[Federal Register Volume 59, Number 163 (Wednesday, August 24, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20656]


[[Page Unknown]]

[Federal Register: August 24, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

24 CFR Part 208

[Docket No. R-94-1691; FR-3521-F-03]
RIN 2502-AG16

 

Electronic Transmission of Required Data for Certification and 
Recertification and Subsidy Billing Procedures for Multifamily 
Subsidized Projects

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

ACTION: Final rule.

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SUMMARY: This rule requires electronic submission in a HUD-prescribed 
format of tenant and financial data by owners of certain subsidized 
multifamily projects and by the public agencies that administer the 
assistance contracts for HUD. Electronic transmission is necessary 
because the manual submission of HUD forms has become a burden to 
project owners, managers and HUD.
    This final rule responds to public comments received on a previous 
interim rule that applies to multifamily subsidized projects 
administered by State housing finance and development agencies and 
other public housing agencies under the following programs: the section 
236 Interest Reduction and Rental Assistance Payments program, the 
section 8 Housing Assistance Payments Program (except the section 8 
Existing Housing Program or the Moderate Rehabilitation Program), the 
section 221(d)(3) Below Market Interest Rate Loan program, and the 
section 101 Rent Supplement Payment program. It also applies to 
projects under the following programs: the section 202 program (except 
section 202/8 projects, for which a similar rule was already 
effective), and the section 811 Supportive Housing for Persons with 
Disabilities program.
    The change made in response to comments on the interim rule to 
clarify the 12 month retroactive data collection is extended in this 
rule to comparable provisions applicable already by final rule to 
owners of subsidized projects that are administered directly by HUD.

EFFECTIVE DATE: This rule is effective September 23, 1994.

FOR FURTHER INFORMATION CONTACT: Barbara D. Hunter, Acting Director, 
Planning and Procedures Division, Office of Multifamily Housing 
Management, Room 6180, Department of Housing and Urban Development, 451 
Seventh Street SW., Washington, D.C. 20410, telephone (202) 708-3944. 
Hearing or speech-impaired individuals may call HUD's TDD number (202) 
708-4594. (These telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

    The information collection requirements contained in this rule were 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520) and assigned OMB 
control numbers 2502-0204 and 2502-0182.

II. Background

    On November 19, 1993, a rule was published (58 FR 61017) [following 
previous publication of a proposed rule in June 1988] that covered both 
the HUD multifamily subsidized projects administered by HUD and the 
ones administered by State finance and development agencies or other 
public housing agencies as Contract Administrators (CAs) for HUD. The 
rule was final as to the projects administered directly by HUD and 
interim with no stated effective date with respect to those 
administered by CAs and to Section 202 and Section 811 projects. 
(Project owners who had already automated tenant certifications and 
recertifications of income were subject to an effective date of March 
21, 1994, whereas project owners who had not yet automated were subject 
to an effective date of May 20, 1994.)
    The rule was interim (Secs. 208.108 (c) and (d)) with respect to 
the projects administered by CAs, Section 202 Elderly Housing projects, 
and Section 811 Supportive Housing for Persons With Disabilities 
projects. No effective date announcement has been published for the 
interim rule, and this rule makes final the provisions of that interim 
rule with two changes to reflect response to comments received.

III. Discussion of Public Comments From Interim Rule

    Comments on the requirements applicable to contract administrators 
and the Section 202 projects and Section 811 projects were due January 
18, 1994. In response to the publication of that rule, the Department 
received 6 public comments. The commenters were three management 
companies, two State housing finance and development agencies, and the 
National Council of State Housing Agencies. All commentors expressed 
concern about details of the conversion to electronic submission of 
data rather than about the overall concept. As a result of these 
comments, the Department has made some revisions to the rule governing 
automation of submission of data by project owners and contract 
administrators. The following discussion summarizes the comments and 
provides HUD's responses to those comments.
    Comment: This automation of certification and recertification of 
tenant data (TRACS) should be put on hold or implemented as designed in 
the proposed rule. If this is not done, it will be impractical for many 
CAs to meet the current timing.
    Response: The Department's intent to automate has been known since 
1988, and most owners and agents have already automated the form HUD 
50059. Furthermore, this effort is necessary for the Department to meet 
its goals of improving financial management of these important programs 
and enabling accurate forecasting of budget projections for these 
programs.
    Comment: (From two management companies) HUD should consult with 
Contract Administrators to find out what additional data they would 
like to obtain, and HUD should prescribe one alternative transmission 
format for this additional data. This additional format would allow 
developers/owners to achieve the benefits of uniformity and provide 
them with the information they need.
    Response: The Department is limited to the collection of 
information that is approved by OMB. The information collected must be 
mandated by Federal Regulations and be justified by HUD before OMB will 
grant approval. Therefore, HUD is not authorized to require the 
collection of any additional information CAs may believe it is 
desirable to obtain from project owners. CAs may not use HUD data 
collection needs as a basis for seeking additional information.
    Comment: HUD should provide clear directions to CAs regarding how 
TRACS operates, what software will be needed by CAs and what technical 
assistance HUD will provide CAs to get up and running. They ask HUD to 
work with them to answer these questions to determine a reasonable date 
by which the CAs will be in full compliance with TRACS.
    Response: When a project obtains HUD-50059 data on paper, it 
submits the certification data, either directly or by a service bureau, 
to the CA in the prescribed format. The certification data are 
submitted electronically to the CA via modem, disk or tape, in 
accordance with this rule. The CA then transmits the certification data 
to HUD via modem, disk or tape.
    HUD receives the certification data and checks the format of the 
transmission. Physically acceptable records are validated for 
conformation to HUD programmatic rules. Discrepancy records are 
generated for data that does not conform to programmatic rules. 
Discrepancy records are sent back to the CA, which are in turn 
forwarded to the project. (A future enhancement of the TRACS software 
will allow discrepancy records to be sent simultaneously to the CA and 
the project if desired.) Invalid certifications are corrected as 
required by the project and resubmitted to HUD by the CA.
    There are a number of sources available to CAs that provide 
guidance:
    The HUD-50059 Information Packet. This is also known as the Yellow 
Book. The HUD-50059 Information Packet contains general information on 
TRACS, data collection and processing, data transmission media, error 
correction, and the Monthly Activity Transmission (MAT) User Guide, 
which details the required format--record layouts and field 
characteristics--for all TRACS data transmitted to and from HUD.
    The Release 1.1 Entity and Attribute Definition Report Reference. 
This contains detailed information about the data gathered by TRACS and 
the edits performed on the data to ensure that it is valid. (This 
information is technical and would be most suited for use by ADP 
professionals.)
    The PC SprintMail Electronic Information Packet. This is also known 
as the Blue Book. The PC SprintMail Electronic Information Packet 
contains information regarding electronic submission of certification 
data to HUD, using SprintMail software. The Packet covers hardware 
requirements, configuration information, installation instructions, and 
operating instructions for PC SprintMail. The PC SprintMail software is 
available from the TRACS Central Facility at 1-800-767-7558.
    Understanding the TRACS Automation Rule. This contains information 
on the programs covered by the rule, effective dates for the rule, 
transmission of retroactive data, options for submitting data 
electronically, the costs of automation, and the data to be transmitted 
to HUD.
    TRACS Industry Bulletin Board. The Bulletin Board provides a format 
for open communication between HUD and third parties with an active 
interest in TRACS. Questions and observations of a technical or 
programmatic nature can be posted on the Bulletin Board, via modem, at 
202-755-2189. For more information, CAs should consult the TRACS BBS 
User Guide.
    The TRACS Central Facility. The TRACS Central Facility can provide 
guidance on the data transmittal process and assistance in correction 
of errors in the physical composition of transmissions. All of the 
documents referenced here are available from the TRACS Central 
Facility. The TRACS Central Facility can be contacted at 1-800-767-
7588.
    The HUD-50059 Information Packet, the Release 1.1 Entity and 
Attribute Definition Report Reference, and the PC SprintMail Electronic 
Information Packet are available from the TRACS Central Facility at 1-
800-767-7588. In addition, many software vendors are now developing and 
offering products that automate the preparation of certification data 
in the prescribed format. CAs may call either or both the National 
Leased Housing Association (NLHA) at 202-785-8888 and the National 
Assisted Housing Management Association (NAHMA) at 703-683-8630 or 
other associations related to the management of assisted housing to 
obtain a listing of software developers.
    Comment: Although owners and agents may voluntarily participate by 
submitting data electronically to CA after December 1993, the CAs who 
are not automated will not be able to process these payment requests.
    Response: CAs will need to purchase or modify their software to be 
ready to receive and transmit data electronically when this rule 
becomes effective. After the CAs are automated they must notify 
projects under their jurisdiction as to when and how they are to begin 
electronic submission.
    Comment: HUD should provide CAs with in-house TRACS edit programs 
that would allow the Contract Administrators to correct all field and 
format errors before forwarding to the HUD database. This edit program 
will enhance the accuracy of the housing assistance payments.
    Response: The TRACS team has created several documents to assist 
data submitters in preparation of error-free transmissions. See above 
listing.
    Comment: Section 208.108(c) requires CAs to transmit data 
electronically to HUD in a HUD specified format. To date, the CAs have 
not been advised of the format to be utilized.
    Response: The HUD specified format is detailed in the Yellow Book. 
See listing of sources of information on TRACS.
    Comment: In order to build the contemplated HUD database, it does 
not appear necessary to collect all tenant data for the previous twelve 
months. Rather collection of the most recent tenant certification from 
form HUD 50059 should provide all the necessary data.
    Response: Data is requested for subsidized tenants who are 
currently in occupancy and have not had their assistance terminated. 
The transmission of retroactive data is to include only the tenant's 
most recent ``complete certification'' (move-in, initial certification, 
interim recertification). When the most recent certification for a 
tenant is a partial certification (gross rent change or unit transfer), 
both the complete and partial certifications should be transmitted so 
that HUD's automated system can establish a complete record for the 
household.
    Sections 208.108(a) through (d) have been revised to reflect this 
clarification, both for the projects administered by CAs and those 
directly administered by HUD.
    Comment: Current HUD handbook provisions require the CA to review 
supporting documentation for Special Claims before approving the claim 
for payment. Special claims are submitted for billing only after this 
review. The Interim Rule (Sec. 208.108(e)) does not distinguish between 
Special Claims that have been reviewed and approved for payment from 
those that have just been received from project owners. The Final Rule 
should clearly indicate that only previously approved Special Claims 
should be submitted electronically to the CA.
    Response: Automation of Special Claims is contained in a future 
system release, and the design has not been fully developed at this 
time. In instances where HUD is the contract administrator, current 
plans call for electronic transmission of detailed data contained in 
the Section 8 Special Claims Worksheets (Forms 52671A-D), prior to 
approval by the field office. There would be a concurrent manual 
submission of supporting documentation as required in Handbook 
Sec. 4350.3, Chapter 6. Special Claims would not be submitted for 
billing until after the field office has approved the claim and so 
noted it in the system. The billing data is contained in the Housing 
Owner's Certification and Application for Housing Assistance Payments 
(Form 52670), and Schedule of Section 8 Special Claims (Form 52670A 
Part 2). The system will be designed to verify that approval has been 
granted when special claims are billed.
    Where a contract administrator other than HUD has the 
responsibility for reviewing and approving special claims, it is 
anticipated that there will be a similar process by which the contract 
administrator will review the documentation and note the approval in 
the system. Again, the system will verify that approval has been 
granted by the contract administrator. More information on this 
function will be provided when the system design is completed.
    Comment: HUD should reimburse CAs equitably for TRACS-related 
expenses.
    Response: CAs receive an administrative fee as reimbursement for 
administering contracts. It is the Department's opinion that once CAs 
are automated, the actual costs of doing business will be reduced, 
since CAs will be able to reduce their clerical and administrative 
costs. The cost of administering contracts will be higher with the 
onset of automation, but the actual costs will be reduced over time, 
which will have a balancing effect on the overall cost of administering 
the contracts. Moreover, CAs will need to automate various other 
functions they perform just to stay current with technological 
improvements in management practices.
    Comment: HUD should allow for a trial operating period, so the 
system can be tested and any difficulties resolved.
    Response: Undoubtedly, once CAs start transmitting, there will be 
some difficulties. These will be tested and resolved during those 
initial months of transmission.
    Comment: Requiring some projects, particularly small projects 
located in remote areas or projects where an owner/manager only owns 
one or two projects, to automate and electronically transmit the 
required data to HUD will place unnecessary burden on them. HUD should 
allow CAs to accept hard copy information directly from these projects, 
either by processing these projects' data forms or by operating as 
service bureaus.
    Response: Section 208.112(e) of the current rule permits owners of 
small projects covered by the rule either to automate or to contract 
with a service bureau to perform the automated transmission function. 
This rule revises Sec. 208.112(e) to extend the same option of using a 
service bureau to State agencies administering only one project. Even 
though the Department would prefer for each State agency to obtain its 
own hardware and software, this rule gives greater latitude to State 
agencies administering only one project (approximately 100 units) in 
recognition of their concern that automation of their operations might 
not be cost effective.

IV. Other Matters

A. Regulatory Review

    This rule was reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866 on Regulatory Planning and Review, issued 
by the President on September 30, 1993. Any changes made in this rule 
subsequent to its submission to OMB are identified in the docket file, 
which is available for public inspection in the office of the 
Department's Rules Docket Clerk, room 10276, 451 Seventh Street SW., 
Washington, DC.

B. Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations, 
the policies and procedures contained in this rule relate only to HUD 
administrative procedures and, therefore, are categorically excluded 
from the requirements of the National Environmental Policy Act.

C. Executive Order 12612, Federalism

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

D. Executive Order 12606, the Family

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

E. Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. Because this rule changes the 
way in which the data is transmitted to HUD, and all costs associated 
with implementation of the electronic transmission will be considered 
project operating costs, the rule is not expected to have a significant 
economic impact.

F. Regulatory Agenda

    This rule was listed as item number 1601 under the Office of 
Housing in the Department's Semiannual Agenda of Regulations published 
on April 25, 1994 (59 FR 20424, 20451) under Executive Order 12866 and 
the Regulatory Flexibility Act.

G. Catalog

    The Catalog of Federal Domestic Assistance numbers for the programs 
affected by this rule are 14.103, 14.149, 14.157, 14.181, and 14.182.

List of Subjects in 24 CFR Part 208

    Computer technology--automatic data processing, Data processing, 
Electronic data processing, Subsidies--grant programs, Rent subsidies.

    Accordingly, chapter II of title 24 of the Code of Federal 
Regulations is amended as follows:

PART 208--ELECTRONIC TRANSMISSION OF REQUIRED DATA FOR 
CERTIFICATION AND RECERTIFICATION AND SUBSIDY BILLING PROCEDURES 
FOR MULTIFAMILY SUBSIDIZED PROJECTS

    1. The authority citation for part 208 continues to read as 
follows:

    Authority: 12 U.S.C. 1701s, 1715l, 1715z-1; 42 U.S.C. 1437f and 
3535(d).


    2. Section 208.108 is amended by:
    a. Adding section headings at the beginning of paragraphs (a), (b), 
and (e);
    b. Adding two sentences to the end of paragraphs (a) and (b)(3); 
and
    c. Revising paragraphs (c) and (d), to read as follows:


Sec. 208.108  Requirements.

    (a) Projects specified in Sec. 208.104(a) that are automated. * * * 
Data collected for the 12 months preceding March 21, 1994, is to 
include only the tenant's most recent ``complete certification'' (move-
in, initial certification, interim recertification, or annual 
recertification). When the most recent certification for a tenant is a 
partial certification (gross rent change, unit transfer, or 
correction), both the complete and partial certifications must be 
transmitted.
    (b) Projects specified in Sec. 208.104(a) that are not automated.
    (3) * * *
    Data collected for the 12 months preceding May 20, 1994, is to 
include only the tenant's most recent ``complete certification'' (move-
in, initial certification, interim recertification, or annual 
recertification). When the most recent certification for a tenant is a 
partial certification (gross rent change, unit transfer, or 
correction), both the complete and partial certifications must be 
transmitted.
    (c) Projects specified in Sec. 208.104(b). (1) Project owners. 
Project owners of applicable projects under Sec. 208.104(b) must 
electronically transmit data for certification, recertification and 
subsidy billing procedures in a HUD specified format to the contract 
administrator. These project owners are required to transmit data 
collected for the 12 months preceding September 23, 1994, as well as 
data collected on or after that date. Data collected for the 12 months 
preceding September 23, 1994 is to include only the tenant's most 
recent ``complete certification'' (move-in, initial certification, 
interim recertification, or annual recertification). When the most 
recent certification for a tenant is a partial certification (gross 
rent change, unit transfer, or correction), both the complete and 
partial certifications must be transmitted.
    (2) Contract administrators. State housing finance and development 
agencies and Public Housing Agencies that serve as the subsidy contract 
administrator must accept the electronic transmission of the HUD forms 
listed below in Sec. 208.108(e) from the projects they administer, and 
electronically transmit that data to HUD in a HUD specified format 
after appropriate review and correction of the data.
    (d) Projects specified in Sec. 208.104(c). Project owners of 
applicable projects under Sec. 208.104(c) must electronically transmit 
data for certification, recertification and subsidy billing procedures 
to HUD in a HUD specified format. In the case of partially assisted 
section 202 projects, owners are required to electronically transmit 
data only for subsidized units. These project owners are required to 
transmit data collected for the 12 months preceding the effective date 
of the rule, as well as data collected on or after the effective date 
of the rule. Data collected for the 12 months preceding September 23, 
1994 is to include only the tenant's most recent ``complete 
certification'' (move-in, initial certification, interim 
recertification, or annual recertification). When the most recent 
certification for a tenant is a partial certification (gross rent 
change, unit transfer, or correction), both the complete and partial 
certifications must be transmitted.
    (e) Data to be transmitted. * * *
    3. In Sec. 208.112, paragraph (e) is revised to read as follows:


Sec. 208.112  Cost.

* * * * *
    (e) Owners of smaller projects or partially assisted projects with 
few subsidized units and CAs that administer no more than one project 
that determine that the purchase of hardware and/or software is not 
cost effective may contract out the electronic data transmission 
function to organizations that provide such services, including, but 
not limited to the following organizations: local management agents, 
local management associations and management agents with centralized 
facilities. Owners of multiple projects may centralize the electronic 
transmission function. However, owners that contract out or centralize 
the electronic transmission function are required to retain the ability 
to monitor the day-to-day operations of the project at the project site 
and be able to demonstrate that ability to the relevant HUD field 
office.


    Dated: August 15, 1994.
Nicolas Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 94-20656 Filed 8-23-94; 8:45 am]
BILLING CODE 4210-27-P