[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: 94-18486]


[[Page Unknown]]

[Federal Register: August 1, 1994]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

[2900-AG82]

 

Transitional Housing Loan Program

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to establish application provisions and 
selection criteria for loans to non-profit organizations for use in 
initial startup costs cor transitional housing for veterans who are in 
(or have recently been) in a program for the treatment of substance 
abuse. This new program is intended to increase the amount of 
transitional housing available for such veterans who need a period of 
supportive housing to encourage sobriety maintenance and 
reestablishment of social and community relationships.

DATES: Comments must be received on or before August 31, 1994.

ADDRESSES: Send written comments to: Secretary of Veterans Affairs, 
(271A), Department of Veterans Affairs, 810 Vermont Avenue NW, 
Washington, DC 20420. All written comments received will be available 
for public inspection on business days in the Veterans Services Unit, 
Room 119 of the above address between the hours of 8 a.m. and 4:30 p.m.

FOR FURTHER INFORMATION CONTACT: Frederick Lee, Acting Deputy Associate 
Director for Psychiatric Rehabilitation Services, or Christine Woods, 
Administrative Officer; either can be reached at (804) 722-9961 x3628. 
(This is not a toll-free number)

SUPPLEMENTARY INFORMATION: 

Background

    Substance abuse is a significant problem among veterans, with 
approximately 25% of veterans discharged from VA Medical Centers having 
substance abuse as a primary or secondary diagnosis. Many of these 
veterans, wish not to return to their prior living situation because of 
negative effects that environment may have on their substance abuse 
recovery. Group living arrangements, such as described by this 
Transitional Housing Loan Program, offer affordable housing with other 
recovering veterans, in an atmosphere free from alcohol and illegal 
drugs.
    To help ensure the availability of such transitional housing, 
section 8 of PL. 102-54 (Loans to Organizations Providing Transitional 
Housing to Substance Abusers) authorizes the Secretary of VA to make 
loans to non-profit organizations to assist in the provision of leased 
transitional housing exclusively for veterans who are in (or who have 
recently been in) a program for the treatment of substance abuse.
    This proposed rule contains application provisions and selection 
criteria for obtaining loans. Portions of this proposed rule restate 
statutory requirements. However, insofar as they establish regulatory 
material beyond the statutory requirements, the procedures and criteria 
are designed to provide a mechanism for making loans consistent with 
the statutory purpose. It is proposed that the interest rate for the 
loans shall be the same as the rate the VA is charged to borrow these 
funds from the U.S. Department of the Treasury. It is also proposed 
that a penalty of 4% of the amount due be imposed on each failure to 
pay an installment by the date specified in the loan agreement 
involved. This is in accordance with standard VA debt collection 
procedures.
    Loans may be made for up to $4,500 for each housing unit and may be 
used only for initial startup costs. Veteran residents will be required 
to pay for ongoing housing costs through fees collected by the non-
profit organization to cover rent and utilities.
    Criteria for approval of loan applications will focus on the 
applicant's favorable credit history, evidence of prior successful 
experience in providing similar services for groups of people 
recovering from substance abuse, plans for the provision of 
transitional housing, and plans for use of loan proceeds.

E.O. 12866

    This action is exempt from OMB review under E.O. 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that the provisions of this proposed 
rule would not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601-612. The reason for this 
certification is that in all likelihood, only similar entities that are 
small entities would seek loans under this program. Therefore, pursuant 
to 5 U.S.C. 605(b), this rule is exempt from the initial and final 
regulatory flexibility analysis requirement of sections 603 and 604.
    The comment period for this proposed rule has been shortened to 
thirty days. It has been determined that this is necessary in order to 
establish a final rule as soon as possible in an effort to help ensure 
that veterans recovering from substance abuse can be afforded 
transitional housing in an environment where measures are taken to help 
assure that they will not relapse.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Claims, Daycare, Dental health, Drug abuse, Foreign relations, 
Government contracts, Grant programs--health, Grant programs--veteran 
Healthcare, Health facilities, Health professionals, Health records, 
Loans, Medical and dental schools, Medical devices, Medical research, 
Medical health programs, Nursing homes, Philippines, Reporting and 
recordkeeping requirements, Scholarships and fellowships, Travel and 
transportation expenses, Veterans, Veterans Affairs Department.

    For the reasons set out in the preamble, 38 CFR part 17 is proposed 
to be amended as set out below:


PART 17--MEDICAL

    1. The authority citation for Part 17 is amended to read as 
follows:

    Authority: 38 U.S.C. 501, 7721, unless otherwise noted.

    2. Part 17 is amended by adding Sections 17.800 through 17.805 and 
on undesignated center heading preceding section 17.800 to read as 
follows:

Transitional Housing Loan Program

Sec.
17.800  Purpose.
17.801  Definitions.
17.802  Application Provisions.
17.803  Order of Consideration.
17.804  Loan Approval Criteria.
17.805  Additional Terms of Loans.

Transitional Housing Loan Program

Sec. 17.800  Purpose.

    The purpose of the Transitional Housing Loan Program regulations is 
to establish application provisions and selection criteria for loans to 
non-profit organizations for use in initial startup costs for 
transitional housing for veterans who are in (or have recently been in) 
a program for the treatment of substance abuse. This program is 
intended to increase the amount of transitional housing available for 
such veterans who need a period of supportive housing to encourage 
sobriety maintenance and reestablishment of social and community 
relationships.


Sec. 17.801  Definitions.

    (a) Applicant: A non-profit organization making application for a 
loan under this program.
    (b) Non-profit organization: A secular or religious organization, 
no part of the net earnings of which may inure to the benefit of any 
member, founder, contributor, or individual. The organization must 
include a voluntary board and must either maintain or designate an 
entity to maintain an accounting system which is operated in accordance 
with generally accepted accounting principles. If not named in, or 
approved under Title 38 U.S.C. (United States Code), Section 5902, a 
non-profit organization must provide VA with documentation which 
demonstrates approval as a non-profit organization under Internal 
Revenue Code, Section 501.c(3).
    (c) Recipient: A non-profit organization which has received a loan 
from VA under this program.
    (d) Veteran: A person who served in the active military, naval, or 
air service, and who was discharged or released therefrom under 
conditions other than dishonorable.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)


Sec. 17.802  Application Provisions.

    (a) To obtain a loan under these Transitional Housing Loan Program 
regulations, an application must be submitted by the applicant in the 
form prescribed by VA in the application package. The completed 
application package must be submitted to the Deputy Associate Director 
for Psychiatric Rehabilitation Services, (302/111C), VA Medical Center, 
100 Emancipation Drive, Hampton, VA 23667. An application package may 
be obtained by writing to the preceding address or telephoning (804) 
722-9961 x3628. (This is not a toll-free number)
    (b) The application package includes exhibits to be prepared and 
submitted, including:
    (1) Information concerning the applicant's income, assets, 
liabilities and credit history,
    (2) Information for VA to verify the applicant's financial 
information,
    (3) Identification of the official(s) authorized to make financial 
transactions on behalf of the applicant,
    (4) Information concerning:
    (i) The history, purpose and composition of the applicant,
    (ii) The applicant's involvement with recovering substance abusers, 
including:
    (A) Type of services provided,
    (B) Number of persons served,
    (C) Dates during which each type of service was provided,
    (D) Names of at least two references of government or community 
groups whom the organization has worked with in assisting substance 
abusers,
    (iii) The applicant's plan for the provision of transitional 
housing to veterans including:
    (A) Means of identifying and screening potential residents,
    (B) Number of occupants intended to live in the residence for which 
the loan assistance is requested,
    (C) Residence operating policies addressing structure for 
democratic self-government, expulsion policies for nonpayment, alcohol 
or illegal drug use or disruptive behavior,
    (D) Type of technical assistance available to residents in the 
event of house management problems,
    (E) Anticipated cost of maintaining the residence, including rent 
and utilities,
    (F) Anticipated charge, per veteran, for residing in the residence,
    (G) Anticipated means of collecting rent and utilities payments 
from residents,
    (H) A description of the housing unit for which the loan is sought 
to support, including location, types of neighborhood, brief floor plan 
description, etc., and why this residence was selected for this 
endeavor.
    (iv) The applicant's plans for use of the loan proceeds.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)


Sec. 17.803  Order of Consideration.

    Loan applications will be considered on a first-come-first-served 
basis, subject to availability of funds for loans, and awards will be 
made on a first-come-first-serve basis to applicants who meet the 
criteria for receiving a loan. If no funds are available for loans, 
applications will be retained in the order of receipt for consideration 
as funds become available.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)


Sec. 17.804  Loan Approval Criteria.

    Upon consideration of the application package, loan approval will 
be based on the following:
    (a) Favorable financial history and status,
    (1) A minimum of a two-year credit history,
    (2) No open liens, judgments, and no unpaid collection accounts,
    (3) No more than two instances where payments were ever delinquent 
beyond 60 days,
    (4) Net ratio: (monthly expenses divided by monthly cash flow) that 
does not exceed 40%,
    (5) Gross ratio: (Total indebtedness divided by gross annual cash 
flow) that does not exceed 35%,
    (6) At least two favorable credit references.
    (b) Demonstrated ability to successfully address the needs of 
substance abusers as determined by a Minimum of one year of successful 
experience in providing services, such as, provision of housing, 
vocational training, structured job seeking assistance, organized 
relapse prevention services, or similar activity. Such experience would 
involve at least than twenty-five substance abusers, and would be 
experience which could be verified by VA inquiries of government or 
community groups with whom the applicant has worked in providing these 
services.
    (c) An acceptable plan for operating a residence designed to meet 
the conditions of a loan under this program, which will include:
    (1) measures to ensure that residents are eligible for residency, 
i.e., are veterans, are in (or have recently been in) a program for the 
treatment of substance abuse, are financially able to pay their share 
of costs of maintaining the residence, and agree to abide by house 
rules and rent/utilities payment provisions,
    (2) adequate rent/utilities collections to cover cost of 
maintaining the residence,
    (3) policies that ensure democratic self-run government, including 
expulsion policies, and
    (4) available technical assistance to residents in the event of 
house management problems.
    (d) Selection of a suitable housing unit for use as a transitional 
residence in a neighborhood with no known illegal drug activity, and 
with adequate living space for number of veterans planned for residence 
(at least one large bedroom for every three veterans, at least one 
bathroom for every four veterans, adequate common space for entire 
household)
    (e) Agreements, signed by an official authorized to bind the 
recipient, which include:
    (1) the loan payment schedule in accordance with the requirements 
of PL No. 102-54, with the interest rate being the same as the rate the 
VA is charged to borrow these funds from the U.S. Department of the 
Treasury and with a penalty of 4% of the amount due for each failure to 
pay an installment by the date specified in the loan agreement 
involved, and
    (2) the applicant's intent to use proceeds of loan only to cover 
initial startup costs associated with the residence, such as security 
deposit, furnishings, household supplies, and any other initial startup 
costs.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat. 271, 38 U.S.C. 501)


Sec. 17.805  Additional Terms of Loans.

    In the operation of each residence established with the assistance 
of the loan, the recipient must agree to the following:
    (a) The use of alcohol or any illegal drugs in the residence will 
be prohibited;
    (b) Any resident who violates the prohibition of alcohol or any 
illegal drugs will be expelled from the residence;
    (c) The cost of maintaining the residence, including fees for rent 
and utilities, will be paid by residents;
    (d) The residents will, through a majority vote of the residents, 
otherwise establish policies governing the conditions of the residence, 
including the manner in which applications for residence are approved;
    (e) The residence will be operated solely as a residence for not 
less than six veterans.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat. 271, 38 U.S.C. 501)

    Approved: July 15, 1994.
Jesse Brown,
Secretary of Veterans Affairs.
[FR Doc. 94-18486 Filed 7-29-94; 8:45 am]
BILLING CODE 8320-01-M