation report,
in accordance with Sec. 950.684;
(2) The IHA has not carried out its activities under the CGP
program in a timely manner and in accordance with its Comprehensive
Plan or HUD requirements, as described in paragraph (a)(1) of this
section;
(3) The IHA does not have a continuing capacity to carry out its
Comprehensive Plan in a timely manner or in accordance with its
Comprehensive Plan or HUD requirements, as described in paragraph
(a)(2) of this section;
(4) The IHA has not satisfied, or has not made reasonable progress
towards satisfying, the performance standards specified in paragraph
(a)(3) of this section;
(5) An audit conducted in accordance with 24 CFR part 44 and
Sec. 950.120, or pursuant to other HUD reviews (including monitoring
findings) reveals deficiencies that HUD reasonably believes require
corrective action;
(6) The IHA has failed to repay HUD for amounts awarded under the
CGP program that were improperly expended; or
(7) The IHA has been determined to be high risk, in accordance with
Sec. 950.135.
(e) Types of corrective action. HUD may direct an IHA to take one
or more of the following corrective actions:
(1) Submit additional information:
(i) Concerning the IHA's administrative, planning, budgeting,
accounting, management, and evaluation functions, to determine the
cause for a IHA not meeting the standards in paragraph (a) (1), (2), or
(3) of this section;
(ii) Explaining any steps the IHA is taking to correct the
deficiencies;
(iii) Documenting that IHA activities were not inconsistent with
the IHA's annual statement or other applicable laws, regulations, or
program requirements; and
(iv) Demonstrating that the IHA has a continuing capacity to carry
out the Comprehensive Plan in a timely manner;
(2) Submit schedules for completing the work identified in its Work
Statements and report periodically on its progress on meeting the
schedules;
(3) Notwithstanding 24 CFR 85.36(g), submit to HUD the following
documents for prior approval, which may include, but are not limited
to:
(i) Proposed agreement with the architect/engineer (prior to
execution);
(ii) Complete construction and bid documents (prior to soliciting
bids);
(iii) Proposed award of contracts, including construction and
equipment contracts and management contracts; or
(iv) Proposed contract modifications prior to issuance, including
modifications to construction and equipment contracts, and management
contracts.
(4) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, annual statement, or performance and
evaluation report;
(5) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, Five-Year Action Plan, or Performance and
Evaluation Report;
(6) Reimburse, from non-HUD sources, one or more program accounts
for any amounts improperly expended;
(7) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies.
(8) Submit to an alternative management strategy which may involve
third-party oversight or administration of the modernization function
(see Sec. 950.669(d)); and
(9) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies.
(f) Failure to take corrective action. In cases where HUD has
ordered corrective action and the IHA has failed to take the required
actions within a reasonable time, as specified by HUD, HUD may take one
or more of the following steps:
(1) Withhold some or all of the IHA's grant;
(2) Declare a breach of the ACC grant amendment with respect to
some or all of the IHA's functions; or
(3) Any other sanction authorized by law or regulation.
(g) Reallocation of funds that have been withheld. Where HUD has
withheld for a prescribed period of time some or all of an IHA's annual
grant, HUD may reallocate such amounts to other IHAs/PHAs under the CGP
program, subject to approval in appropriations acts. The reallocation
shall be made to IHAs which HUD has determined to be administratively
capable under Sec. 950.135, and to PHAs under the CGP program which are
not designated as either troubled or mod troubled under the PHMAP at 24
CFR part 901, based upon the relative needs of these IHAs and PHAs, as
determined under the formula at Sec. 950.601.
(h) Right to appeal. Before withholding some or all of the IHA's
annual grant, declaring a breach of the ACC grant amendment, or
reallocating funds that have been withheld, HUD will notify the IHA and
give it an opportunity, within a prescribed period of time, to present
to the Assistant Secretary for Public and Indian Housing any arguments
or additional facts and data concerning the proposed action.
(i) Notification of residents. The IHA's Board of Commissioners
must notify affected residents of HUD's final determination to withhold
funds, declare a breach of the ACC grant amendment, or reallocate
funds, as well as the basis for, and the consequences resulting from,
such a determination.
(j) Recapture. In addition, HUD may recapture for good cause any
grant amounts previously provided to an IHA, based upon a determination
that the IHA has failed to comply with the requirements of the CGP
program. Before recapturing any grant amounts, HUD will notify the IHA
and give it an opportunity to appeal in accordance with
Sec. 950.687(h). Any reallocation of recaptured amounts will be in
accordance with Sec. 950.687(g). The IHA's board of Commissioners must
notify affected residents of HUD's final determination to recapture any
funds.
Subpart J--Operating Subsidy
Sec. 950.701 Purpose and applicability.
(a) Implementation of section 9(a). (1) The purpose of this subpart
is to establish standards and policies for the distribution of
operating subsidy in accordance with section 9(a) of the United States
Housing Act of 1937 (42 U.S.C. 1437g(a)). Section 9(a) authorizes the
Secretary of Housing and Urban Development (HUD) to make annual
contributions for the operation of IHA-owned rental housing (operating
subsidy).
(2) This subpart establishes standards for the cost of providing
comparable services as determined in accordance with a formula
representing the operations of a prototype well-managed project, taking
into account the character and location of the project and the
characteristics of the families served. These standards, policies and
procedures are called the Performance Funding System (PFS), as
described in this subpart. The provisions of PFS are intended to
recognize and give an incentive for efficient and economical management
and to avoid the expenditure of Federal funds to compensate for
excessive costs attributable to poor or inefficient management. PFS is
intended to provide the incentive and financial discipline for
excessively high-cost IHAs to improve their management efficiency.
(b) Applicability. This subpart is applicable to all IHA-owned
rental units under Annual Contributions Contracts. This subpart is not
applicable to the Section 23 Leased Housing Program, the Section 23
Housing Assistance Payments Program, the Section 8 Housing Assistance
Payments Program, the Mutual-Help Program, or the Turnkey III
Homeownership Opportunity Program. Provisions regarding operating
subsidy for the homeownership programs are found in the applicable
subpart of this rule (subpart E for Mutual Help of this part, and
subpart G for Turnkey III of this part).
Sec. 950.705 Determination of amount of operating subsidy under PFS.
The amount of operating subsidy for which each IHA is eligible
shall be determined as follows: The projected operating income level is
subtracted from the total expense level (Allowable Expense Level plus
Utilities Expense Level). These amounts are per-unit per-month dollar
amounts, and must be multiplied by the Unit Months Available.
Transition funding, if applicable, and other costs as specified in
paragraphs (b) through (e) of Sec. 950.720 are then added to this total
in order to determine the total amount of operating subsidy for the
requested budget year, exclusive of consideration of the cost of an
independent audit. As an independent operating subsidy eligibility
factor, an IHA may receive operating subsidy in an amount, approved by
HUD, equal to the actual or estimated cost of the independent audit to
be prorated to operations of the IHA-owned rental housing (under
Sec. 950.720(a)). (See Sec. 950.730 regarding adjustments.)
Sec. 950.710 Computation of allowable expense level.
The IHA shall compute its Allowable Expense Level (AEL) using forms
prescribed by HUD, as follows:
(a) Computation of Base Year Expense Level. The Base Year Expense
Level includes payments in lieu of taxes (PILOT) required by a
Cooperation Agreement even if PILOT is not included in the approved
operating budget for the base year because of a waiver of the
requirements by the local taxing jurisdiction(s). The Base Year Expense
Level includes all other operating expenditures as reflected in the
IHA's operating budget for the base year approved by HUD except the
following:
(1) Utilities expense;
(2) Cost of an independent audit;
(3) Adjustments applicable to budget years before the base year;
(4) Expenditures supported by supplemental subsidy payments
applicable to budget years before the base year;
(5) All other expenditures that are not normal fiscal year
expenditures as to amount or as to the purpose for which expended; and
(6) Expenditures that were funded from a nonrecurring source of
income.
(b) Adjustment. In compliance with the six exclusions set forth in
paragraph (a) of this section, the IHA shall adjust the AEL by
excluding any of these items from the Base Year Expense Level if this
has not already been accomplished. If such adjustment is made in the
second or some later fiscal year of the PFS, the AEL shall be adjusted
in the year in which the adjustment is made, but the adjustment shall
not be applied retroactively. If the IHA does not make these
adjustments, the HUD Field Office shall compute the adjustments.
(c) Computation of ``Formula Expense Level''. The IHA shall compute
its Formula Expense Level in accordance with a HUD- prescribed formula
that estimates the cost of operating an average unit in a particular
IHA's inventory. The formula takes into account such data as the number
of two or more bedroom units, ratio of two or more bedroom units in
high-rise family projects, ratio of units with three or more bedrooms,
local government wage rates, and number of pre-1940 rental units
occupied by poor households. It uses weights, and a local inflation
factor assigned each year, to derive a Formula Expense Level for the
current year and the requested budget year. The weights of the formula
and the formula are subject to updating by HUD.
(d) Computation of Allowable Expense Level. The IHA shall compute
its Allowable Expense Level as follows:
(1) Allowable Expense Level for first budget year under PFS where
Base Year Expense Level does not exceed the top of the range. The top
of the range is defined as: FEL plus $10.31 for fiscal years starting
before April 1, 1992, and FEL multiplied by 1.15 for fiscal years
starting on or after April 1, 1992. Every IHA whose Base Year Expense
Level is less than the top limit of the range shall compute its AEL for
the first budget year under PFS by adding the following to its Base
Year Expense Level (before adjustment under Sec. 950.730);
(i) Any increase approved by HUD in accordance with
Sec. 950.730(a);
(ii) The increase (decrease) between the Formula Expense Level for
the base year and the Formula Expense Level for the first budget year
under PFS; and
(iii) The sum of the Base Year Expense Level, and any amounts
described in paragraphs (d)(1) (i) and (ii) of this section multiplied
by the local inflation factor.
(2) Allowable Expense Level for first budget year under PFS where
Base Year Expense Level exceeds the top of the range. The top of the
range is defined as: FEL plus $10.31 for fiscal years starting before
April 1, 1992, and FEL multiplied by 1.15 for fiscal years starting on
or after April 1, 1992. Every IHA whose Base Year Expense Level exceeds
the top of the range shall compute its AEL for the first budget year
under PFS by adding the following to the top of the range (not to its
Base Year Expense Level, as in paragraph (d)(1) of this section):
(i) The increase (decrease) between the Formula Expense Level for
the base year and the Formula Expense Level or the first budget year
under PFS;
(ii) The sum of the figure equal to the top of the range and the
increase (decrease) described in paragraph (d)(2)(i) of this section,
multiplied by the local inflation factor. (If the Base Year Expense
Level is above the allowable expense level, computed as provided in
paragraph (d) of this section, the IHA may be eligible for transition
funding under Sec. 950.735.)
(3) Allowable Expense Level for first budget year under PFS for a
new project. A new project of a new IHA or a new project of an existing
IHA that the IHA decides to place under a separate ACC, which did not
have a sufficient number of units available for occupancy in the base
year to have a level of operations representative of a full fiscal year
of operation is considered to be a ``new project''. The AEL for the
first budget year under PFS for a ``new project'' will be based on the
AEL for a comparable project, as determined by the HUD Field Office.
The IHA may suggest a project or projects it believes to be comparable.
(4) Allowable Expense Level for budget years after the first budget
year under PFS that begins on or after April 1, 1986. For each budget
year after the first budget year under PFS that begin on or after April
1, 1986, the AEL shall be computed as follows:
(i) The allowable expense level shall be increased by any increase
to the AEL approved by HUD under Sec. 950.720(c);
(ii) The AEL for the current budget year also shall be increased
(or decreased) by either;
(A) If the IHA has not experienced a change in the number of its
units in excess of 5 percent or 1,000 units, whichever is less, since
the last adjustment to the AEL based on paragraph (d)(4)(ii)(B) of this
section, the AEL shall be increased by one-half of one percent (.5
percent); or
(B) If the IHA has experienced a change in the number of units in
excess of 5 percent or 1,000 units, whichever is less, since the last
adjustment to the AEL based on this paragraph (d)(4)(ii)(B) of this
section, it shall use the increase (decrease) between the Formula
Expense Level for the current budget year and the Formula Expense Level
for the requested budget year. The IHA characteristics that shall be
used to compute the Formula Expense Level for the current budget year
shall be the same as those that were used for the requested budget year
when the last adjustment to the AEL was made based on this paragraph
(d)(4)(ii)(B) of this section, except that the number of interim years
in which the .5 percent adjustment was made under paragraph
(d)(4)(ii)(A) of this section shall be added to the average age that
was used for the last adjustment; and
(iii) The amount computed in accordance with paragraphs (d)(4) (i)
and (ii) of this section shall be multiplied by the local inflation
factor.
Example:
FY 1987. Assume that: (1) The IHA has experienced no change in
the number of its units, (2) the AEL for the IHA's FY 1986 is
$64.00, and (3) the applicable local inflation factor is 6 percent
(expressed as 1.06). The AEL for FY 1987 is $68.18, computed as
follows:
1. Allowable Expense Level for FY 1986....................... $64.00
2. Delta: Increase (or Decrease) in Formula Expense Level
($64.00 x .5 percent)....................................... .32
----------
3. Sum (line 1 plus line 2).................................. 64.32
4. Local Inflation Factor.................................... 1.06
----------
5. Allowable Expense Level for FY 1987 (line 3 multiplied by
line 4)..................................................... $68.18
FY 1988. Assume that the IHA has deprogrammed (e.g., demolished
or sold) a project that represents seven percent of its units, and
that the last time an adjustment to the AEL was made based on
paragraph (d)(4)(ii)(B) of this section was in its FY 1985, at which
time the IHA had the following characteristics for its requested
budget year: average age of 10 years, average project height of 5
stories, and average unit size of 4 bedrooms. The Formula Expense
Level for the current budget year is calculated using 12 years (10
years plus two years in which the standard .5 percent adjustment was
used), 5 stories and 4 bedrooms.
Also assume that Formula Expense Level calculated based on these
characteristics is $70.00 and that the IHA average characteristics
for the requested budget year are now an average age of 8 years,
average project height of 4 stories and average unit size of 2
bedrooms, resulting in a Formula Expense Level for the requested
budget year of $68.00. The Formula Expense Level for the requested
budget year, therefore, decreases by $2.00. Assuming that the local
inflation factor is 4.5 percent (expressed as 1.045), the AEL for FY
1988 is $69.16, computed as follows:
1. Allowable Expense Level for FY 1987....................... $68.18
2. Delta (or Decrease) in Formula Expense Level.............. (2.00)
----------
3. Sum (line 1 plus line 2).................................. 66.18
4. Local Inflation Factor.................................... 1.045
----------
5. Allowable Expense Level for FY 1988 (line 3 multiplied by
line 4)..................................................... $69.16
It should be noted that the Delta in line 2 of the example
reflects the application of the formula weights, constant and local
inflation factor for the requested budget year applied first to the
IHA characteristics for the current budget year and then to the IHA
characteristics for the requested budget year, to determine the
respective Formula Expense Levels. The local inflation factor shown
on line 4 of the example is the same one used in determining the
Formula Expense Levels.
(5) Allowable Expense Level for budget years after the first budget
year under PFS that begins on or after April 1, 1992. For each budget
year after the first budget year under PFS that begins on or after
April 1, 1992, the AEL shall be computed as follows:
(i) The Allowable Expense Level shall be increased by any increase
to the AEL approved by HUD under Sec. 950.720(c);
(ii) The AEL for the Current Budget Year also shall be adjusted as
follows:
(A) Increased by one-half of one percent (.5 percent); and
(B) If the IHA has experienced a change in the number of units in
excess of 5 percent or 1,000 units, whichever is less, since the last
adjustment to the AEL based on this paragraph (d)(5)(ii)(B) of this
section, it shall use the increase (decrease) between the Formula
Expense Level for the Current Budget Year and the Formula Expense Level
for the Requested Budget Year. The IHA's characteristics that shall be
used to compute the Formula Expense Level for the Current Budget Year
shall be the same as those that applied to the Requested Budget Year
when the last adjustment to the AEL was made based on this paragraph
(d)(5)(ii)(B) of this section, except that the number of interim years
in which the .5 percent adjustment was made under paragraph
(d)(5)(ii)(A) of this section shall be added to the average age that
was used for the last adjustment.
(iii) The amount computed in accordance with paragraphs (d)(5) (i)
and (ii) of this section shall be multiplied by the Local Inflation
Factor.
(6) Adjustment of Allowable Expense Level for budget years after
the first budget year under PFS. HUD may adjust the AEL of budget years
after the first year under PFS under the provisions of Secs. 950.710(b)
or 950.720(c).
Sec. 950.715 Computation of utilities expense level.
(a) General. In recognition of the rapid rises which occur in
utilities costs, the wide diversity among IHAs as to types of utilities
services used and the manner in which utilities payments are allocated
between IHAs and tenants, and the fact that utilities rates charged by
suppliers are beyond the control of the IHA, the PFS treats utilities
expenses separately from other IHA expenses. Utilities expenses are,
therefore, excluded from the IHA's allowable expense level and the PFS
provides for computation of the amount of operating subsidy for
utilities costs based upon a calculated utilities expense of each IHA.
Accordingly, the IHA's utilities expense level for the requested budget
year shall be computed by multiplying the allowable utilities
consumption level (AUCL) per-unit per-month for each utility,
determined as provided in paragraph (c) of this section, by the
projected utility rate determined as provided in paragraph (b) of this
section. The AUCL for space heating utilities will be adjusted after
the end of the affected fiscal year pursuant to the instructions of
paragraph (d) of this section.
(b) Utilities rates. (1) The currently applicable rates, with
consideration of adjustments and pass-throughs, in effect at the time
the operating budget is submitted to HUD will be used as the utilities
rates for the requested budget year, except that, when the appropriate
utility commission has, before the date of submission of the operating
budget to HUD, approved and published rate changes to be applicable
during the requested budget year, the future approved rates may be used
as the utilities rates for the entire requested budget year.
(2) If an IHA takes action, such as a well-head purchase of natural
gas or administrative appeals or legal action beyond normal public
participation in rate-making proceedings to reduce the rate it pays for
utilities (including water, fuel oil, electricity, and gas), then the
IHA will be permitted to retain one-half of the cost savings during the
first 12 months attributable to its actions. Upon determination that
the action was cost-effective in the first year, the IHA may be
permitted to retain one-half the annual cost savings for an additional
period not to exceed six years, if the actions continue to be cost-
effective. See also paragraph (f) of this section and Sec. 950.730(c).
(c) Computation of ``Allowable Utilities Consumption Level''. The
Allowable Utilities Consumption Level (AUCL) used to compute the
utilities expense level of an IHA for the requested budget year
generally will be based upon the availability of consumption data. For
project utilities where consumption data are available for the entire
rolling base period, the computation will be in accordance with
paragraph (c)(1) of this section. Where data are not available for the
entire period, the computation will be in accordance with paragraph
(c)(2) of this section, unless the project is a new project, in which
case the computation will be in accordance with paragraph (c)(3) of
this section. For a project where the IHA has taken special energy
conservation measures that qualify for special treatment in accordance
with paragraph (g)(1) of this section, the computation of the AUCL may
be made in accordance with paragraph (c)(4) of this section. The AUCL
for all of an IHA's projects is the sum of the amounts determined using
all of the paragraphs in this paragraph (c), as appropriate.
(1) Rolling Base Period System. For project utilities with
consumption data for the entire rolling base period, the AUCL is the
average amount consumed per unit per month during the rolling base
period, adjusted in accordance with paragraph (d) of this section. The
IHA shall determine the average amount of each of the utilities
consumed during the rolling base period (i.e., the 36-month period
ending 12 months prior to the first day of the requested budget year).
(i) IHA fiscal years affected. The rolling base period shall be
used to compute the AUCL submitted with the operating budgets.
(ii) An example of a rolling base is as follows:
------------------------------------------------------------------------
IHA fiscal year (affected fiscal year) Rolling base period
------------------------------------------------------------------------
Beginning Ending Begins Ends
------------------------------------------------------------------------
1-1-92..... 12-31-92 (1st year).............. 1-1-88 12-31-90
1-1-93..... 12-31-93 (2nd year).............. 1-1-89 12-31-91
------------------------------------------------------------------------
(2) Alternative method where data is not available for the entire
rolling base period:
(i) If the IHA has not maintained or cannot recapture consumption
data regarding a particular utility from its records for the whole
rolling base period mentioned in paragraph (c)(1) of this section, it
shall submit consumption data for that utility for the last 24 months
of its rolling base period to the HUD Field Office for approval. If
this is not possible, it shall submit consumption data for the last 12
months of its rolling base period. The IHA also shall submit a written
explanation of the reasons that data for the whole rolling base period
is unavailable.
(ii) In those cases where an IHA has not maintained or cannot
recapture consumption data for a utility for the entire rolling base
period, comparable consumption for the greatest of either 36, 24, or 12
months, as needed, shall be used for the utility for which the data is
lacking. The comparable consumption shall be estimated based upon the
consumption experienced during the rolling base period of comparable
project(s) with comparable utility delivery systems and occupancy. The
use of actual and comparable consumption by each IHA, other than those
IHAs defined as new projects in paragraph (c)(3) of this section, will
be determined by the availability of complete data for the entire 36-
month rolling base period. Appropriate utility consumption records,
satisfactory to HUD, shall be developed and maintained by all IHAs so
that a 36-month rolling average utility consumption per unit per month
under paragraph (c)(1) of this section can be determined.
(iii) If an IHA cannot develop the consumption data for the rolling
base period or for 12 or 24 months of the rolling base period, either
from its own project(s) data, or by using comparable consumption data
the actual per-unit per-month utility expenses stated in paragraph (e)
of this section shall be used as the utilities expense level and no
change factor shall be applied.
(3) Computation of Allowable Utilities Consumption Levels for New
Projects. (i) A new project, for the purpose of establishing the
rolling base period and the utilities expense level, is defined as
either:
(A) A project that had not been in operation during at least 12
months of the rolling base period, or a project that enters management
after the rolling base period and before the end of the requested
budget year, or
(B) A project that during or after the rolling base period, has
experienced conversion from one energy source to another; interruptible
service; deprogrammed units, a switch from tenant-purchased to IHA-
supplied utilities; or a switch from IHA-supplied to tenant-purchased
utilities.
(ii) The actual consumption for new projects shall be determined so
as not to distort the rolling base period in accordance with a method
prescribed by HUD.
(4) Freezing the Allowable Utilities Consumption Level (AUCL).
(i) Notwithstanding the provisions of paragraphs (c)(1) and (c)(2)
of this section, if an IHA undertakes energy conservation measures that
are approved by HUD under paragraph (g) of this section, the AUCL for
the project and the utilities involved may be frozen during the
contract period. Before the AUCL is frozen, it shall be adjusted to
reflect any energy savings resulting from the use of any HUD funding.
The AUCL is then frozen at the level calculated for the year during
which the conservation measures initially will be implemented, as
determined in accordance with paragraph (g) of this section.
(ii) See Sec. 950.730(c)(2)(ii) for the method of adjusting the
AUCL for heating degree days.
(iii) If the AUCL is frozen during the contract period, the annual
three-year rolling base procedures for computing the AUCL shall be
reactivated after the IHA satisfies the conditions of the contract. The
three years of consumption data to be used in calculating the AUCL
after the end of the contract period will be as follows:
(A) First year: The energy consumption during the year before the
year in which the contract ended and the energy consumption for each of
the two years before installation of the energy conservation
improvements;
(B) Second year: The energy consumption during the year the
contract ended, energy consumption during the year before the contract
ended, and energy consumption during the year before installation of
the energy conservation improvements;
(C) Third year: The energy consumption during the year after the
contract ended, energy consumption during the year the contract ended,
and energy consumption during the year before the contract ended.
(d) Adjustment to utilities used for space heating. For project
utilities with consumption data for the entire rolling base period, and
for new projects, consumption of utilities used for space heating shall
be adjusted, after the end of the affected year, using a change factor
as follows:
(1) Adjustment of the rolling base period data. (i) Use of Change
Factors. A change factor will be developed each year by HUD that
indicates the relationship of the affected IHA fiscal year Heating
Degree Days (HDD) to the average HDD of the rolling base period. This
change factor is to be used to establish an AUCL for utilities used for
space heating which reflects the severity of the winter weather of the
affected IHA fiscal year. The change factors are developed by the
National Climatic Center of the Department of Commerce for each
established standard weather division of the country, by IHA fiscal
year. Change factors will be supplied by HUD to the IHAs. When a change
factor is greater than 1.000, it means that the HDD of the affected
fiscal year were greater than the average annual HDD of the rolling
base period. An example of the effect of the change factor on the
rolling base period consumption is:
Assume:
Affected fiscal year HDD--5,250
Rolling Base Period average HDD--5,000
Rolling Base Period average annual consumption for heating purposes--
1,000 gallons
Results:
Change Factor is (5,250 divided by 5,000) = 1.050
Adjusted Rolling Base Period average consumption for heating purposes
(1,000 x 1.050) = 1,050 gallons
(ii) Application of change factor to consumption of the Rolling
Base Period. The change factor is to be applied only to the consumption
readings of meters of utilities, or gallons of oil, or tons of coal
used for the purpose of generating heat for dwelling units and other
IHA associated buildings. The change factor shall not be applied to the
consumption readings of meters of utilities not used for the purpose of
generating heat; e.g., water and sewer or electricity used solely for
non-heating purposes. The change factor shall be applied to the total
consumption reading of meters of utilities, or gallons of oil, or tons
of coal used for heating even though the same meter or same energy
source is used for other purposes; e.g., heating and cooking gas usage
metered on the same meter or oil used for space heating and also
heating of water. Such consumption for each fiscal year of the rolling
base period shall be adjusted by the change factor. The adjusted
consumption for each year shall be totalled. These totals then will be
averaged. The consumption readings of meters of utilities not used for
heating (not adjusted by the change factor) shall be included in the
total consumption.
Example Showing Application of Change Factor
------------------------------------------------------------------------
Base years
--------------------------------------
1st year 2nd year 3rd year
------------------------------------------------------------------------
Gas meters used for heating:
No. 1234 (In therms)........... 15,000 18,000 17,000
No. 2345....................... 10,000 12,000 11,000
Subtotal..................... 25,000 30,000 28,000
Change Factor (from HUD)......... x 1.050 x 1.050 x 1.050
Subtotal..................... 26,250 31,500 29,400
Gas meters not used for heating:
No. 3456....................... 2,500 2,600 2,650
Total adjusted allowable gas
consumption level............... 28,750 34,100 32,050
------------------------------------------------------------------------
(iii) IHAs will be required to use change factors of less than
1.000. Change factors are listed by county. If an IHA manages units in
more than one county and those counties have different change factors,
the above calculation shall be done considering the units in each
county and each county's assigned change factor. If an IHA manages
units in an independent city not within the jurisdiction of a county,
it shall:
(A) If within one county, use that county's change factor; or
(B) If the city abuts more than one county, use the average of the
change factors of the contiguous counties.
(2) Adjusted consumption for new projects. (i) Use of change
factor. For new projects, the IHA shall apply the change factor to the
HUD approved consumption level of utilities used for heating.
(ii) Application of change factor to consumption of new projects.
The annual AUCL for new projects shall be adjusted by applying the
change factor to the estimated consumption where the utility is used
for heating in part or in total. This consumption shall be from a
comparable project during the permissible rolling base period. Any
other consumption of this utility which is not used for heating shall
not be adjusted by the change factor, but the estimated annual
consumption based upon data from a comparable project during the
permissible rolling base period shall be added to the adjusted
consumption.
(e) Utilities expense level where consumption data for the full
rolling base period is unavailable. If an IHA does not obtain the
consumption data for the entire rolling base period, or for 12 or 24
months of the rolling base period, either for its own project(s) or by
using comparable consumption data as required in paragraph (c)(2) of
this section, it shall request HUD Field Office approval to use actual
per-unit per-month utility expenses. These expenses shall exclude
utilities labor and other utilities expenses. The actual per-unit per-
month utility expenses shall be taken from the year-end statement of
operating receipts and expenditures Form HUD-52599 (Office of
Management and Budget approval number 2577-0067), prepared for the IHA
fiscal year which ended 12 months before the beginning of the IHA
requested budget year (e.g., for an IHA fiscal year beginning January
1, 1983, the IHA would use data from the fiscal year ended December 31,
1981). No change factor shall be applied to actual per-unit per-month
utility expenses, and subsequent adjustments will not be approved for a
budget year for which the utility expense level is established based
upon actual per-unit per-month utility expenses.
(f) Adjustments. IHAs shall request adjustments of utilities
expense levels in accordance with Sec. 950.730(c), which requires an
adjustment based upon a comparison of actual experience and estimates
of consumption (after adjustment for heating degree days in accordance
with paragraph (d) of this section) and of utility rates.
(g) Incentives for energy conservation improvements. If an IHA
undertakes energy conservation measures (including measures to save
water, fuel oil, electricity, and gas) that are financed by an entity
other than the Secretary, such as physical improvements financed by a
loan from a utility or governmental entity, management of costs under a
performance contract, or a shared savings agreement with a private
energy service company, the IHA may qualify for one of two possible
incentives under this part. For an IHA to qualify for these incentives,
HUD approval shall be obtained. Approval will be based upon a
determination that payments under the contract can be funded from the
reasonably anticipated energy cost savings, and the contract period
does not exceed 12 years.
(1) If the contract allows the IHA's payments to be dependent on
the cost savings it realizes, the IHA shall use at least 50 percent of
the cost savings to pay the contractor. With this type of contract, the
IHA may take advantage of a frozen AUCL under paragraph (c)(4) of this
section, and it may use the full amount of the cost savings, as
described in Sec. 950.730(c)(2)(ii).
(2) If the contract does not allow the IHA's payments to be
dependent on the cost savings it realizes, then the AUCL will continue
to be calculated in accordance with paragraphs (c)(1) through (c)(3) of
this section, as appropriate; the IHA will be able to retain part of
the cost savings, in accordance with Sec. 950.730(c)(2)(i); and the IHA
will qualify for additional operating subsidy eligibility (above the
amount based on the allowable expense level) to cover the cost of
amortizing the improvement loan during the term of the contract, in
accordance with Sec. 950.730(f).
(Approved by the Office of Management and Budget under control
number 2577-0029.)
Sec. 950.720 Other costs.
(a) Costs of independent audits. (1) Eligibility to receive
operating subsidy for independent audits is considered separately from
the PFS. However, the IHA shall not request, nor will HUD approve, an
operating subsidy for the cost of an independent audit if the audit has
been funded by subsidy in a prior year. The IHA's estimate of cost of
the independent audit is subject to adjustment by HUD. If the IHA
requires assistance in determining the amount of cost to be estimated,
the HUD Field Office should be contacted.
(2) An IHA that is required by the Single Audit Act (31 U.S.C.
7501-7507) (see 24 CFR part 44) to conduct a regular independent audit
may receive operating subsidy to cover the cost of the audit. The
amount shall be prorated between the IHA's development cost budget and
one or all of its operating budgets, as appropriate. The estimated cost
of an independent audit, applicable to the operations of IHA-owned
rental housing, is not included in the allowable expense level, but it
is allowed in full in computing the amount of operating subsidy under
Sec. 950.705.
(3) An IHA that is exempt from the audit requirements of the Single
Audit Act (31 U.S.C. 7501-7507); see 24 CFR part 44) may receive
operating subsidy to offset the cost of an independent audit chargeable
to operations (after the end of the initial operating period) if the
IHA chooses to have an audit.
(b) Costs attributable to units approved for deprogramming and
vacant.
(1) Units approved for deprogramming are those for which the IHA's
formal request has been approved by HUD but for which deprogramming has
not been completed. Costs for these units may be eligible for
inclusion, but shall be limited to the minimum services and protection
necessary to protect and preserve the units until the units are
deprogrammed. Costs attributable to units temporarily unavailable for
occupancy because they are utilized for IHA related activities are not
eligible for inclusion. In determining the PFS operating subsidy, these
units shall not be included in the calculation of unit months
available. Units approved for deprogramming shall be listed by the IHA
and supporting documentation regarding direct costs attributable to
such units shall be included as part of the operating budget in which
the IHA requests operating subsidy for these units. If the IHA requires
assistance in this matter, the HUD Field Office should be contacted.
(2) Units approved for nondwelling use to promote economic self-
sufficiency services and anti-drug activities are eligible for
operating subsidy under the conditions provided in this paragraph
(b)(2), and the costs attributable to them are to be included in the
operating budget. If a unit satisfies the conditions stated in
paragraphs (b)(2) (i) through (v) of this section, it will be eligible
for subsidy at the rate of the AEL for the number of months the unit is
devoted to such use. Approval will be given for a period of no more
than three years. Renewal of the approval to allow payments after that
period may be made only if the IHA can demonstrate that no other
sources for paying the non-utility operating costs of the unit are
available:
(i) The unit must be used for either economic self-sufficiency
activities directly related to maximizing the number of employed
residents or for anti-drug programs directly related to ridding the
development of illegal drugs and drug-related crime. The activities
must be directed toward and for the benefit of residents of the
development.
(ii) The IHA must demonstrate that space for the service or program
is not available elsewhere in the locality and that the space used is
safe and suitable for its intended use or that resources are committed
to make the space safe and suitable.
(iii) The IHA must demonstrate satisfactorily that other funding is
not available to pay for the non-utility operating costs. All rental
income generated as a result of the activity must be reported as income
in the operating subsidy calculation.
(iv) Operating subsidy may be approved for only one site (involving
one or more contiguous units) per Indian housing development for
economic self-sufficiency services or anti-drug programs, and the
number of units involved should be the minimum necessary to support the
service or program. Operating subsidy for any additional sites per
development can only be approved by HUD Headquarters.
(v) The IHA must submit a certification with its Performance
Funding System calculation that the units are being used for the
purpose for which they were approved and that any rental income
generated as a result of the activity is reported as income in the
operating subsidy calculation. The IHA must maintain specific
documentation of the units covered. Such documentation should include a
listing of the units and project/management control numbers.
(c) Costs attributable to changes in Federal law or regulation. In
the event that HUD determines that enactment of a Federal law or
revision in HUD or other Federal regulation has caused or will cause a
significant increase in expenditures of a continuing nature above the
allowable expense level and utilities expense level, and upon a
determination that sufficient other funds are not available to cover
the required expenditures, HUD may in HUD's sole discretion decide to
prescribe a procedure under which the IHA may apply for or may receive
an increase in operating subsidy.
(d) Costs beyond the control of the IHA. Costs attributable to
unique circumstances that are beyond the control of the IHA and were
not reflected in the IHA's Base Year Expense Level may be considered
for supplemental operating subsidy funding. Where costs were reflected
in the IHA's Base Year Expense Level, but the rate of increase for such
costs is greater than the prescribed PFS inflation rate(s), then the
increase in excess of that provided by the inflation rate may be
considered for supplemental operating subsidy funding. The IHA shall
submit to the HUD Field Office complete documentation relating to those
cost items which it claims to be beyond its control. Such documentation
shall not be submitted as part of the requested operating budget, but
shall be submitted separately as an addendum to the budget. The IHA
also shall show that these additional costs cannot be funded from its
own resources. In the event that excess funds are available after
making all payments approvable under Secs. 990.705 and 950.720 of these
regulations, HUD may, in HUD's sole discretion, solicit, evaluate and
approve or disapprove, in full or in part, these requests for
additional operating subsidy for costs beyond the control of the IHA.
(e) Costs resulting from combination of two or more units. When an
IHA redesigns or rehabilitates a project and combines two or more units
into one larger unit and the combination of units results in a unit
that houses at least the same number of people as were previously
served, the AEL for the requested year shall be multiplied by the
number of unit months not included in the requested year's unit months
available as a result of these combinations that have occurred since
the Base Year. The number of people served in a unit will be based on
the formula [(2 x No. of bedrooms) minus 1], which yields the average
number of people that would be served. An efficiency unit will be
counted as a one bedroom unit for purposes of this calculation.
(f) User fee. Additional operating subsidy will be provided to IHAs
for payment of an annual User Fee separate from the PFS. An IHA
operating a rental program shall pay an annual User Fee to
municipalities, which may include Tribal, city, county government, or
other political subdivision that provides any roads, water supply,
sewage facilities, electrical systems or fuel distribution systems. The
annual User Fee will be paid in an amount equal to 10 percent of the
applicable shelter rent, minus the utility allowance; or $150,
whichever is greater, for each rental housing unit covered by this
section.
(Approved by the Office of Management and Budget under control
number 2577-0029.)
Sec. 950.725 Projected operating income level.
(a) Policy. PFS determines the amount of operating subsidy for a
particular IHA based in part upon a projection of the actual dwelling
rental income and other income for the particular IHA. The projection
of dwelling rental income is obtained by computing the average monthly
dwelling rental charge per unit for the IHA, and projecting this amount
for the requested budget year by applying an upward trend factor
(subject to updating) of 3 percent, and multiplying this amount by the
projected occupancy percentage for the requested budget year.
Nondwelling income is projected by the IHA subject to adjustment by
HUD. There are special provisions for projection of dwelling rental
income for new projects.
(b) Computation of projected average monthly dwelling rental
income. The projected average monthly dwelling rental income per unit
for the IHA is computed as follows:
(1) Average monthly dwelling rental charge per unit. The dollar
amount of the average monthly dwelling rental charge per unit shall be
computed on the basis of the total dwelling rental charges (total of
the adjusted rent roll amounts) for all project units, as shown on the
rent roll control and analysis of dwelling rent charges, which the IHA
is required to maintain, for the first day of the month which is six
months before the first day of the requested budget year, except that
if a change in the total of the rent rolls has occurred in a subsequent
month which is before the beginning of the requested budget year and
before the submission of the requested budget year operating budget,
the IHA shall use the latest changed rent roll for the purpose of the
computation. This aggregate dollar amount shall be divided by the
number of occupied dwelling units as of the same date.
(2) Three percent increase. The average monthly dwelling rental
charge per unit, computed under paragraph (b)(1) of this section, is
increased by 3 percent to obtain the projected average monthly dwelling
rental charge per unit of the IHA for the requested budget year.
(3) Projected occupancy percentage. The IHA shall determine its
projected percentage of occupancy for all project units (projected
occupancy percentage) as follows:
(i) High occupancy IHAs. If the IHA's actual occupancy percentage
(see Sec. 950.760) is equal to or greater than 97 percent, the IHA's
projected occupancy percentage is 97 percent.
(ii) High occupancy IHAs exclusive of scheduled modernization. If
the IHA's actual occupancy percentage (see Sec. 950.760) is less than
97 percent solely because of vacant, on-schedule modernization units
described in paragraph (b)(3)(v) of this section, the IHA's projected
occupancy percentage is its actual occupancy percentage. An IHA may
also use its actual occupancy percentage as its projected occupancy
percentage if the IHA has five or fewer vacant units other than vacant,
on-schedule modernization units described in paragraph (b)(3)(v) of
this section.
(iii) Low occupancy IHAs with an approved Comprehensive Occupancy
Plan (COP). If the IHA has an actual occupancy percentage (see
Sec. 950.760) less than 97 percent and more than five vacant units, not
solely because of vacant, on-schedule modernization units described in
paragraph (b)(3)(v) of this section and if the IHA has a HUD-approved
COP, the IHA's projected occupancy percentage is determined under
Sec. 950.770(h).
(iv) Low Occupancy IHAs without an approved COP. (A) The IHA shall
use 97 percent as its projected occupancy percentage, if the IHA:
(1) Has an actual occupancy percentage (see Sec. 950.760) less than
97 percent and has more than five vacant units, not solely because of
vacant, on-schedule modernization units described in paragraph
(b)(3)(v) of this section; and the IHA:
(2)(i) Has completed the term of its approved COP but has not
achieved a 97 percent actual occupancy percentage or has not had five
or fewer vacant units other than vacant, on-schedule modernization
units described in paragraph (b)(3)(v) of this section; or
(ii) Is authorized to submit a COP but elects not to submit one; or
(iii) Submits a COP that is disapproved by HUD.
(B) Notwithstanding the requirement in paragraph (b)(3)(iv)(A) of
this section that 97 percent be the projected occupancy percentage, a
low occupancy IHA which satisfies all the conditions described in
paragraph (b)(3)(iv)(A)(2)(i) of this section, may adjust the 97
percent projected occupancy percentage to discount units that are
vacant for reasons beyond its control, as provided in Sec. 950.770(i).
(v) Vacant, on-schedule modernization units. Vacant, on-schedule
modernization units are vacant units in an otherwise occupiable project
that has received funding for modernization through the comprehensive
improvement assistance program (subpart I of this part) or other
sources; and for which:
(A) It is expected that the vacant units will be occupied on
completion of modernization work;
(B) The IHA has a schedule for carrying out the modernization which
is acceptable to HUD; and
(C) The modernization work is on schedule.
(4) Projected average monthly dwelling rental income. The projected
occupancy percentage under paragraph (b)(3) of this section shall be
multiplied by the projected average monthly dwelling rental charge
under paragraph (b)(2) of this section to obtain the projected monthly
dwelling rental income per unit.
(c) Projected average monthly dwelling rental charge per unit for
new projects. The projected average monthly dwelling rental charge for
new projects that were not available for occupancy during the budget
year before the requested budget year and which will reach the end of
the initial operating period (EIOP) within the first nine months of the
requested budget year, shall be calculated as follows:
(1) If the IHA has another project or projects under management
which are comparable in terms of elderly and nonelderly tenant
composition, the IHA shall use the projected average monthly dwelling
rental charge for such project or projects.
(2) If the IHA has no other projects which are comparable in terms
of elderly and nonelderly tenant composition, the HUD Field Office will
provide the projected average monthly dwelling rental charge for such
project or projects, based on comparable projects located in the area.
(d) Estimate of additional dwelling rental income. After
implementation of the provisions of any legislation enacted or any HUD
administrative action taken after [THE EFFECTIVE DATE OF THE FINAL
RULE], which affects rent paid by tenants of projects, each IHA shall
submit a revision of its annual operating budget showing an estimate of
any change in rental income which it anticipates as the result of the
implementation of said provisions. HUD shall have complete discretion
to adjust the projected average monthly dwelling rental charge per unit
to reflect the IHA's estimate of change or, in the absence of this
submission, to reflect HUD's estimate of such change. HUD also shall
have complete discretion to reduce or increase the operating subsidy
approved for the IHA current fiscal year in an amount equivalent to the
change in the rental income.
(e) IHA's estimate of income other than dwelling rental income.
(1) Investment income. IHAs with an estimated average cash balance
of less than $20,000, excluding investment income earned from a funded
replacement reserve under Sec. 950.666(f), shall make a reasonable
estimate of investment income for the Requested Budget Year. IHAs with
an estimated average cash balance of $20,000 or more, excluding
investment income earned from a funded replacement reserve under
Sec. 950.666(f), shall estimate interest on general fund investments
based on the estimated average yield for 91-day Treasury bills for the
IHA's Requested Budget Year (yield information will be provided by
HUD). The determination of average cash balance will allow a deduction
of $10,000, plus $10 per unit for each unit over 1,000, subject to a
total maximum deduction of $250,000. In all cases, the estimated
investment income amount shall be subject to HUD approval. (See
Sec. 950.730(b).)
(2) Other income. All IHAs shall estimate other income based on
past experience and a reasonable projection for the requested budget
year, which estimate shall be subject to HUD approval.
(3) Total. The estimated total amount of income from investments
and other income, as approved, shall be divided by the number of unit
months available to obtain a per-unit per-month amount. Such amount
shall be added to the projected average dwelling rental income per unit
to obtain the projected operating income level. This amount shall not
be subject to the provisions regarding program income in 24 CFR 85.25.
(f) Required adjustments to estimates. The IHA shall submit year-
end adjustments of projected operating income levels in accordance with
Sec. 950.730(b), which covers investment income.
(Approved by the Office of Management and Budget under control
number 2577-0029.)
Sec. 950.730 Adjustments.
Adjustment information submitted to HUD under this section shall be
accompanied by an original or revised operating budget.
(a) Adjustment of Base Year Expense Level. (1) Eligibility. An IHA
with projects that have been in management for at least one full fiscal
year, for which operating subsidy is being requested under the formula
for the first time, may, during its first budget year under PFS,
request HUD to increase its Base Year Expense Level. Included in this
category are existing IHAs requesting subsidy for a project or projects
in operation at least one full fiscal year under separate ACC for which
operating subsidy has never been paid, except for IPA audit costs. This
request may be granted by HUD, in its discretion, only where the IHA
establishes to HUD's satisfaction that the Base Year Expense Level
computed under Sec. 950.710(a) will result in operating subsidy at a
level insufficient to support a reasonable level of essential services.
The approved increase cannot exceed the per-unit per-month amount by
which the top of the range exceeds the Base Year Expense Level or
$10.31.
(2) Procedure. An IHA that is eligible for an adjustment under
paragraph (a)(1) of this section may only make a request for such
adjustment once for projects under a particular ACC, at the time it
submits the operating budget for the first budget year under PFS. Such
request shall be submitted to the HUD Field Office, which will review,
modify as necessary, and approve or disapprove the request. A request
under this paragraph shall include a calculation of the amount per-unit
per-month of requested increase in the Base Year Expense Level, and
shall show the requested increase as a percentage of the Base Year
Expense Level.
(b) Adjustments to estimated investment income. An IHA that has an
estimated average cash balance of at least $20,000 shall submit a year-
end adjustment to the estimated amount of investment income that was
used to determine subsidy eligibility at the beginning of the IHA's
fiscal year. The amount of the adjustment will be the difference
between the estimate and a target investment income amount based on the
actual average yield on 91-day Treasury bills for the IHA's fiscal year
being adjusted and the actual average cash balance available for
investment during the IHA's fiscal year, computed in accordance with
HUD requirements. HUD will provide the IHA with the actual average
yield on 91-day Treasury bills for the IHA's fiscal year. Failure of an
IHA to submit the required adjustment of investment income by the date
due may, in the discretion of HUD, result in the withholding of
approval of future obligation of operating subsidies until the
adjustment is received.
(c) Adjustments to Utilities Expense Level. An IHA receiving
operating subsidy under Sec. 950.705, excluding those IHAs that receive
operating subsidy solely for IPA audit (Sec. 950.720(a)), shall submit
a year-end adjustment regarding the utility expense level approved for
operating subsidy eligibility purposes. This adjustment, which will
compare the actual utility expense and consumption for the IHA fiscal
year to the estimates used for subsidy eligibility purposes, shall be
submitted on forms prescribed by HUD. This request shall be submitted
to the HUD Field Office by a deadline established by HUD, which will be
during the IHA fiscal year following the IHA fiscal year for which an
operating subsidy was received by the IHA, exclusive of a subsidy
solely for IPA audit costs. Failure to submit the required adjustment
of the utilities expense level by the due date may, in the discretion
of HUD, result in the withholding of approval of future obligation of
operating subsidies until it is received. Adjustments under this
subsection normally will be made in the IHA fiscal year following the
year for which the adjustment is applicable, except as provided in
paragraph (c)(5) of this section or unless a repayment plan is
necessary as noted in paragraph (d) of this section.
(1) Rates. (i) A decrease in the utilities expense level because of
decreased utility rates--to the extent funded by operating subsidy--
will be deducted by HUD from future operating subsidy payments.
However, where the rate reduction covering utilities, such as water,
fuel oil, electricity, and gas, is directly attributable to action by
the IHA, such as well-head purchase of natural gas, or administrative
appeals or legal action beyond normal public participation in
ratemaking proceedings, then the IHA will be permitted to retain one-
half of the cost savings attributable to its actions for the first year
and, upon determination that the action was cost-effective in the first
year, for up to an additional six years, as long as the actions
continue to be cost-effective, and the other one-half of the cost
savings will be deducted from operating subsidy otherwise payable.
(ii) An increase in the utilities expense level because of
increased utility rates--to the extent funded by operating subsidy--
will be fully funded by increased operating subsidy, subject to
availability of funds.
(2) Consumption. (i) Generally, 50 percent of any decrease in the
utilities expense level attributable to decreased consumption (adjusted
for heating degree days in accordance with Sec. 950.715(d)), after
adjustment for any utility rate change, will be retained by the IHA; 50
percent will be offset by HUD against subsequent payment of operating
subsidy.
(ii) However, in the case of an IHA whose energy conservation
measures have been approved by HUD as satisfying the requirements of
Sec. 950.715(g)(1), the IHA may retain 100 percent of the savings from
decreased consumption after payment of the amount due the contractor
until the term of the financing agreement is completed. The decreased
consumption is to be determined using a heating degree day adjustment
for space heating utilities and by adjusting for any utility rate
changes. The heating degree day experience during the frozen rolling
base period will be used instead of the degree days in the year being
adjusted. The documentation on the degree days shall be supplied by the
IHA and is subject to HUD approval. The savings realized shall be
applied in the following order:
(A) Retention of up to 50 percent of the total savings from
decreased consumption to cover training of IHA employees, counseling of
tenants, IHA management of the cost reduction program and any other
eligible costs; and
(B) Prepayment of the amount due the contractor under the contract.
(iii) Fifty percent of the increase in the Utilities Expense Level
attributable to increased consumption will be funded by increased
operating subsidy payments, subject to the availability of funds.
(3) Emergency adjustments. In emergency cases, where an IHA
establishes to HUD's satisfaction that a severe financial crisis would
result from a utility rate increase, an adjustment covering only the
rate increase may be submitted to HUD at any time during the IHA's
Current Budget Year. Unlike the adjustments mentioned in paragraphs
(c)(1) and (c)(2) of this section, this adjustment shall be submitted
to the HUD Field Office by revision of the original submission of the
estimated Utility Expense Level for the fiscal year to be adjusted.
(4) Documentation. Supporting documentation substantiating the
requested adjustments shall be retained by the IHA pending HUD audit.
(d) Requests for adjustments to projected average monthly dwelling
rental income. Requests for adjustments to projected average monthly
dwelling rental income may be made as follows:
(1) Criteria for granting request. An IHA may request an adjustment
to projected average monthly dwelling rental income under PFS if the
IHA can establish to HUD's satisfaction that the projected amount
computed under Sec. 950.725 was not attained because of circumstances
beyond the control of the IHA, such as a substantial increase in
general unemployment in the locality, or because of a revision of the
IHA's rent schedule which has been approved by HUD. The IHA shall also
demonstrate to HUD's satisfaction that it has established and is
effectively implementing tenant selection criteria in compliance with
HUD requirements. HUD shall have complete discretion to approve
completely, approve in part or deny any requested adjustments to
projected average monthly dwelling rental income.
(2) Procedure. A request for an adjustment under this subsection
shall be submitted to the HUD Field Office by a deadline established by
HUD, which will be within twelve months following the IHA's fiscal year
being adjusted. In emergency cases, however, where an IHA establishes
to HUD's satisfaction that decreased rental income would result in a
severe financial crisis, a request for adjustments may be submitted to
HUD at an earlier time.
(e) Energy conservation financing. If HUD has approved an energy
conservation contract under Sec. 950.715(g)(2), then the IHA is
eligible for additional operating subsidy each year of the contract to
amortize the cost of the energy conservation measures under the
contract, subject to a maximum annual limit equal to the cost savings
for that year (and a maximum contract period of 12 years).
(1) Each year, the energy cost savings would be determined as
follows:
(i) The consumption level that would have been expected if the
energy conservation measure had not been undertaken would be adjusted
for the Heating Degree Days experience for the year, and for any change
in utility rate.
(ii) The actual cost of energy (of the type affected by the energy
conservation measure) after implementation of the energy conservation
measure would be subtracted from the expected energy cost, to produce
the energy cost savings for the year. (See also paragraph (c)(2)(ii) of
this section for retention of consumption savings.)
(2) If the cost savings for any year during the contract period is
less than the amount of operating subsidy to be made available under
this paragraph (e) to pay for the energy conservation measure in that
year, the deficiency will be offset against the IHA's operating subsidy
eligibility for the IHA's next fiscal year.
(3) If energy cost savings are less than the amount necessary to
meet amortization payments specified in a contract, the contract term
may be extended (up to the 12-year limit) if HUD determines that the
shortfall is the result of changed circumstances rather than a
miscalculation or misrepresentation of projected energy savings by the
contractor or IHA. The contract term may only be extended to
accommodate payment to the contractor and associated direct costs.
(f) Formal review process (1992). (1) Eligibility for
consideration. Any IHA with an established Allowable Expense Level may
request to use a revised Allowable Expense Level for its requested
budget year that starts on or after April 1, 1992 (and ends during
calendar year 1993).
(2) Eligibility for adjustment. (i) If an IHA's AEL for the budget
year that ends during calendar year 1992 is either less than 85 percent
of the Formula Expense Level or more than 115 percent of the Formula
Expense Level, as calculated using the revised formula and the
characteristics for the IHA and its community, then the IHA's AEL for
the budget year that ends during calendar year 1993 is subject to
adjustment at the IHA's request. The revised formula expense level for
the fiscal year ending during calendar year 1992 is the IHA's value of
the following formula, after updating by the local inflation factors
from FY 1989 to the requested budget year.
(ii) The revised formula is the sum of the following six numbers:
(A) The number of pre-1940 rental units occupied by poor households
in 1980 as a percentage of the 1980 population of the community
multiplied by a weight of 7.954. This Census-based statistic applies to
the county of the IHA, except that, if the IHA has 80 percent or more
of its units in an incorporated city of more than 10,000 persons, it
uses city-specific data. County data will exclude data for any
incorporated cities of more than 10,000 persons within its boundaries.
(B) The Local Government Wage Rate multiplied by a weight of
116.496. The wage rate used is a figure determined by the Bureau of
Labor Statistics. It is a county-based statistic, calibrated to a unit-
weighted IHA standard of 1.0. For multi-county IHAs, the local
government wage is unit-weighted. For this formula, the local
government wage index for a specific county cannot be less than 85
percent or more than 115 percent of the average local government wage
for counties of comparable population and metro/non-metro status, on a
state-by-state basis. In addition, for counties of more than 150,000
population in 1980, the local government wage cannot be less than 85
percent or more than 115 percent of the wage index of private
employment determined by the Bureau of Labor Statistics and the
rehabilitation cost index of labor and materials determined by the R.S.
Means Company.
(C) The lesser of the current number of the IHA's two or more
bedroom units available for occupancy, or 15,000 units, multiplied by a
weight of .002896.
(D) The current ratio of the number of the IHA's two or more
bedroom units available for occupancy in high-rise family projects to
the number of all the IHA's units available for occupancy multiplied by
a weight of 37.294. For this indicator, a high-rise family project is
defined as averaging 1.5 or more bedrooms per unit available for
occupancy and averaging 35 or more units available for occupancy per
building and containing at least one building with units available for
occupancy that is 5 or more stories high.
(E) The current ratio of the number of the IHA's three or more
bedroom units available for occupancy to the number of all the IHA's
units available for occupancy multiplied by a weight of 22.303.
(F) An equation calibration constant of -.2344.
(3) Procedure. If an IHA wants to request a revision to its AEL, it
should determine whether its AEL for the fiscal year ending in calendar
year 1992 (for purposes of this section, the ``unrevised AEL'') is
either less than 85 percent of the Formula Expense Level or more than
115 percent of the Formula Expense Level. Then, in lieu of using the
unrevised AEL as the basis for developing the IHA's AEL and operating
budget for the fiscal year ending in calendar year 1993, the IHA will
use 85 percent of the FEL (if this is higher than the unrevised AEL) or
115 percent of the FEL (if this is lower than the unrevised AEL). If an
IHA has submitted its original operating budget before the publication
of a change to the PFS handbook containing forms and instructions
necessary to implementation of this regulatory change, the IHA shall
submit a revision to its operating budget with calculations based on
the new AEL. If an IHA requests such revision of its AEL in connection
with submission of an operating budget and its current AEL is within 85
to 115 percent of the FEL, HUD will not adjust the AEL. If an IHA
requests revision and its AEL is not within 85 to 115 percent of the
FEL, HUD will increase it to 85 percent or decrease it to 115 percent.
The revised Allowable Expense Levels approved by HUD will be put into
effect for the IHA's budget year that begins on or after April 1, 1992
(and thus ends in calendar year 1993).
(g) Additional HUD-initiated adjustments. Notwithstanding any other
provisions of this subpart, HUD may at any time make an upward or
downward adjustment in the amount of the IHA's operating subsidy as
result of data subsequently available to HUD which alters projections
upon which the approved operating subsidy was based. Normally
adjustments shall be made in total in the IHA fiscal year in which the
needed adjustment is determined; however, if a downward adjustment
would cause a severe financial hardship on the IHA, the HUD Field
Office may establish a recovery schedule which represents the minimum
number of years needed for repayment.
(Approved by the Office of Management and Budget under control
number 2577-0029)
Sec. 950.735 Transition funding for excessive high-cost IHAs.
If an IHA's Base Year Expense Level exceeds its allowable expense
level, computed as provided in Sec. 950.710, for any budget year under
PFS, the IHA may be eligible for transition funding. Transition funding
shall be an amount not to exceed the difference between the Base Year
Expense Level and the allowable expense level for the requested budget
year, multiplied by the number of units months available. HUD shall
have the right to discontinue payment of all or part of the transition
funding in the event HUD at any time determines that the IHA has not
achieved a satisfactory level of management efficiency, or is not
making efforts satisfactory to HUD to improve its management
performance.
Sec. 950.740 Operating reserves.
(a) The IHA shall maintain an operating reserve for the project in
an amount sufficient for working capital purposes, for estimated future
nonroutine maintenance requirements for IHA-owned administrative
facilities, common property and dwelling units, for the payment of
advanced insurance premiums and unanticipated project requirements. If
an IHA fails to maintain an adequate operating reserve level, HUD may
declare the IHA to be ``high risk'' and require that the IHA develop a
plan for improving its financial condition.
(b) At the end of each fiscal year or other budget period, the
project operating reserve shall be:
(1) Credited with the amount by which operating receipts exceed
operating expenses of the project for the budget period, or
(2) Charged with the amount by which operating expenses exceed
operating receipts of the project for the budget period.
Sec. 950.745 Operating budget submission and approval.
(a) Required board resolution. In addition to other budget
documentation required by HUD, each operating budget or operating
budget revision shall include a certified copy of a resolution of the
board of commissioners stating that the board has reviewed and approved
the operating budget or operating budget revision and has found:
(1) That the proposed expenditures are necessary in the efficient
and economical operation of the housing for the purpose of serving low
income families.
(2) That the financial plan is reasonable in that:
(i) It indicates a source of funding adequate to cover all proposed
expenditures.
(ii) It does not provide for use of Federal funding in excess of
that payable under the provisions of these regulations.
(3) That all proposed rental charges and expenditures will be
consistent with provisions of law and the annual contributions
contract.
(b) HUD limited operating budget review. Detailed HUD review of the
operating budgets or operating budget revisions normally will be
limited to the prescribed PFS forms. Under this procedure, although the
operating budget normally will not be reviewed in depth, the operating
reserve calculation in all cases will be examined and budget
modifications will be made where the operating reserve provisions are
not in accordance with HUD requirements. In addition, if the HUD Field
Office finds that an operating budget is incomplete, includes illegal
or ineligible expenditures, mathematical errors or errors in the
application of accounting procedures, or is otherwise unacceptable, the
HUD Field Office may at any time require the submission by the IHA of
further information regarding an operating budget or operating budget
revision.
(c) Withdrawal by HUD of limited operating budget review. HUD
reserves the right at any time to deviate from the limited operating
budget review provided in paragraph (b) of this section if HUD finds
that the IHA is operating its program in a manner which threatens the
future serviceability, efficiency, economy, or stability of the housing
that it operates. If such action is deemed necessary, the HUD Field
Office will normally notify the IHA before its submission of the
operating budget that HUD will subject the operating budget to a
detailed review. When the IHA's operating no longer threaten the future
serviceability, efficiency, economy or stability of the housing, HUD
will notify the IHA that the limited review as provided in paragraph
(b) of this section is being reinstated.
(Approved by the Office of Management and Budget under control
number 2577-00267.)
Sec. 950.750 Payment procedure for operating subsidy under PFS.
(a) General. Subject to the availability of funds, payments of
operating subsidy under PFS shall be made generally by electronic funds
transfers, based on a schedule submitted by the IHA and approved by
HUD, reflecting the IHA's projected cash needs. The schedule may
provide for several payments per month. If an IHA has an unanticipated,
immediate need for disbursement of approved operating subsidy, it may
make an informal request to HUD to revise the approved schedule.
(Requests by telephone are acceptable.)
(b) Payments procedure. In the event that the amount of operating
subsidy has not been determined by HUD as of the beginning of an IHA's
budget year under the PFS regulations in this subpart, annual or
monthly or quarterly payments of operating subsidy shall be made, as
provided in paragraph (a) of this section, based upon the amount of the
IHA's operating subsidy for the previous budget year or such other
amount as HUD may determine to be appropriate.
(c) Availability of funds. In the event that insufficient funds are
available to make payments approvable under PFS for operating subsidy
payable by HUD, HUD shall have complete discretion to revise, on a pro
rata basis or other basis established by HUD, the amounts of operating
subsidy to be paid to IHAs.
Sec. 950.755 Payments of operating subsidy conditioned upon
reexamination of income of families in occupancy.
(a) Policy. The income and composition of each family shall be
reexamined at least annually (see Sec. 950.315). IHAs must be in
compliance with this reexamination requirement to be eligible to
receive full operating subsidy payments.
(b) IHAs in compliance with requirements. Each submission of the
original operating budget for a fiscal year shall be accompanied by a
certification by the IHA that it is in compliance with the annual
income reexamination requirements and that rents have been or will be
adjusted in accordance with subpart D of this part.
(c) IHAs not in compliance with requirements. Any IHA not in
compliance with the annual income reexamination requirement at the time
of operating budget submission shall furnish to the HUD Field Office a
copy of the procedure it is using to attain compliance and a statement
of the number of families that have undergone reexamination during the
twelve months preceding the date of the operating budget submission, or
the revision thereof. If, on the basis of such submission, or any other
information, the Field Office Director determines that the IHA is not
substantially in compliance with the annual income reexamination
requirement, HUD shall withhold payments to which the IHA might
otherwise be entitled under this part, equal to his or her estimate of
the loss of rental income to the IHA resulting from its failure to
comply with those requirements.
(Approved by the Office of Management and Budget under control
number 2577-0026.)
Sec. 950.760 Determining actual occupancy percentage.
(a) For each requested budget year beginning on or after July 1,
1986, the IHA shall determine the percentage of occupancy for all
project units included in the unit months available (actual occupancy
percentage), at its option, either:
(1) For the last day of the month that ends six months before the
beginning of the requested budget year; or
(2) Based on the average occupancy during the month ending six
months before the beginning of the requested budget year.
(b) If the IHA elects to use an average, it shall maintain a record
of its computation of its actual occupancy percentage. The actual
occupancy percentage shall be adjusted to reflect expected changes in
occupancy because of modernization, new development, demolition or
disposition in order to reflect the expected average occupancy rate
throughout the year. If, after that date, there are changes, up or
down, in occupancy because of modernization, new development,
demolition, or disposition not reflected in the adjustment, the IHA
shall submit a budget revision to reflect the actual change in
occupancy due to these actions.
Sec. 950.770 Comprehensive Occupancy Plan requirements.
(a) IHAs that may submit a Comprehensive Occupancy Plan. An IHA may
prepare and submit a COP to HUD in accordance with the provisions of
this section:
(1) For its first requested budget year beginning on or after July
1, 1986, if the IHA has an actual occupancy percentage (Sec. 950.760)
less than 97 percent, and has more than five vacant units, not solely
because of vacant, on-schedule modernization units (as defined in
Sec. 950.725(b)(3)(v)); or
(2) For a requested budget year beginning on or after July 1, 1987,
if:
(i) The IHA projects an actual occupancy percentage (Sec. 950.760)
for the requested budget year of less than 97 percent and has more than
five vacant units, other than vacant, on-schedule modernization units;
(ii) The IHA is not currently a low occupancy IHA, that is, the IHA
had an actual occupancy percentage determined under Sec. 950.760 for
the current requested budget year that equalled or exceeded 97 percent
or had five or fewer vacant units other than vacant, on-schedule
modernization units; and
(iii) The IHA is not currently under a COP.
(b) Comprehensive Occupancy Plan content. A COP shall provide a
general IHA-wide strategy for returning to occupancy or deprogramming
all vacant units and a specific strategy for returning to occupancy or
deprogramming units for each project that has an occupancy percentage
of less than 97 percent.
(1) The general IHA-wide strategy for returning to occupancy or
deprogramming all vacant units shall specify management actions the IHA
is taking or intends to take to eliminate vacancies, such as revised
occupancy policies, actions to reduce time to return vacated units to
occupancy, and identification of the need to use the exception for
nonelderly tenants in elderly projects, and shall include a schedule
for completing these actions.
(2) The project-specific strategy shall:
(i) Identify each project that has a percentage of occupancy less
than 97 percent.
(ii) State the project-specific actions the IHA is taking or
intends to take to eliminate vacancies, such as:
(A) Modernization;
(B) Demolition;
(C) Disposition;
(D) Change in occupancy policy; or
(E) Physical or management improvements; and
(iii) For each project identified, include a schedule for
completing these actions and returning the units to occupancy.
(3) The COP shall also include yearly IHA-wide occupancy goals and
yearly occupancy goals for each project with an occupancy rate below 97
percent stated for each year until there is a projected IHA-wide
occupancy rate of at least 97 percent or an estimate that the IHA will
have five or fewer vacant units, excluding units that are vacant, on-
schedule modernization units. These goals should reflect the average
occupancy percentage for each year. The yearly occupancy goals (both
IHA-wide and project specific) for the first year of a COP that is
submitted with an IHA's budget for its first requested budget year
beginning on or after July 1, 1986, shall take into account actions
taken by the IHA from August 2, 1985, to reduce vacancies.
(c) Time for submitting a Comprehensive Occupancy Plan. An IHA that
submits a COP to HUD for approval in accordance with paragraph (a) of
this section shall submit the COP with its budget.
(d) Maximum term of a Comprehensive Occupancy Plan. (1) Except as
provided in paragraph (d)(2) of this section, a COP:
(i) Submitted for an IHA's first requested budget year beginning on
or after July 1, 1986, shall be for a period approved by HUD as
reasonable, which shall not exceed five years; or
(ii) Submitted for a requested budget year beginning on or after
July 1, 1987, shall be for a period of one or two years, as approved by
HUD.
(2) A COP that exceeds the maximum period provided in paragraphs
(d)(1) (i) or (ii) of this section may be approved only if the
Assistant Secretary for Public and Indian Housing has given written
authorization for such longer period before the approval of the COP.
(e) Local governing body review. The IHA shall have the COP
reviewed by the local governing body for comment and shall submit any
comments from the local governing body to HUD with the COP.
(f) HUD review of Comprehensive Occupancy Plan. If HUD fails to
approve, disapprove or otherwise substantively comment on a COP within
45 days of receipt of the plan, the IHA-wide yearly occupancy goal for
the first year of the COP shall be considered approved for the purpose
of determining the IHA's projected occupancy percentage under paragraph
(h) of this section.
(g) Projected Occupancy Percentage (Comprehensive Occupancy Plan).
An IHA that has a HUD-approved COP shall use as its projected occupancy
percentage for computing its projected operating income level under
Sec. 950.725 the greater of its actual occupancy percentage, as
determined under Sec. 950.760 or its approved, yearly IHA-wide
occupancy goal, adjusted, as necessary, to discount units that are
vacant for reasons beyond the IHA's control, as provided in paragraph
(i) of this section.
(h) Units vacant for reasons beyond an IHA's control. A vacant unit
is considered vacant for reasons beyond an IHA's control only if the
unit is located in a project that meets one of the following
conditions:
(1) The IHA has applied for modernization, HUD cannot fund the
project because of lack of sufficient funding, and it is expected that
the units will be occupied when the units are modernized.
(2) The vacant units are vacant, on-schedule modernization units.
(3) The units are vacant because of natural disasters, or as a
result of court-ordered, or HUD-approved, constraints relating to title
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d).
Sec. 905.772 Financial management systems, monitoring and reporting.
The financial management systems, reporting and monitoring on
program performance and financial reporting will be in compliance with
the requirements of 24 CFR 85.20, 85.40, and 85.41, except to the
extent that HUD requirements provide for additional specialized
procedures necessary to permit the Secretary to make the determinations
regarding the payment of operating subsidy specified in section 9(a)(1)
of the United States Housing Act of 1937 (42 U.S.C 1437g(a)(1)).
(Approved by the Office of Management and Budget under OMB control
number 2577-0066.)
Sec. 950.774 Operating subsidy eligibility for projects owned by IHAs
in Alaska.
The provisions of this subpart are applicable to the development,
modernization, and operation of the rental housing owned by the IHAs in
the State of Alaska, excluding the formula calculation for the PFS.
Subpart K--Energy Audits, Energy Conservation Measures and Utility
Allowances
Sec. 950.801 Purpose and applicability.
(a) Purpose. The purpose of this subpart is to implement HUD
policies in support of national energy conservation goals by reducing
energy consumption, with consequent reduction of operating costs of
IHA-owned housing projects, by requiring that IHAs conduct energy
audits and undertake certain cost-effective, energy conservation
measures. This subpart also provides for the establishment of utility
allowances for tenants based on reasonable consumption of utilities by
an energy-conscious household.
(b) Applicability. The provisions of this subpart apply to all IHAs
with IHA-owned housing including Mutual Help and Turnkey III.
Energy Audits and Energy Conservation Measures
Sec. 950.805 Requirements for energy audits.
All IHAs shall complete an appropriate energy audit for each IHA-
owned project under management in accordance with the schedule
specified in Sec. 950.822. Energy audits shall be conducted by IHA
personnel or consultants as appropriate. Standards for energy audits
shall be equivalent to State or Tribal standards for energy audits or
as approved by HUD. Energy audits shall analyze all of the energy
conservation measures, and the payback period for these measures, that
are pertinent to the type of buildings and equipment operated by the
IHA.
Sec. 950.810 Order of funding.
Within the funds available to an IHA, energy conservation measures
should be accomplished with the shortest pay-back periods funded first.
However, HUD Field Offices should permit IHAs to make adjustments to
this funding order because of insufficient funds to accomplish high-
cost energy conservation measures (ECM) or a situation in which an ECM
with a longer pay-back period can be more efficiently installed in
conjunction with other planned modernization. Field Offices may not
authorize installation of individual utility meters that measure the
energy or fuel used for space heating in dwelling units that need
substantial weatherization, when installation of meters would result in
economic hardship for tenants. In these cases, the ECMs related to
weatherization must be accomplished before the installation of
individual utility meters.
Sec. 950.812 Funding.
(a) The cost of accomplishing cost-effective energy conservation
measures, including the cost of performing energy audits, shall be
funded from operating funds of the IHA to the extent feasible. When
sufficient operating funds are not available for this purpose, such
costs are eligible for inclusion in a modernization program, for
funding from any available development funds in the case of projects
still in development or for other available funds that HUD may
designate to be used for energy conservation.
(b) If an IHA finances energy conservation measures from sources
other than CIAP or operating reserves, such as on the basis of a
promise to repay, HUD may agree to provide adjustments in its
calculation of the IHA's operating subsidy eligibility under the PFS
for the project and utility involved if the financing arrangement is
cost-beneficial to HUD. (See Sec. 950.730(e).)
Sec. 950.815 Energy conservation equipment and practices.
In purchasing original or, when needed, replacement equipment, IHAs
shall acquire only equipment that meets or exceeds the minimum
efficiency requirements established by the U.S. Department of Energy.
In the operation of their facilities, IHAs shall follow operating
practices directed to maximum energy conservation.
Sec. 950.822 Compliance schedule.
All energy conservation measures determined by energy audits to be
cost effective shall be accomplished as funds are available.
Sec. 950.825 Energy performance contracts.
(a) Method of procurement. Energy performance contracting shall be
conducted using one of the following methods of procurement:
(1) Competitive proposals (see Sec. 950.175(d)). In identifying the
evaluation factors and their relative importance, as required by
Sec. 950.175(d)(1), the solicitation shall state that technical factors
are significantly more important than price (of the energy audit); or
(2) If the services are available only from a single source,
noncompetitive proposals (see Sec. 950.175(e)(2)).
(b) HUD review. Solicitations for energy performance contracts
shall be submitted to the HUD Field Office for review and approval
before issuance. Energy performance contracts shall be submitted to the
Office of Native American Programs for review and approval before
award.
Individual Metering of Utilities
Sec. 950.840 Individually metered utilities.
(a) All utility service shall be individually metered to tenants,
either through provision of retail service to the tenants by the
utility supplier or through the use of checkmeters unless:
(1) Individual metering is impractical, such as in the case of a
central heating system in an apartment building;
(2) Change from a mastermetering system to individual meters would
not be financially justified based upon a benefit/cost analysis; or
(3) Checkmetering is not permissible under state or local law, or
under the policies of the particular utility supplier or public service
commission.
(b) If checkmetering is not permissible, retail service must be
considered. Where checkmetering is permissible, the type of individual
metering offering the most savings to the IHA shall be selected.
Sec. 950.842 Benefit/cost analysis.
(a) A benefit/cost analysis shall be made to determine whether a
change from a mastermetering system to individual meters will be cost
effective, except as otherwise provided in Sec. 950.846.
(b) Proposed installation of checkmeters must be justified on the
basis that the cost of debt service (interest and amortization) of the
estimated installation costs plus the operating costs of the
checkmeters will be more than offset by reduction in future utilities
expenditures to the IHA under the mastermeter system.
(c) Proposed conversion to retail service must be justified on the
basis of net savings to the IHA. This determination involves making a
comparison between the reduction in utility expense obtained through
eliminating the expense to the IHA for IHA-supplied utilities compared
to the resultant allowance for tenant-supplied utilities, based on the
cost of utility service to the tenants after conversion.
Sec. 950.844 Funding.
The cost to change mastermeter systems to individual metering of
tenant consumption, including the costs of benefit/cost analysis and
complete installation of checkmeters, shall be funded from operating
funds of the IHA to the extent feasible. When sufficient operating
funds are not available for this purpose, such costs are eligible for
inclusion in a modernization project or for funding from any available
development funds.
Sec. 950.845 Order of conversion.
Conversions to individually metered utility service shall be
accomplished in the following order where an IHA has projects of two or
more of the designated categories, unless otherwise approved by the HUD
Field Office:
(a) In projects where retail service is provided by the utility
supplier and the IHA is paying all the individual utility bills, no
benefit/cost analysis is necessary and tenants shall be billed directly
after the IHA adopts revised payment schedules providing appropriate
allowances for tenant-supplied utilities.
(b) In projects where checkmeters have been installed but are not
being utilized as the basis for determining utility charges to the
tenants, no benefit/cost analysis is necessary and the checkmeters
shall be used as the basis for utility charges, and tenants shall be
surcharged for excess utility use.
(c) Projects where meter loops have been installed for utilization
of checkmeters shall be analyzed both for the installation of
checkmeters and for conversion to retail service.
(d) Low or medium rise family units with a mastermeter system
should be analyzed for both checkmetering and conversion to retail
service, because of their large potential for energy savings.
(e) Low or medium rise housing for elderly should next be analyzed
for both checkmetering and conversion to retail service, since the
potential for energy saving is less than for family units.
(f) Electric service under mastermeters for high rise buildings,
including projects for the elderly, should be analyzed for both use of
retail service and of checkmeters.
Sec. 950.846 Actions affecting residents.
(a) Before making any conversion to retail service, the IHA shall
adopt revised payment schedules, providing appropriate allowances for
the tenant-supplied utilities resulting from the conversion.
(b) Before implementing any modifications to utility services
arrangements with the tenants or charges with respect thereto, the
requisite changes shall be made in tenant dwelling leases in accordance
with subpart D of this part.
(c) To the extent practicable, IHAs should work closely with
resident organizations in making plans for conversion of utility
service to individual metering, explaining the national policy
objectives of energy conservation, the changes in charges and rent
structure that will result, and the goals of achieving an equitable
structure that will be advantageous to tenants who conserve energy.
(d) A transition period of at least six months shall be provided in
the case of initiation of checkmeters during which tenants will be
advised of the charges but during which no surcharge will be made,
based on the readings. This trial period will afford tenants ample
notice of the effects the checkmetering system will have on their
individual utility charges and also afford a test period for the
adequacy of the utility allowances established.
(e) During and after the transition period, IHAs shall advise and
assist tenants with high utility consumption on methods for reducing
their usage. This advice and assistance may include counseling,
installation of new energy conserving equipment or appliances, and
corrective maintenance.
Sec. 950.849 Waivers for similar projects.
IHAs with more than one project of similar design and utilities
service may prepare a benefit/cost analysis for a representative
project. A finding that a change in metering is not cost effective for
the representative project is sufficient reason for the HUD Field
Office to waive the requirements of this subpart for benefit/cost
analysis on the remaining similar projects.
Sec. 950.850 Reevaluations of mastermeter systems.
Because of changes in the cost of utility services and the periodic
changes in utility regulations, IHAs with mastermeter systems are
required to reevaluate mastermeter systems without checkmeters by
making benefit/cost analyses at least every 36 months. HUD Field
Offices may grant waivers of this requirement upon making a finding as
provided in Sec. 950.849.
Resident Utility Allowances
Sec. 950.860 Applicability.
(a) Sections 950.860 through 950.876 apply to all Indian housing
dwelling units, including those operated under the Mutual Help
Homeownership Opportunity Program.
(b) In rental units where utilities are furnished by the IHA but
there are no checkmeters to measure the actual utilities consumption of
the individual units, tenants shall be subject to charges for
consumption of tenant-owned major appliances, or for optional functions
of IHA-furnished equipment, in accordance with Sec. 950.865(e), but no
utility allowance will be established.
Sec. 950.865 Establishment of utility allowances by IHAs.
(a) IHAs shall establish allowances for IHA-furnished utilities for
all checkmetered utilities and allowances for tenant-purchased
utilities for all utilities purchased directly by tenants from the
utilities suppliers.
(b) The IHA shall maintain a record that documents the basis on
which allowances and scheduled surcharges, and revisions thereof, are
established and revised. Such record shall be available for inspection
by tenants.
(c) The IHA shall give notice to all tenants of proposed allowances
and scheduled surcharges and revisions thereof. Such notice shall be
given, in the manner provided in the lease or homebuyer agreement, not
less than 60 days before the proposed effective date of the allowances
or scheduled surcharges or revisions; shall describe with reasonable
particularity the basis for determination of the allowances, scheduled
surcharges or revisions, including a statement of the specific items of
equipment and function whose utility consumption requirements were
included in determining the amounts of the allowances or scheduled
surcharges; shall notify tenants of the place where the IHA's record
maintained in accordance with paragraph (b) of this section is
available for inspection; and shall provide all tenants an opportunity
to submit written comments during a period expiring not less than 30
days before the proposed effective date of the allowances or scheduled
surcharges or revisions. Such written comments shall be retained by the
IHA and shall be available for inspection by tenants and, upon request,
by HUD.
(d) The IHA shall furnish to HUD, as instructed, a copy of its
schedule of allowances and scheduled surcharges, and each revision
thereof, promptly upon such schedule becoming effective. Schedules of
allowances and scheduled surcharges shall not ordinarily be subject to
approval by HUD before becoming effective but will be reviewed in the
course of audits or reviews of IHA operations. Following such audits or
reviews, HUD may require additional data concerning the IHA's basis for
determination of allowances or scheduled surcharges, may require
additional or different relevant data to be considered by the IHA in
its next annual review on an exception basis, and may require that an
IHA submit its proposed revision of allowances or scheduled surcharges
to HUD for review and approval before the revision is adopted.
(e) The IHA's determinations of allowances, scheduled surcharges
and revisions thereof shall be final and valid unless found to be
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.
(Approved by the Office of Management and Budget under control
number 2577-0062)
Sec. 950.867 Categories for establishment of allowances.
Separate allowances shall be established for each utility and for
each category of dwelling units determined by the IHA to be reasonably
comparable as to factors affecting utility usage. The IHA will
establish allowances for different size units, in terms of numbers of
bedrooms. Other categories may be established at the discretion of the
IHA.
Sec. 950.869 Period for which allowances are established.
(a) IHA-furnished utilities. Allowances will normally be
established on a quarterly basis; however, tenants may be surcharged on
a monthly basis. The allowances established may provide for seasonal
variations.
(b) Tenant-purchased utilities. Monthly allowances shall be
established at a uniform monthly amount based on an average monthly
utility requirement for a year; however, if the utility supplier does
not offer tenants a uniform payment plan, the allowances established
may provide for seasonal variations.
Sec. 950.870 Standards for allowances for utilities.
(a) The objective of an IHA in designing methods of establishing
utility allowances for each dwelling unit category and unit size shall
be to approximate a reasonable consumption of utilities by an energy-
conservative household of modest circumstances consistent with the
requirements of a safe, sanitary, and healthful living environment.
(b) Allowances for both IHA-furnished and tenant-purchased
utilities shall be designed to include such reasonable consumption for
major equipment or for utility functions furnished by the IHA for all
tenants (e.g., heating furnace, hot water heater), for essential
equipment whether or not furnished by the IHA (e.g., range and
refrigerator), and for minor items of equipment (such as toasters and
radios) furnished by tenants.
(c) The complexity and elaborateness of the methods chosen by the
IHA, in its discretion, to achieve the foregoing objective will be
dependent upon the data available to the IHA and the extent of the
administrative resources reasonably available to the IHA to be devoted
to the collection of such data, the formulation of methods of
calculation, and actual calculation and monitoring of the allowances.
(d) In establishing allowances, the IHA shall take into account
relevant factors affecting consumption requirements, including:
(1) The equipment and functions intended to be covered by the
allowance for which the utility will be used. For instance, natural gas
may be used for cooking or heating domestic water or space heating or
any combination of the three.
(2) The climatic location of the housing projects.
(3) The size of the dwelling units and the number of occupants per
dwelling unit.
(4) Type of construction and design of the housing project.
(5) The energy efficiency of IHA-supplied appliances and equipment.
(6) The utility consumption requirements of appliances and
equipment whose reasonable consumption is intended to be covered by the
total tenant payment.
(7) The physical condition, including insulation and
weatherization, of the housing project.
(8) Temperature levels intended to be maintained in the unit during
the day and at night, and in cold and warm weather.
(9) Temperature of domestic hot water.
Sec. 950.872 Surcharges for excess consumption of IHA-furnished
utilities.
(a) For dwelling units subject to allowances for IHA-furnished
utilities where checkmeters have been installed, the IHA shall
establish surcharges for utility consumption in excess of the
allowances. Surcharges may be computed on a straight per unit of
purchase basis (e.g., cents per kilowatt hour of electricity) or for
stated blocks of excess consumption, and shall be based on the IHA's
average utility rate. The basis for calculating such surcharges shall
be described in the IHA's schedule of allowances. Changes in the dollar
amounts of surcharges based directly on changes in the IHA's average
utility rate shall not be subject to the advance notice requirements of
this section.
(b) For dwelling units served by IHA-furnished utilities where
checkmeters have not been installed, the IHA shall establish schedules
of surcharges indicating additional dollar amounts tenants will be
required to pay by reason of estimated utility consumption attributable
to tenant-owned major appliances or to optional functions of IHA-
furnished equipment. Such surcharge schedules shall state the tenant-
owned equipment (or functions of IHA-furnished equipment) for which
surcharges shall be made and the amounts of such charges, which shall
be based on the cost to the IHA of the utility consumption estimated to
be attributable to reasonable usage of such equipment.
Sec. 950.874 Review and revision of allowances.
(a) Annual review. The IHA shall review at least annually the basis
on which utility allowances have been established and, if reasonably
required in order to continue adherence to the standards stated in
Sec. 950.870, shall establish revised allowances. The review shall
include all changes in circumstances (including completion of
comprehensive or special purpose modernization under the Comprehensive
Improvement Assistance Program and/or other energy conservation
measures implemented by the IHA) indicating probability of a
significant change in reasonable consumption requirements and changes
in utility rates.
(b) Revision as a result of rate changes. The IHA may revise its
allowances for tenant-purchased utilities between annual reviews if
there is a rate change (including fuel adjustments) and shall be
required to do so if such change, by itself or together with prior rate
changes not adjusted for, results in a change of 10 percent or more
from the rates on which such allowances were based. Adjustments to
tenant payments as a result of such changes shall be retroactive to the
first day of the month following the month in which the last rate
change taken into account in such revision became effective.
(Approved by the Office of Management and Budget under control
number 2577-0062)
Sec. 950.876 Individual relief.
Requests for relief from surcharges for excess consumption of IHA-
purchased utilities, or from payment of utility supplier billings in
excess of the allowances for tenant-purchased utilities, may be granted
by the IHA on reasonable grounds, such as special needs of elderly, ill
or handicapped tenants, or special factors affecting utility usage not
within the control of the tenant, as the IHA shall deem appropriate.
The IHA's criteria for granting such relief, and procedures for
requesting such relief, shall be adopted at the time the IHA adopts the
methods and procedures for determining utility allowances. Notice of
the availability of such procedures (including identification of the
IHA representative with whom initial contact may be made by tenants),
and the IHA's criteria for granting such relief, shall be included in
each notice to tenants given in accordance with Sec. 950.865(c) and in
the information given to new tenants upon admission.
* * * * *
Subpart M--Disposition or Demolition of Projects
Sec. 950.921 Purpose and applicability.
(a) Purpose. This subpart sets forth requirements for HUD approval
of an IHA's application to dispose of or demolish (in whole or in part)
IHA-owned projects assisted under the Act. The rules and procedures
contained in 24 CFR part 85 are inapplicable.
(b) Applicability.--(1) Type of projects. This subpart applies to
any Indian housing project which is owned by an IHA and is subject to
an ACC under section 5 of the United States Housing Act of 1937 (42
U.S.C. 1437c), including rental, Turnkey III, or Mutual Help housing.
This subpart does not apply to:
(i) IHA-owned Section 8 housing or housing leased under section
10(c) or section 23 of the Act (42 U.S.C. 1437h(c) or 1437u);
(ii) Demolition or disposition before the end of the initial
operating period (EIOP), as determined under the ACC, of property
acquired incident to the development of an Indian housing project
(however, this exception does not apply to units occupied or available
for occupancy by Indian housing tenants before EIOP);
(iii) Conveyance of Indian housing for the purpose of providing
homeownership opportunities for low-income families under section 21 of
the Act, the Turnkey III or Mutual Help Homeownership Opportunity
programs, or any other homeownership programs established under
sections 5(h) and 6(c)(4)(D) of the Act (42 U.S.C. 1437c(h),
1437d(c)(4)(3)) or titles II and III of the Act (42 U.S.C. 1437aa,
1437aaa).
(iv) Leasing of dwelling or nondwelling space incident to the
normal operation of the project for Indian housing purposes, as
permitted by the ACC;
(v) Easements, rights-of-way and transfers of utility systems
incident to the normal operation of the project for Indian housing
purposes, as permitted by the ACC;
(vi) Reconfiguration of the interior space of buildings (e.g.,
moving or removing interior walls to change the design, sizes or number
of units) without demolition; and
(vii) A whole or partial taking by a public or quasi-public entity
through the exercise of its power of eminent domain.
(2) [Reserved]
(c) Type of actions. Any action by an IHA to dispose of or demolish
an Indian housing project or a portion of an Indian housing project is
subject to the requirements of this subpart. Until such time as HUD
approval may be obtained, the IHA may not take any action to dispose of
or demolish an Indian housing project or portion of an Indian housing
project, and the IHA shall continue to meet its ACC obligations to
maintain and operate the property as housing for low-income families.
This does not mean that HUD approval under this subpart is required for
planning activities, analysis, or consultations, such as project
viability studies, comprehensive modernization planning or
comprehensive occupancy planning.
Sec. 950.923 General requirements for HUD approval of disposition or
demolition.
(a) For purposes of this subpart, the term ``tenant'' will also
include ``homebuyer'' where the development involved is a homeownership
project, and the term ``unit of general government'' will include the
tribal government, where applicable.
(b) HUD will not approve an application for disposition or
demolition unless:
(1) The application has been developed in consultation with tenants
of the project involved, any tenant organizations for the project, and
any IHA-wide tenant organizations that will be affected by the
disposition or demolition;
(2) The IHA has complied with the requirement to offer the project
or portion of the project proposed for demolition or disposition to the
resident organizations as required under Sec. 950.925 of this subpart;
(3) The application contains a certification by the chief executive
officer, or designee, that the unit of general government will comply
with displacement, relocation, and real property acquisition policies
described in Sec. 950.117;
(4) Demolition or disposition (including any related replacement
housing plan) will meet the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321), the National Historic Preservation
Act of 1966 (16 U.S.C. 469), and related laws, as stated in the HUD's
regulations at 24 CFR part 50. Where the site of the replacement
housing is unknown at the time of submission of the application for
demolition or disposition, the application shall contain a
certification that the applicant agrees to assist HUD to comply with 24
CFR part 50 and that the applicant shall:
(i) Supply HUD with all available, relevant information necessary
for HUD to perform for each property any environmental review required
by 24 CFR part 50;
(ii) Carry out mitigating measures required by HUD or select
alternate eligible property; and
(iii) Not acquire, rehabilitate, convert, lease, repair or
construct property, or commit HUD funds or other funds to such program
activities with respect to any eligible property, until HUD approval is
received.
(5) The IHA has developed a replacement housing plan, in accordance
with Sec. 950.935, and has obtained a commitment for the funds
necessary to carry out the plan over the approved schedule of the plan.
To the extent such funding is not provided from other sources (e.g.,
State, tribal or local programs or proceeds of disposition), HUD
approval of the application for demolition or disposition is
conditioned on HUD's agreement to commit the necessary funds (subject
to availability of future appropriations).
Sec. 950.925 Resident organization opportunity to purchase.
(a) Applicability. (1) This section applies to applications for
demolition or disposition of a development which involve dwelling
units, nondwelling spaces (e.g., administration and community
buildings, maintenance facilities), and excess land.
(2) The requirements of this section do not apply to the following
cases which it has been determined do not present appropriate
opportunities for resident purchase:
(i) The IHA has determined that the property proposed for
demolition is an imminent threat to the health and safety of residents;
(ii) The tribal or local government has condemned the property
proposed for demolition;
(iii) A tribal or local government agency has determined and
notified the IHA that units must be demolished to allow access to fire
and emergency equipment;
(iv) The IHA has determined that the demolition of selected
portions of the development in order to reduce density is essential to
ensure the long term viability of the development or the IHA (but in no
case should this be used cumulatively to avoid Section 412
requirements); or
(v) A public body has requested to acquire vacant land that is less
than two acres in order to build or expand its services (e.g., a tribal
or local government wishes to use the land to build or establish a
police substation).
(3) In the situations listed in paragraph (a)(2) of this section,
the IHA may proceed to submit its request to demolish or dispose of the
property, or the portion of the property, to HUD, in accordance with
section 18 of the United States Housing Act of 1937 (42 U.S.C. 1437p)
and this subpart without affording an opportunity for purchase by a
resident organization. However, resident consultation would be required
in accordance with Sec. 950.923(b)(1). The IHA must submit written
documentation, on official stationery, with date and signatures to
justify paragraphs (a)(2)(i) through (v) of this section. Examples of
such documentation include:
(i) A certification from a tribal or local agency, such as the fire
or health department, that a condition exists in the development that
is an imminent threat to residents; or
(ii) A copy of the condemnation order from the local health
department. If, however, at some future date, the IHA proposes to sell
the remaining property described in paragraphs (a)(2)(i) through (iii)
of this section, the IHA will be required to comply with this section.
(b) Opportunity for residents to organize. Where the affected
development does not have an existing resident organization, resident
management corporation or resident cooperative at the time of the IHA
proposal to demolish or dispose of the development or a portion of the
development, the IHA shall make a reasonable effort to inform residents
of the development of the opportunity to organize and purchase the
property proposed for demolition or disposition. Examples of
``reasonable effort'' at a minimum include at least one of the
following activities: convening a meeting, sending letters to all
residents, publishing an announcement in the resident newsletter, where
available, or hiring a consultant to provide technical assistance to
the residents. HUD will not approve any application that cannot
demonstrate that the IHA has allowed at least 45 days for the residents
of the affected development to organize a resident organization. The
IHA should initiate its efforts to inform the residents of their right
to organize as an integral part of the resident consultation
requirement under Sec. 950.923(b)(1).
(c) Established organizations. Where there are duly formed resident
management corporations, resident organizations or resident
cooperatives at the affected development, the IHA should follow the
procedures beginning in paragraph (d) of this section. Where the
affected development is fully or partially occupied, the residents must
be given the opportunity to form under the procedures in paragraph (b)
of this section.
(d) Offer of sale to resident organizations. (1) The IHA shall make
the formal offer for sale which must include the information listed in
this section. All contacted organizations shall have 30 days to express
an interest in the offer. The IHA must offer to sell the property
proposed for demolition or disposition to the resident management
corporation, the resident organization or resident cooperative of the
affected development under at least as favorable terms and conditions
as the IHA would offer it for sale to another purchaser. The offer
shall include:
(i) An identification of the development, or portion of the
development, in the proposed demolition or disposition, including the
development number and location, the number of units and bedroom
configuration, the amount of space and use for non-dwelling space, the
current physical condition (e.g., fire damaged, friable asbestos, lead
based paint test results), and occupancy status (e.g., percent
occupancy);
(ii) In the case of disposition, a copy of the appraisal of the
property and any terms of sale;
(iii) An IHA disclosure and description of plans proposed for reuse
of land, if any, after the proposed demolition or disposition;
(iv) An identification of available resources (including its own
and HUD's) to provide technical assistance to the resident management
corporation, resident organization or resident cooperative of the
affected development to enable the organization to better understand
its opportunity to purchase the development, the development's value
and potential use;
(v) Any and all terms of sale that the IHA requires for the Section
18 action; [If the resident management corporation, resident
organization or resident cooperative of the affected development
submits a proposal that is other than the terms of sale (e.g., purchase
at less than fair market value with demonstrated commensurate public
benefit or for the purposes of homeownership), the IHA may consider
accepting the offer.]
(vi) A date by which the resident management corporation, resident
organization or resident cooperative of the affected development must
respond to the IHA's offer to sell the property proposed for demolition
or disposition, which shall be no less than 30 days from the date of
the official offering of the IHA which will be made sometime after the
meeting. The response from the resident management corporation,
resident organization or resident cooperative of the affected
development shall be in the form of a letter expressing its interest in
accepting the IHA's written offer.
(vii) A statement that the resident management corporation,
resident organization and resident cooperative of the affected
development will be given up to 60 days to develop and submit a
proposal to the IHA to purchase the property and to obtain a firm
financial commitment. It shall explain that the IHA shall approve the
proposal from the resident management corporation, resident
organization or resident cooperative of the affected development, if it
meets the terms of sale. However, the statement shall indicate that the
IHA can consider accepting an offer from the resident management
corporation, resident organization or resident cooperative of the
affected development that is other than the terms of sale; e.g.,
purchase at less than fair market value with demonstrated commensurate
public benefit or for the purposes of homeownership. The statement
shall explain that if the IHA receives more than one proposal from a
resident management corporation, resident organization or resident
cooperative at the affected development, the IHA shall select the
proposal that meets the terms of sale. In the event that two proposals
from the affected development meet the terms of sale, the IHA shall
choose the best proposal.
(2) After the 30 day time frame for the resident management
corporation, resident organization or resident cooperative of the
affected development to respond to the notification letter has expired,
the IHA is to prepare letters to those organizations that responded
affirmatively inviting them to submit a formal proposal to purchase the
property. The organization has up to 60 days from the date of its
affirmative response to prepare and submit a proposal to the IHA that
provides all the information requested in paragraph (d)(1) of this
section and meets the terms of sale.
(e) IHA review of proposals. The IHA has up to 60 days from the
date of receipt of the proposals to review them and determine whether
they meet the terms of sale set forth in its offer. If the resident
management corporation, resident organization or resident cooperative
of the affected development submits a proposal that is other than the
terms of sale (e.g., purchase at less than the fair market value with
demonstrated commensurate public benefit or for the purposes of
homeownership), the IHA may consider accepting the offer. If the terms
of sale are met, within 14 days of the IHA's final decision, the IHA
shall notify the resident management corporation, resident organization
or resident cooperative of the affected development of that fact and
that the proposal has been accepted or rejected.
(f) Appeals. The resident management corporation, resident
organization or resident cooperative of the affected development has
the right to appeal the IHA's decision to the HUD Field Office. A
written appeal must be made within 30 days of the decision by the IHA.
The appeal should include copies of the proposal and any related
correspondence. The HUD Field Office will render a final decision
within 30 days. A letter communicating the decision is to be prepared
and sent to the IHA and the resident management corporation, resident
organization or resident cooperative of the affected development.
(g) Contents of proposal. (1) The proposal from the resident
management corporation, resident organization or resident cooperative
of the affected development shall at a minimum include the following:
(i) The length of time the organization has been in existence;
(ii) A description of current or past activities which demonstrate
the organization's organizational and management capability or the
planned acquisition of such capability through a partner or other
outside entities;
(iii) A statement of financial capability;
(iv) A description of involvement of any non-resident organization
(non-profit, for-profit, governmental or other entities), if any, the
proposed division of responsibilities between the two, and the non-
resident organization's financial capabilities;
(v) A plan for financing the purchase of the property and a firm
commitment for funding resources necessary to purchase the property and
pay for any necessary repairs;
(vi) A plan for the use of the property;
(vii) The proposed purchase price in relation to the appraised
value;
(viii) Justification for purchase at less than the fair market
value in accordance with Sec. 950.931(h), if appropriate;
(ix) Estimated time schedule for completing the transaction;
(x) The response to the IHA's terms of sale;
(xi) A resolution from the resident organization approving the
proposal; and
(xii) A proposed date of settlement, generally not to exceed six
months from the date of IHA approval of the proposal, or such period as
the IHA may determine to be reasonable.
(2) If the proposal is to purchase the property for homeownership
under section 5(h) or HOPE 1, then the requirements of section 18 of
the United States Housing Act of 1937 (42 U.S.C. 1437p) and this
subpart do not apply, and the applicable requirements shall be those
under the HOPE 1 guidelines, as set forth at 24 CFR Subtitle A, App. A,
or the section 5(h) regulation, as set forth in subpart P of this part.
In order for the IHA to consider a proposal to purchase under section
412, using homeownership opportunities under section 5(h) or HOPE 1,
the resident management corporation, organization or resident
cooperative of the affected development shall meet the provisions of
this paragraph (g), including items in paragraph (g)(1) of this
section.
(3) If the proposal is to purchase the property for other than the
aforementioned homeownership programs or for uses other than
homeownership, then the proposal must meet all the disposition
requirements of section 18 of the United States Housing Act of 1937 (42
U.S.C. 1437p) and this subpart.
(h) IHA Obligations. (1) Prepare and disperse the formal offer of
sale to the resident management corporation, resident organization and
resident cooperative of the affected development.
(2) Evaluate proposals received and make the selection based on the
considerations set forth in paragraph (b) of this section. Issue
letters of acceptance and rejection.
(3) Prepare certifications, where appropriate, as discussed in
paragraph (j)(3) of this section. The IHA shall comply with its
obligations under Sec. 950.923(b)(1) regarding tenant consultation and
provide evidence to HUD that it has met those obligations. The IHA
shall not act in an arbitrary manner and shall give full and fair
consideration to any qualified resident management corporation,
resident organization or resident cooperative of the affected
development and accept the proposal if it meets the terms of sale.
(i) IHA application submission requirements for proposed demolition
or disposition. (1) If the proposal from the resident organization is
rejected by the IHA, and either there is no appeal by the organization
or the appeal has been denied, the IHA shall submit its demolition or
disposition application to HUD in accordance with section 18 of the
United States Housing Act of 1937 (42 U.S.C. 1437p) and this subpart.
The demolition or disposition application must include complete
documentation that the requirements of this section have been met. IHAs
must submit written documentation that the resident management
corporation, resident organization and resident cooperative of the
affected development have been apprised of their opportunity to
purchase under this section. This documentation shall include a copy of
the signed and dated IHA notification letter(s) to each organization
informing them of the IHA's intention to submit an application for
demolition or disposition and the responses from each organization.
(2) If the IHA accepts the proposal of the resident organization,
the IHA shall submit a disposition application in accordance with
section 18 of the United States Housing Act of 1937 (42 U.S.C. 1437p)
and this subpart, with appropriate justification for a negotiated sale
and for sale at less than fair market value, if applicable.
(3) HUD will not process an application for demolition or
disposition unless the IHA provides HUD with one of the following:
(i) Where no resident management corporation, resident organization
or resident cooperative exists in the affected development and the
residents of the affected development have not formed a new
organization, a certification from either the executive director or the
board of commissioners stating that no such organization(s) exists and
documentation that a reasonable effort to inform residents of their
opportunity to organize has been made; or
(ii) Where a resident management corporation, resident organization
or resident cooperative exists in the affected development one of the
following, either paragraph (i)(3), (ii) (A) or (B) of this section:
(A) A board resolution or its equivalent from each resident
management corporation, resident organization or resident cooperative
stating that such organization has received the IHA letter, and that it
understands the offer and waives its opportunity to purchase the
project, or portion of the project, covered by the demolition or
disposition application. The response should clearly state that the
resolution was adopted by the entire organization at a formal meeting;
or
(B) A certification from the executive director or board of
commissioners of the IHA that the thirty (30) day timeframe has expired
and no response was received to its offer.
Sec. 950.927 Specific criteria for HUD approval of disposition
requests.
In addition to other applicable requirements of this subpart, HUD
will not approve a request for disposition unless HUD determines that
retention is not in the best interests of the tenants and the IHA,
because at least one of the following criteria is met:
(a) Developmental changes in the area surrounding the project
adversely affect the health or safety of the tenants or the feasible
operation of the project by the IHA.
(b) Disposition will allow the acquisition, development, or
rehabilitation of other properties that will be more efficiently or
effectively operated as low-income housing projects, and that will
preserve the total amount of low-income housing stock available to the
community.
(c) There are other factors justifying disposition that HUD
determines are consistent with the best interests of the tenants and
the IHA that are not inconsistent with other provisions of the Act.
(d) In the case of disposition of property other than dwelling
units:
(1) The property is determined by HUD to be excess to the needs of
the project (after the end of the initial operating period); or
(2) The disposition of the property is incidental to, or does not
interfere with, continued operation of the remaining portion of the
project.
Sec. 950.928 Specific criteria for HUD approval of demolition
requests.
In addition to other applicable requirements of this subpart, HUD
will not approve an application for demolition unless HUD determines
that at least one of the following criteria is met:
(a) In the case of demolition of all or a portion of a project, the
project, or a portion of the project, is obsolete as to physical
condition, location, or other factors, making it unusable for housing
purposes; and
(b) No reasonable program of modifications, in keeping with the
provisions of subpart I of this part, is feasible to return the project
or portion of the project to useful life.
Sec. 950.931 IHA application for HUD approval.
Written approval by HUD shall be required before the IHA may
undertake any transaction involving demolition or disposition. To
request approval, the IHA shall submit an application to the HUD Field
Office that includes the following:
(a) A description of the property involved;
(b) A description of, as well as a timetable for, the specific
action proposed (including, in the case of disposition, the specific
method proposed);
(c) A statement justifying the proposed disposition or demolition
under one or more of the applicable criteria of Secs. 950.927 or
950.928;
(d) If applicable, a plan that meets the requirements of
Sec. 950.117 for the relocation of tenants who would be displaced by
the proposed demolition or disposition;
(e) A description of the IHA's consultations with tenants and any
tenant organizations (as required under Sec. 950.923(b)(1)), with
copies of any written comments which may have been submitted to the IHA
and the IHA's evaluation of the comments;
(f) A replacement housing plan, as required under Sec. 950.935, and
a resolution by the governing body of the unit of tribal or general
local government in which the project is located, indicating approval
of the replacement plan;
(g) Evidence that the IHA has complied with the requirement to
offer the project or portion of the project proposed for demolition or
disposition to the resident organizations as required under
Sec. 950.925;
(h) The estimated balance of project debt, if any, under the ACC,
for development and modernization;
(i) In the case of disposition, an estimate of the fair market
value of the property, established on the basis of one independent
appraisal unless, as determined by HUD:
(1) More than one appraisal is warranted; or
(2) Another method of valuation is clearly sufficient and the
expense of an independent appraisal is unjustified because of the
limited nature of the property interest involved or other available
data;
(j) In the case of disposition, estimates of the gross and net
proceeds to be realized, with an itemization of estimated costs to be
paid out of gross proceeds and the proposed use of any net proceeds in
accordance with Sec. 950.933;
(k) A copy of a resolution by the IHA's Board of Commissioners
approving the application;
(l) If determined to be necessary by HUD, an opinion by the IHA's
legal counsel that the proposed action is consistent with applicable
requirements of Federal, State, Tribal and local laws; and
(m) Any additional information necessary to support the application
and assist HUD in making determinations under this subpart.
Sec. 950.933 Use of proceeds.
(a) Disposition. (1) Where HUD approves the disposition of real
property of a project, in whole or in part, the IHA shall dispose of it
promptly by public solicitation of bids for not less than fair market
value, unless HUD authorizes negotiated sale for reasons found to be in
the best interests of the IHA or the Federal government, or for sale
for less than fair market value (where permitted by State, Tribal or
local law), based on commensurate public benefits to the community, the
IHA or the Federal government justifying such an exception.
(2) Net proceeds (after payment of HUD-approved costs of
disposition and relocation under paragraph (a) of this section) shall
be used, subject to HUD approval, as follows: first for the retirement
of outstanding obligations, if any, issued to finance development or
modernization of the project, which in the case of scattered site
housing of an IHA, shall be in an amount that bears the same ratio to
the total of such costs and obligations as the number of units disposed
of bears to the total number of units of the project at the time of
disposition, and thereafter for the provision of housing assistance for
low-income families, through such measures as modernization of low-
income housing or the acquisition, development or rehabilitation of
other properties to operate as low-income housing.
(b) Demolition. Where HUD has approved demolition of a project, or
a portion of a project, and the proposed action is part of a
modernization program under subpart I of this part, the costs of
demolition and of relocation of displaced tenants may be included in
the modernization budget.
Sec. 950.935 Replacement housing plan.
(a) HUD may not approve an application or furnish assistance under
this subpart unless the IHA submitting the application for disposition
or demolition also submits a plan for the provision of an additional
decent, safe, sanitary, and affordable dwelling unit (at rents no
higher than permitted under the Act) for each dwelling unit to be
disposed of or demolished under the application. The plan must include
any one or a combination of the following:
(1) The acquisition or development of additional low-income housing
dwelling units;
(2) The use of 15-year project-based assistance under section 8 (as
provided for in 24 CFR part 882, subpart G);
(3) The use of not less than 15-year project-based assistance under
other Federal programs;
(4) The acquisition or development of dwelling units assisted under
a State or local Tribal government program that provides for project-
based assistance comparable in terms of eligibility, contribution to
rent, and length of assistance contract (not less than 15 years) to
assistance under section 8(b)(1) of the Act; or
(5) The use of 15-year tenant-based assistance under section 8 of
the Act (excluding vouchers under section 8(o) of the Act (42 U.S.C.
1437f(o)), under the conditions described in paragraph (b) of this
section.
(b) Fifteen-year tenant-based assistance under section 8 may be
approved under the replacement plan only if:
(1) There is a finding by HUD that replacement with project-based
assistance is not feasible; that the supply of private rental housing
actually available to those who would receive project-based assistance
under the plan is sufficient for the total number of certificates and
vouchers available in the community after implementation of the plan;
and that this available housing supply is likely to remain available
for the full 15-year term of the assistance; and
(2) HUD's findings under paragraph (b)(1) of this section are based
on objective information, which must include rates of participation by
landlords in the Section 8 program; size, condition, and rent levels of
available rental housing as compared to Section 8 standards; the supply
of vacant existing housing meeting the Section 8 housing quality
standards with rents at or below the fair market rent or the likelihood
of adjusting the fair market rent; the number of eligible families
waiting for housing assistance under the Act; the extent of
discrimination practiced against the types of individuals or families
to be served by the assistance; and such additional data as HUD may
determine to be relevant in particular circumstances.
(c) The plan must be approved by the unit of general local
government (including tribal government) in which the project is
located.
(d) The plan must include a schedule for carrying out all its terms
within a period consistent with the size of the proposed disposition or
demolition, except that the schedule for completing the plan shall in
no event exceed 6 years from the date specified to begin plan
implementation.
(e) The plan must include a method that ensures that at least the
same total number of individuals and families will be provided housing,
allowing for replacement with units of different sizes to accommodate
changes in local priority needs.
(f) The plan must include an assessment of the suitability of the
location of proposed replacement housing based upon application of the
site selection criteria established in Sec. 950.230.
(g) The plan must contain assurances that any replacement units
acquired, newly constructed or rehabilitated will meet the applicable
accessibility requirements set forth in 24 CFR 8.25.
* * * * *
Subpart Q--[Reserved]
Subpart R--Family Self-Sufficiency
Sec. 950.3001 Purpose, scope, and applicability.
(a) Purpose. The purpose of the Family Self-Sufficiency (FSS)
program is to develop local strategies to coordinate the use of public
and Indian housing assistance and housing assistance under the section
8 rental certificate and rental voucher programs with public and
private resources, to enable families eligible to receive assistance
under these programs to achieve economic independence and self-
sufficiency.
(b) Applicability. This subpart applies to Indian housing
authorities that elect to operate a local FSS program, and where such
an election is made, to Indian housing assisted under the U.S. Housing
Act of 1937, and developed or operated by an IHA in an Indian area, as
defined in Sec. 950.102. This subpart does not apply to the Mutual Help
Homeownership Program or the Turnkey III Program. Indian housing
authorities that elect to participate in the FSS program are not
subject to minimum program size requirements. Additionally, Indian
housing authorities that received Indian housing units under the FSS
incentive award competitions are not subject to the minimum program
size requirements.
Sec. 950.3002 Program objectives.
The objective of the FSS program is to reduce the dependency of
low-income families on welfare assistance and on section 8, public or
Indian housing assistance or any Federal, State, or local rent or
homeownership subsidies. The FSS program provides, low-income families
opportunities for education, job training, counseling, and other forms
of social service assistance, while living in assisted housing, so that
they may obtain the education, employment, and business and social
skills necessary to achieve self-sufficiency, as this term is defined
in Sec. 950.3003 of this subpart. HUD will measure the success of a
local FSS program not only by the number of families who achieve self-
sufficiency, but also by the number of FSS families who, as a result of
participation in the program, have family members who obtain their
first job, or who obtain higher paying jobs; no longer need benefits
received under one or more welfare programs; obtain a high school
diploma or higher education degree; or accomplish similar goals that
will assist the family in obtaining economic independence.
Sec. 950.3003 Definitions.
As used in this subpart:
Act means the United States Housing Act of 1937 (42 U.S.C. 1437-
1440).
Action Plan. See Sec. 950.3011 of this subpart.
Certification means a written assertion based on supporting
evidence, provided by the FSS family or the IHA, as may be required
under this subpart, and which:
(1) Shall be maintained by the IHA in the case of the family's
certification, or by HUD in the case of the IHA's certification;
(2) Shall be made available for inspection by HUD, the IHA, and the
public, as appropriate; and
(3) Shall be deemed to be accurate for purposes of this subpart,
unless the Secretary or the IHA, as applicable, determines otherwise
after inspecting the evidence and providing due notice and opportunity
for comment.
Chief executive officer (CEO). (1) The CEO of a unit of general
local government means the elected official or the legally designated
official who has the primary responsibility for the conduct of that
entity's governmental affairs. Examples of the CEO of a unit of general
local government are:
(i) The elected mayor of a municipality; the elected county
executive of a county;
(ii) The chairperson of a county commission or board in a county
that has no elected county executive; or
(iii) The official designated pursuant to law by the governing body
of a unit of general local government (e.g., city manager).
(2) The CEO for an Indian tribe is the tribal governing official.
Contract of participation means a contract in a form approved by
HUD, entered into between a participating family and an IHA operating
an FSS program that sets forth the terms and conditions governing
participation in the FSS program. The contract of participation
includes all individual training and services plans entered into
between the IHA and all members of the family who will participate in
the FSS program, and which plans are attached to the contract as
exhibits. For additional detail, see Sec. 950.3022 of this subpart.
Earned income means income or earnings included in annual income
from wages, tips, salaries, other employee compensation, and self-
employment. (See Sec. 950.102.) Earned income does not include any
pension or annuity, transfer payments, any cash or in-kind benefits, or
funds deposited in or accrued interest on the FSS escrow account
established by an IHA on behalf of a participating family.
Effective date of contract of participation means the first day of
the month following the month in which the FSS family and the IHA
entered into the contract of participation.
Eligible families mean current residents of Indian housing.
Enrollment means the date that the FSS family entered into the
contract of participation with the IHA.
Family Self-Sufficiency program or FSS program means the program
established by an IHA within its jurisdiction to promote self-
sufficiency among participating families, including the provision of
supportive services to these families, as authorized by section 23 of
the U.S. Housing Act of 1937 (42 U.S.C. 1437u).
FSS account means the FSS escrow account authorized by section 23
of the Act, and as provided by Sec. 950.3025 of this subpart.
FSS credit means the amount credited by the IHA to the
participating family's FSS account.
FSS family or participating family means a family that resides in
Indian housing, and that elects to participate in the FSS program, and
whose designated head of the family has signed the contract of
participation.
FSS related service program means any program, publicly or
privately sponsored, that offers the kinds of supportive services
described in the definition of ``supportive services'' set forth in
this Sec. 950.3003.
FSS slots refer to the total number of Indian housing units that
comprise the minimum size of an IHA's Indian housing FSS program.
FY means Federal Fiscal Year (starting with October 1, and ending
September 30, and designated by the calendar year in which it ends).
Head of FSS family means the adult member of the FSS family who is
the head of the household for purposes of determining income
eligibility and rent.
Housing subsidies means assistance to meet the costs and expenses
of temporary shelter, rental housing or homeownership, including rent,
mortgage or utility payments.
HUD or Department means the Department of Housing and Urban
Development Field Offices, unless HUD Headquarters is specified.
Indian housing authority or IHA. See definition in Sec. 950.102.
Individual training and services plan means:
(1) A written plan that is prepared for the head of the FSS family,
and each adult member of the FSS family who elects to participate in
the FSS program, by the IHA in consultation with the family member, and
which sets forth:
(i) The supportive services to be provided to the family member;
(ii) The activities to be completed by that family member; and
(iii) The agreed upon completion dates for the services and
activities.
(2) Each individual training and services plan must be signed by
the IHA and the participating family member, and is attached to, and
incorporated as part of the contract of participation. An individual
training and services plan must be prepared for the head of the FSS
family.
JOBS Program means the Job Opportunities and Basic Skills Training
Program authorized under part F of title IV of the Social Security Act
(42 U.S.C. 402(a)(19)).
JTPA means the Job Training Partnership Act (29 U.S.C. 1579(a)).
Low-income family. See definition in 24 CFR 950.102.
Participating family. See definition for ``FSS family'' in this
section.
Program Coordinating Committee or PCC is the committee described in
Sec. 950.3012 of this subpart.
Secretary means the Secretary of Housing and Urban Development.
Self-sufficiency means that an FSS family is no longer receiving
section 8, public or Indian housing assistance, or any Federal, State,
or local rent or homeownership subsidies or welfare assistance.
Achievement of self-sufficiency, although an FSS program objective, is
not a condition for receipt of the FSS account funds. (See
Sec. 950.3025.)
Supportive services means those appropriate services that an IHA
will make available, or cause to be made available to an FSS family
under a contract of participation, and may include:
(1) Child care--child care of a type that provides sufficient hours
of operation and serves an appropriate range of ages;
(2) Transportation--transportation necessary to enable
participating family members to receive available services, or to
commute to their places of employment;
(3) Education--remedial education; education for completion of
secondary or post secondary schooling;
(4) Employment--job training, preparation, and counseling; job
development and placement; and follow-up assistance after job placement
and completion of the contract of participation;
(5) Personal welfare--substance/alcohol abuse treatment and
counseling;
(6) Household skills and management--training in homemaking and
parenting skills; household management; and money management;
(7) Counseling--counseling in the areas of:
(i) The responsibilities of homeownership;
(ii) Opportunities available for affordable rental and
homeownership in the private housing market; and
(iii) Money management; and
(8) Other services--any other services and resources, including
case management, reasonable accommodations for individuals with
disabilities, that the IHA may determine to be appropriate in assisting
FSS families to achieve economic independence and self-sufficiency.
Unit size or size of unit refers to the number of bedrooms in a
dwelling unit.
Very low-income family. See definition in Sec. 950.102.
Welfare assistance means income assistance from Federal or State
welfare programs, and includes assistance provided under the Aid to
Families with Dependent Children (AFDC) Program, Supplemental Security
Income (SSI) that is subject to an income eligibility test; Medicaid,
food stamps, general assistance, or other assistance provided under a
Federal or State program directed to meeting general living expenses,
such as food, health care, child care, but does not include assistance
solely directed to meeting housing expenses (e.g., rent, mortgage or
utilities payments), and does not include transitional welfare
assistance (e.g. medicaid) provided to JOBS participants.
Sec. 950.3004 Basic requirements of the FSS program.
(a) Compliance with program regulations. An FSS program established
under this subpart shall be operated in conformity with the regulations
of this part.
(b) Compliance with Action Plan. An FSS program established under
this subpart shall be operated in compliance with an Action Plan, as
described in Sec. 950.3011, and provide comprehensive supportive
services as defined in Sec. 950.3003.
(c) Compliance with equal opportunity requirements. An FSS program
established under this subpart shall be operated in compliance with all
applicable Indian housing regulations and all applicable civil rights
authorities including: the Indian Civil Rights Act of 1968 (25 U.S.C.
1301-1303); title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601-3619); section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794); the Age Discrimination Act
of 1975 (42 U.S.C. 6101-6107); Executive Order 11063 on Equal
Opportunity in Housing, 27 FR 11527 (1962), as amended, 46 FR 1253
(1980); section 7(b) of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450(e)(b)); section 3 of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701u); and the regulations
implementing these authorities. (The Indian Civil Rights Act applies to
IHAs organized pursuant to tribal laws; and Title VI of the Civil
Rights Act of 1964 and the Fair Housing Act applies to state authorized
IHAs.)
Sec. 950.3011 Action Plan.
(a) General. To participate in the FSS program, an IHA must have a
HUD-approved Action Plan that complies with the requirements of this
section.
(b) Development of Action Plan. The Action Plan shall be developed
by the IHA in consultation with the chief executive officer of the
applicable unit of general local government, and the Program
Coordinating Committee.
(c) Initial submission and revisions. (1) Initial submission.
Unless the dates set forth in this paragraph are extended by HUD for
good cause, an IHA that is establishing its first FSS program must
submit an Action Plan to HUD for approval within:
(i) 90 days of notification by HUD of approval of the IHA's
application for FY 1991 or FY 1992 incentive award units; or
(ii) If the IHA did not apply for FSS incentive award units, within
90 days of notification by HUD of approval of the IHA's first
application, commencing in FY 1993, for new Indian housing units.
(2) Revision. Following initial approval of the Action Plan by HUD,
no further approval of the Action Plan is required unless the IHA
proposes to make policy changes to the Action Plan, or changes are
required by HUD. Any changes to the Action Plan must be submitted to,
and approved by HUD.
(d) Contents of Plan. The Action Plan shall describe the policies
and procedures of the IHA for operation of a local FSS program, and
shall contain, at a minimum, the following information:
(1) Family demographics--a description of the number, size,
characteristics, and other demographics (including racial and ethnic
data), and the supportive service needs of the families expected to
participate in the FSS program;
(2) Estimate of participating families--an estimate of the number
of eligible FSS families who can reasonably be expected to receive
supportive services under the FSS program, based on available and
anticipated Federal, tribal, State, local, and private resources;
(3) Eligible families from other self-sufficiency program--if
applicable, the number of eligible families, by program type, who are
participating in Operation Bootstrap, Project Self-Sufficiency, or any
other local self-sufficiency program who are expected to agree to
execute an FSS contract of participation.
(4) FSS family selection procedures--a statement indicating the
procedures to be utilized to select families for participation in the
FSS program, subject to the requirements governing the selection of FSS
families, set forth in Sec. 950.3013.
(5) Incentives to encourage participation--a description of the
incentives that the IHA intends to offer eligible families to encourage
their participation in the FSS program (incentives plan). The
incentives plan shall provide for the establishment of the FSS account
in accordance with the requirements set forth in Sec. 950.3025, and
other incentives, if any, designed by the IHA. The incentives plan
shall be part of the Action Plan.
(6) Outreach efforts--a description of:
(i) The IHA's efforts, including notification and outreach efforts,
to recruit FSS participants from among eligible families; and
(ii) The IHA's actions to be taken to assure that both minority and
non-minority groups are informed about the FSS program, and how the IHA
will make this information known (e.g., through door-to-door flyers,
posters in any common rooms, advertisements in newspapers of general
circulation, as well as any media targeted to minority groups).
(7) FSS activities and supportive services--a description of the
activities and supportive services to be provided by both public and
private resources to FSS families, and identification of the public and
private resources, which are expected to provide the supportive
services.
(8) Method for identification of family support needs--a
description of how the FSS program will identify the needs and deliver
the services and activities according to the needs of the FSS families;
(9) Program termination; withholding of services; and grievance
procedures--a description of the IHA's policies concerning: termination
of participation in the FSS program, or withholding of supportive
services on the basis of a family's failure to comply with the
requirements of the contract of participation; and the grievance and
hearing procedures available to FSS families.
(10) Assurances of non-interference with rights of non-
participating families--an assurance that a family's election to not
participate in the FSS program will not affect the family's admission
to Indian housing or the family's right to occupancy in accordance with
its lease.
(11) Timetable for program implementation--a timetable for
implementation of the FSS program, as provided in Sec. 950.3020(a)(1),
including the schedule for filling FSS slots with eligible FSS
families, as provided in Sec. 950.3013;
(12) Certification of coordination--a certification that
development of the services and activities under the FSS program has
been coordinated with the JOBS Program; the programs provided under the
JTPA; and any other relevant employment, child care, transportation,
training, and education programs (e.g., Job Training for the Homeless
Demonstration program) in the applicable area, and that implementation
will continue to be coordinated, in order to avoid duplication of
services and activities; and
(13) Optional additional information--such other information that
would help HUD determine the soundness of the IHA's proposed FSS
program.
(e) Eligibility of a combined program. An IHA that wishes to
operate a joint FSS program with other IHAs may combine its resources
with one or more IHAs to deliver supportive services under a joint
Action Plan that will provide for the establishment and operation of a
combined FSS program that meets the requirements of this subpart.
(f) Single action plan. IHAs implementing both a section 8 FSS
program and an Indian housing FSS program may submit one Action Plan.
Sec. 950.3012 Program Coordinating Committee (PCC).
(a) General. Each participating IHA must establish a PCC whose
functions will be to assist the IHA in securing commitments of public
and private resources for the operation of the FSS program within the
IHA's jurisdiction, including assistance in developing the Action Plan
and in implementing the program.
(b) Membership. (1) The PCC may consist of representatives of the
IHA and of residents of Indian housing.
(2) Recommended membership. Membership on the PCC also may include
representatives of the unit of general local government served by the
IHA, local agencies (if any) responsible for carrying out JOBS training
programs, or programs under the JTPA, and other organizations, such as
other State, local or tribal welfare and employment agencies, public
and private education or training institutions, child care providers,
nonprofit service providers, private business, and any other public and
private service providers with resources to assist the FSS program.
(c) Alternative committee. The IHA may, in consultation with the
chief executive officer of the unit of general local government served
by the IHA, utilize an existing entity as the PCC if the membership of
the existing entity consists or will consist of the individuals
identified in paragraph (b)(1) of this section, and also includes
individuals from the same or similar organizations identified in
paragraph (b)(2) of this section.
Sec. 950.3013 FSS family selection procedures.
(a) Preference in the FSS selection process. An IHA has the option
of giving a selection preference for up to 50 percent of its FSS slots
to eligible families, as defined in Sec. 950.3003, who have one or more
family members currently enrolled in an FSS related service program or
on the waiting list for such a program. The IHA may limit the selection
preference given to participants in and applicants for FSS related
service programs to one or more eligible FSS related service programs.
An IHA that chooses to exercise the selection preference option must
include the following information in its Action Plan:
(1) The percentage of FSS slots, not to exceed 50 percent of the
total number of FSS slots, for which it will give a selection
preference;
(2) The FSS related service programs to which it will give a
selection preference to the programs' participants and applicants; and
(3) The method of outreach to, and selection of, families with one
or more members participating in the identified programs.
(b) FSS selection without preference. For those FSS slots for which
the IHA chooses not to exercise the selection preference provided in
paragraph (a) of this section, the FSS slots must be filled with
eligible families in accordance with an objective selection system,
such as a lottery, the length of time living in subsidized housing, or
the date the family expressed an interest in participating in the FSS
program. The objective system to be used by the IHA must be described
in the IHA's Action Plan.
(c) Motivation as a selection factor. (1) General. An IHA may
screen families for interest, and motivation to participate in the FSS
program, provided that the factors utilized by the IHA are those which
solely measure the family's interest, and motivation to participate in
the FSS program.
(2) Permissible motivational screening factors. Permitted
motivational factors include requiring attendance at FSS orientation
sessions or preselection interviews, and assigning certain tasks which
indicate the family's willingness to undertake the obligations which
may be imposed by the FSS contract of participation (e.g., contacting
job training or educational program referrals). However, any tasks
assigned shall be those which may be readily accomplishable by the
family, based on the family members' educational level, and
disabilities, if any. Reasonable accommodations must be made for
individuals with mobility, manual, sensory, speech impairments, mental
or developmental disabilities.
(3) Prohibited motivational screening factors. Prohibited
motivational screening factors include the family's educational level,
educational or standardized motivational test results, previous job
history or job performance, credit rating, marital status, number of
children, or other factors, such as sensory or manual skills, and any
factors which may result in discriminatory practices or treatment
toward individuals with disabilities or minority or non-minority
groups.
Sec. 950.3014 On-site facilities.
Each IHA may, subject to the approval of HUD, make available and
utilize common areas or unoccupied units in Indian housing projects to
provide supportive services under an FSS program.
Sec. 950.3020 Program implementation.
(a) Program implementation deadline. (1) Program start-up. Full
delivery of the supportive services to be provided to the total number
of families required to be served under the program need not occur
within 12 months, but must occur by the deadline set forth in paragraph
(a)(2) of this section.
(2) Full enrollment and delivery of services. Except as provided in
paragraph (a)(3) of this section, the IHA must have completed
enrollment of the total number of families to be served under the FSS
program and must have begun delivery of the supportive services within
two years from the date of notification of approval of the application
for new Indian housing units.
(3) Extension of program deadlines for good cause. HUD may extend
the deadline set forth in either paragraph (a)(1) or paragraph (a)(2)
of this section if the IHA requests an extension, and the HUD Field
Office determines that, despite best efforts on the part of the IHA,
the development of new Indian housing units will not occur within the
deadlines set forth in this paragraph (a), the commitment by public or
private resources to deliver supportive services has been withdrawn,
the delivery of such services has been delayed, or other local
circumstances which the HUD Field Office determines warrants an
extension of the deadlines set forth in paragraph (a) of this section.
(b) Program administration. An IHA may employ appropriate staff,
including a service coordinator or program coordinator to administer
its FSS program, and may contract with an appropriate organization to
establish and administer the FSS program, including the FSS account, as
provided by Sec. 950.3025.
Sec. 950.3021 Administrative fees.
The performance funding system (PFS), provided under section 9(a)
of the Act, shall provide for the inclusion of reasonable and
administrative costs incurred by IHAs in carrying out the local FSS
programs. These costs are subject to appropriations by the Congress.
Sec. 950.3022 Contract of participation.
(a) General. Each family that is selected to participate in an FSS
program must enter into a contract of participation with the IHA that
operates the FSS program in which the family will participate. The
contract of participation shall be signed by the head of the FSS
family.
(b) Form and content of contract. (1) General. The contract of
participation, which incorporates the individual training and services
plan, shall be in the form prescribed by HUD, and shall set forth the
principal terms and conditions governing participation in the FSS
program, including the rights and responsibilities of the FSS family
and of the IHA, the services to be provided to, and the activities to
be completed by, the head of the FSS family, and each adult member of
the family who elects to participate in the program.
(2) Interim goals. The individual training and services plan,
incorporated in the contract of participation, shall establish specific
interim and final goals by which the IHA, and the family, may measure
the family's progress toward fulfilling its obligations under the
contract of participation, and becoming self-sufficient. For each
participating FSS family that is a recipient of welfare assistance, the
IHA must establish as an interim goal that the family become
independent from welfare assistance and remain independent from welfare
assistance for at least one year before expiration of the term of the
contract of participation, including any extension thereof.
(3) Compliance with lease terms. The contract of participation
shall provide that one of the obligations of the FSS family is to
comply with the terms and conditions of the Indian housing lease.
(4) Employment obligation. (i) Head of family's obligation. The
head of the FSS family shall be required under the contract of
participation to seek and maintain suitable employment during the term
of the contract and any extension thereof. Although other members of
the FSS family may seek and maintain employment during the term of the
contract, only the head of the FSS family is required to seek and
maintain suitable employment.
(ii) Seek employment. The obligation to seek employment means that
the head of the FSS family has applied for employment, attended job
interviews, and has otherwise followed through on employment
opportunities.
(iii) Determination of suitable employment. A determination of
suitable employment shall be made by the IHA based on the skills,
education, and job training of the individual that has been designated
the head of the FSS family, and based on the available job
opportunities within the jurisdiction served by the IHA.
(5) Consequences of noncompliance with contract. The contract of
participation shall specify that if the FSS family fails to comply with
the terms and conditions of the contract of participation, the IHA may:
(i) Withhold the supportive services; or
(ii) Terminate the family's participation in the FSS program.
(c) Contract term. The contract of participation shall provide that
each FSS family will be required to fulfill those obligations to which
the participating family has committed itself under the contract of
participation no later than 5 years after the effective date of the
contract.
(d) Contract extension. The IHA shall, in writing, extend the term
of the contract of participation for a period not to exceed two years
for any FSS family that requests, in writing, an extension of the
contract, provided that the IHA finds that good cause exists for
granting the extension. The family's written request for an extension
must include a description of the need for the extension. As used in
this paragraph (d) of this section, ``good cause'' means circumstances
beyond the control of the FSS family, as determined by the IHA, such as
a serious illness or involuntary loss of employment. Extension of the
contract of participation will entitle the FSS family to continue to
have amounts credited to the family's FSS account in accordance with
Sec. 950.3025.
(e) Unavailability of supportive services. (1) Good faith effort to
replace unavailable services. If a social service agency fails to
deliver the supportive services pledged under an FSS family member's
individual training and services plan, the IHA shall make a good faith
effort to obtain these services from another agency.
(2) Assessment of necessity of services. If the IHA is unable to
obtain the services from another agency, the IHA shall reassess the
family member's needs, and determine whether other available services
would achieve the same purpose. If other available services would not
achieve the same purpose, the IHA shall determine whether the
unavailable services are integral to the FSS family's advancement or
progress toward self-sufficiency. If the unavailable services are:
(i) Determined not to be integral to the FSS family's advancement
toward self-sufficiency, the IHA shall revise the individual training
and services plan to delete these services, and modify the contract of
participation to remove any obligation on the part of the FSS family to
accept the unavailable services, in accordance with paragraph (f) of
this section; or
(ii) Determined to be integral to the FSS family's advancement
toward self-sufficiency (which may be the case if the affected family
member is the head of the FSS family), the IHA shall declare the
contract of participation null and void.
(f) Modification. The IHA and the FSS family may mutually agree to
modify the contract of participation. The contract of participation may
be modified in writing with respect to the individual training and
services plan, the contract term in accordance with paragraph (d) of
this section, and designation of the head of the family.
(g) Completion of the contract. The contract of participation is
considered to be completed, and a family's participation in the FSS
program is considered to be concluded when one of the following occurs:
(1) The FSS family has fulfilled all of its obligations under the
contract of participation on or before the expiration of the contract
term, including any extension thereof; or
(2) Thirty (30) percent of the monthly adjusted income of the FSS
family equals or exceeds the published existing housing fair market
rent for the size of the unit for which the FSS family qualifies based
on the IHA's occupancy standards. The contract of participation will be
considered completed and the family's participation in the FSS program
concluded on this basis even though the contract term, including any
extension thereof, has not expired, and the family members who have
individual training and services plans, have not completed all the
activities set forth in their plans.
(h) Termination of the contract. The contract of participation may
be terminated before the expiration of the contract term, and any
extension thereof, by:
(1) Mutual consent of the parties;
(2) The failure of the FSS family to meet its obligations under the
contract of participation without good cause;
(3) The family's withdrawal from the FSS program;
(4) Such other act as is deemed inconsistent with the purpose of
the FSS program; or
(5) By operation of law.
(i) Transitional supportive service assistance. An IHA may continue
to offer to a former FSS family who has completed its contract of
participation and whose head of the family is employed, appropriate FSS
supportive services in becoming self-sufficient (if the family still
resides in Indian housing), or in remaining self-sufficient (if the
family no longer resides in Indian or other assisted housing).
Sec. 950.3024 Total tenant payment and increases in family income.
(a) Calculation of total tenant payment. Total tenant payment for a
family participating in the FSS program is determined in accordance
with the regulations set forth in Secs. 950.315 through 950.325.
(b) Increases in FSS family income. Any increase in the earned
income of an FSS family during its participation in an FSS program may
not be considered as income or a resource for purposes of eligibility
of the FSS family for other benefits, or amount of benefits payable to
the FSS family, under any other program administered by HUD, unless the
income of the FSS family equals or exceeds 80 percent of the median
income of the area (as determined by HUD, with adjustments for smaller
and larger families).
Sec. 950.3025 FSS account.
(a) Establishment of FSS account. (1) General. The IHA shall
deposit the FSS account funds of all families participating in the
IHA's FSS program into a single depository account. The IHA must
deposit the FSS account funds in one or more of the HUD-approved
investments.
(2) Accounting for FSS account funds. (i) Accounting records. The
total of the FSS account funds will be supported in the IHA accounting
records by a subsidiary ledger showing the balance applicable to each
FSS family. During the term of the contract of participation, the IHA
shall credit monthly, to each family's FSS account, the amount of the
FSS credit determined in accordance with paragraph (b) of this section.
(ii) Proration of investment income. The investment income for
funds in the FSS account will be prorated and credited to each family's
FSS account based on the balance in each family's FSS account at the
end of the period for which the investment income is credited.
(iii) Reduction of amounts due by FSS family. If the FSS family has
not paid the family contribution towards rent, or other amounts, if
any, due under the Indian housing lease, the balance in the family's
FSS account shall be reduced by that amount before prorating the
interest income. If the FSS family has fraudulently under-reported
income, the amount credited to the FSS account will be based on the
income amounts originally reported by the FSS family.
(3) Reporting on FSS account. Each IHA will be required to make a
report, at least once annually, to each FSS family on the status of the
family's FSS account. At a minimum, the report will include:
(i) The balance at the beginning of the reporting period;
(ii) The amount of the family's rent payment that was credited to
the FSS account, during the reporting period;
(iii) Any deductions made from the account for amounts due the IHA
before interest is distributed;
(iv) The amount of interest earned on the account during the year;
and
(v) The total in the account at the end of the reporting period.
(b) FSS credit. (1) Computation of amount. For purposes of
determining the FSS credit, ``family rent'' is the total tenant payment
as defined in this part 950. The FSS credit shall be computed as
follows:
(i) For FSS families who are very low-income families, the FSS
credit shall be the amount which is the lesser of:
(A) Thirty (30) percent of the family's current monthly adjusted
income less the family rent, which is obtained by disregarding any
increase in earned income (as defined in Sec. 950.3003) from the
effective date of the contract of participation; or
(B) The current family rent less the family rent at the time of the
effective date of the contract of participation.
(ii) For FSS families who are low-income families but not very low-
income families, the FSS credit shall be the amount determined
according to paragraph (b)(1)(i) of this section, but which shall not
exceed the amount computed for 50 percent of median income.
(2) Ineligibility for FSS credit. FSS families who are not low-
income families shall not be entitled to any FSS credit.
(3) Cessation of FSS credit. The IHA shall not make any additional
credits to the FSS family's FSS account when the FSS family has
completed the contract of participation, as defined in
Sec. 950.3022(g), or when the contract of participation is terminated
or otherwise nullified.
(c) Disbursement of FSS account funds. (1) General. The amount in
an FSS account, in excess of any amount owed to the IHA by the FSS
family, as provided in paragraph (a)(3)(iii) of this section, shall be
paid to the head of the FSS family when the contract of participation
has been completed as provided in Sec. 950.3022(g), and if, at the time
of contract completion, the head of FSS family submits to the IHA a
certification, as defined in Sec. 950.3003, that, to the best of his or
her knowledge and belief, no member of the FSS family is a recipient of
welfare assistance.
(2) Disbursement before expiration of contract term. (i) If the IHA
determines that the FSS family has fulfilled its obligations under the
contract of participation before the expiration of the contract term,
and the head of the FSS family submits a certification that, to the
best of his or her knowledge, no member of the FSS family is a
recipient of welfare assistance, the amount in the family's FSS
account, in excess of any amount owed to the IHA by the FSS family as
provided in paragraph (a)(3)(iii) of this section, shall be paid to the
head of the FSS family.
(ii) If the IHA determines that the FSS family has fulfilled
certain interim goals established in the contract of participation and
needs a portion of the FSS account funds for purposes consistent with
the contract of participation, such as completion of higher education
(i.e., college, graduate school), or job training, or to meet start-up
expenses involved in creation of a small business, the IHA may, at the
IHA's sole option, disburse a portion of the funds from the family's
FSS account to assist the family meet those expenses.
(3) Verification of family certification. Before disbursement of
the FSS account funds to the family, the IHA may verify that the FSS
family is no longer a recipient of welfare assistance by requesting
copies of any documents which may indicate whether the family is
receiving any welfare assistance, and contacting welfare agencies.
(d) Succession to FSS account. If the head of the FSS family ceases
to reside with other family members in the Indian housing unit, the
remaining members of the FSS family, after consultation with the IHA,
shall have the right to designate another family member to receive the
funds in accordance with paragraph (d) (1) or (2) of this section.
(e) Use of FSS account funds for homeownership. An FSS family may
use its FSS account funds for the purchase of a home, including the
purchase of a home under one of HUD's homeownership programs, or other
Federal, State, or local homeownership programs, unless such use is
prohibited by the statute or regulations governing the particular
homeownership program.
(f) Forfeiture of FSS account funds. (1) Conditions for forfeiture.
Amounts in the FSS account shall be forfeited upon the occurrence of
the following:
(i) The contract of participation is terminated, as provided in
Secs. 950.3022(e) or 950.3022(h); or
(ii) The contract of participation is completed by the family, as
provided in Sec. 950.3022(g), but the FSS family is receiving welfare
assistance at the time of expiration of the term of the contract of
participation, including any extension thereof.
(2) Treatment of forfeited FSS account funds. FSS account funds
forfeited by the FSS family will be credited to the IHA's operating
reserves and counted as other income in the calculation of the PFS
operating subsidy eligibility for the next budget year.
Sec. 950.3030 Reporting.
Each IHA that carries out an FSS program under this subpart shall
submit to HUD, in the form prescribed by HUD, a report regarding its
FSS program. The report shall include the following information:
(a) A description of the activities carried out under the program;
(b) A description of the effectiveness of the program in assisting
families to achieve economic independence and self-sufficiency;
(c) A description of the effectiveness of the program in
coordinating resources of communities to assist families to achieve
economic independence and self-sufficiency; and
(d) Any recommendations by the IHA or the appropriate local program
coordinating committee for legislative or administrative action that
would improve the FSS program and ensure the effectiveness of the
program.
Dated: July 18, 1994.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-17838 Filed 7-29-94; 8:45 am]
BILLING CODE 4210-33-P