[Federal Register Volume 59, Number 244 (Wednesday, December 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31212]


[[Page Unknown]]

[Federal Register: December 21, 1994]


      
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Part II





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner



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24 CFR Part 880 et al.



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

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

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

[Docket No. R-94-1719; FR-3465-F-02]
RIN 2502-AG05

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

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

ACTION: Final rule.

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SUMMARY: This rule makes final an interim rule published on May 3, 
1994. The May 3, 1994 interim rule amended HUD's section 8 regulations 
for newly constructed and substantially rehabilitated housing projects 
to provide for the system of occupancy preferences in certain section 8 
assisted housing authorized by subtitle D of title VI of the Housing 
and Community Development Act of 1992. Subtitle D allows owners of 
section 8 projects originally designed primarily for occupancy by 
elderly families to provide preferences to elderly families in 
selecting tenants for available units in those projects. Owners that 
elect to provide preferences to elderly families as authorized by 
subtitle D also must reserve no less than a statutorily determined 
number of units for disabled families who are not elderly or near-
elderly families.

EFFECTIVE DATE: January 20, 1995.

FOR FURTHER INFORMATION CONTACT: Barbara Hunter, Acting Director of the 
Planning and Procedures Division, Office of Multifamily Housing 
Management, Office of Housing, Department of Housing and Urban 
Development, Room 6184, 451 Seventh Street, SW, Washington, DC 20410. 
Telephone number (202) 708-3944 (voice) or (202) 708-4594 (TDD). (These 
telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

    On May 3, 1994 (59 FR 22916), HUD published an interim rule that 
adopted the system of occupancy preferences authorized by Subtitle D 
(sections 651-661) of title VI of the Housing and Community Development 
Act of 1992 (Pub. L. 102-550, approved October 28, 1992) (``HCD Act of 
1992''). Subtitle D, entitled ``Authority to Provide Preferences for 
Elderly Residents and Units for Disabled Residents\1\ in Certain 
Section 8 Assisted Housing'' and codified at 42 U.S.C. 13611-13620, 
allows an owner of a covered section 8 housing project to elect to 
provide preferences to elderly families in selecting tenants for 
available units in the project, subject to certain statutory 
requirements. An owner who makes this election also must reserve a 
percentage of units, not to be less than the percentage determined 
according to a formula set out in the statute, for disabled families 
who are not elderly or near-elderly.\2\
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    \1\Definitions for ``elderly families'' and ``disabled 
families'' are codified in section 3(b) of the U.S. Housing Act of 
1937 (1937 Act). Section 3(b) was amended by section 621 of the 1992 
HCD Act. Where the definition for ``elderly families'' has, since 
1974, encompassed disabled families, the amended section 3(b) now 
defines ``elderly families'' as families whose heads (or their 
spouses) or sole members are persons at least 62 years old. Thus, 
under the revised definition, a disabled person does not qualify as 
an elderly family solely because of the person's disability.
    Section 3(b) defines ``disabled families'' to mean families 
whose heads (or their spouses) or sole members are persons with 
disabilities. ``Person with disabilities'' is defined to mean a 
person who: (1) Has a disability as defined in section 223 of the 
Social Security Act; (2) is determined pursuant to regulations 
issued by the Secretary of HUD, to have a physical, mental or 
emotional impairment which is expected to be of long-continued and 
indefinite duration, substantially impedes his or her ability to 
live independently, and is of such a nature that such ability could 
be improved by more suitable housing conditions; or (3) has a 
developmental disability as defined in section 102 of the 
Developmental Disabilities Assistance and Bill of Rights Act.
    The Department's regulations for the terms defined in section 
3(b) of the 1937 Act for the assisted housing programs are published 
at 24 CFR part 812. The 1992 HCD Act amendments to section 3(b) of 
the 1937 Act will be reflected in changes to 24 CFR part 812 that 
will be made by separate rulemaking. Accordingly, unless the context 
indicates otherwise, reference to the terms elderly families, 
disabled families, and near-elderly families in this preamble is 
reference to thee terms as defined in section 3(b) of the 1937 Act, 
as amended by section 621 of the 1992 HCD Act.
    \2\Under section 3(b) of the 1937 Act, as revised by section 621 
of the 1992 HCD Act, the term ``near-elderly families'' is defined 
as families whose heads (or their spouses) or sole members are 
persons who are 50-61 years old.
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    The preamble to the May 3, 1994 interim rule provided a detailed 
summary of the provisions of subtitle D, and readers are referred to 
the May 3, 1994 interim rule for a more complete discussion of the 
provisions of subtitle D. The following, however, provides a review of 
which section 8 housing projects are covered by subtitle D, and 
therefore eligible for the election of occupancy preferences authorized 
by subtitle D.

Eligibility to Provide Preferences for Elderly Residents

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

Covered Section 8 Housing Project: Section 659

    Subtitle D and this final rule (and the May 3, 1994 interim rule) 
define ``covered section 8 housing'' to mean housing that:
    (1) Was constructed or substantially rehabilitated pursuant to 
assistance provided under section 8(b)(2) of the United States Housing 
Act of 1937 (1937 Act), as in effect before October 1, 1983;
    (2) Is assisted under a contract for assistance under such section; 
and
    (3) Was originally designed primarily for occupancy by elderly 
families.
1. Projects that are Newly Constructed or Substantially Rehabilitated 
Pursuant to Assistance Provided Under Section 8(b)(2) of the 1937 Act, 
as in Effect Before October 1, 1983
    HUD administers six section 8 programs that involve newly 
constructed or substantially rehabilitated housing. However, the system 
of preferences under subtitle D does not apply to all these programs.
    The programs to which subtitle D applies are:
    (1) The Section 8 New Construction Program, 24 CFR part 880;
    (2) The Section 8 Substantial Rehabilitation Program, 24 CFR part 
881;
    (3) The State Housing Agencies program (insofar as it involves new 
construction and substantial rehabilitation), 24 CFR part 883;
    (4) The New Construction Set-Aside for Section 515 Rural Rental 
Housing Projects Program, 24 CFR part 884; and
    (5) The Section 8 Housing Assistance Program for the Disposition of 
HUD-Owned Projects (insofar as it involves substantial rehabilitation), 
24 CFR part 886.\4\
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    \4\The ``Additional Assistance Program for Projects with HUD-
Insured and HUD-Held Mortgages'' (see 24 CFR part 886, subpart A) 
involves only existing housing. However, the ``Section 8 Housing 
Assistance Program for the Disposition of HUD-owned Projects'' (see 
24 CFR part 886, subpart C) involves substantially rehabilitated 
housing, in addition to existing housing. Accordingly, this rule 
would amend subpart C of 24 CFR part 886, but only for projects 
involving substantially rehabilitated housing.
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    Other programs which may involve section 8 new construction or 
substantial rehabilitation assistance, but which are not covered by the 
preferences in subtitle D are identified in section 658 of the HCD Act 
of 1992. Under section 658 of the HCD Act of 1992, an owner of a 
project (or portion of a project) that was originally designed for 
occupancy by elderly families, and assisted under the Section 221(d)(3) 
Below Market Interest Rate (BMIR) program, the Section 236 Mortgage 
Insurance and Interest Reduction Payment for Rental Projects program, 
or the Section 202 Loans for Housing for the Elderly or Handicapped 
Program, may continue to restrict occupancy in such projects (or 
portion of such projects) to elderly families in accordance with the 
rules, standards and agreements in effect when the housing project was 
developed. Accordingly, under this rule, the subtitle D statutory 
system of preferences does not apply to newly constructed or 
substantially rehabilitated section 8 projects with HUD insurance or 
assistance under any of these three programs.\5\ HUD emphasizes that it 
is critical that a project owner understand the type of assistance a 
project receives to determine eligibility under subtitle D and these 
regulations.
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    \5\Although in this regard, the Department is aware of no 
Section 221(d)(3) BMIR projects or Section 236 projects with Section 
8 new construction or substantial rehabilitation assistance. As 
such, by its terms, ``covered section 8 housing'' does not seem to 
encompass the Section 236 Mortgage Insurance and Interest Reduction 
Payment for Rental Projects program or the Section 221(d)(3) BMIR 
program.
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    Project owners should note that the following types of projects or 
assistance would NOT be covered by this rule:

--Section 202 housing projects,
--Section 221(d)(3) BMIR housing projects,
--Section 221(d)(4) retirement service centers (because such projects 
have FHA mortgage insurance but no section 8 assistance),
--Section 236 housing projects,
--Housing projects with contracts for section 8 loan management set 
aside (unless the projects also have contracts for section 8 assistance 
involving new construction or substantial rehabilitation, in which case 
only those units could be covered),
--Housing projects with project-based section 8 rental certificates, 
and
--Section 8 tenant-based assistance programs (rental vouchers and 
certificates).
2. Assisted Under a Contract for Assistance Under Section 8(b)(2)
    Some newly constructed or substantially rehabilitated projects have 
unassisted units and assisted units. These projects are often referred 
to as ``partially assisted projects.'' Because the statutory definition 
of ``covered section 8 housing'' only applies to housing that is under 
a contract for assistance, the subtitle D system of preferences would 
not apply to unassisted units in a partially assisted project. 
Additionally, nothing in this regulation establishes a cap on the 
number of unassisted units for disabled families in a partially 
assisted project.
    While this regulation does not apply to the unassisted units in a 
partially assisted project, this regulation also does not relieve any 
owner of any project, including the owner of a partially assisted 
project, from complying with the Fair Housing Amendments Act of 1988, 
section 504 of the Rehabilitation Act of 1973, the implementing 
regulations for these statutes, or any other applicable statutory or 
regulatory requirement, including the requirements of the National 
Housing Act, with respect to the assisted or unassisted units. However, 
notwithstanding the foregoing, owners may provide the preferences in 
accordance with this rule, with respect to the assisted units.
3. Originally Designed Primarily for Occupancy by Elderly Families
    The final statutory requirement for qualification as a ``covered 
section 8 housing project'' is that the project must have been 
originally designed for occupancy by elderly families. The statute does 
not define the term ``originally'' or define the phrase ``originally 
designed for occupancy by elderly families.'' However, the House Report 
offers some insight on this subject. The House Report suggests that to 
qualify as housing originally designed for occupancy by elderly 
families, the owner of the project must have expressed an intent to 
create housing for elderly tenants when the developer negotiated with 
the Department for Federal financial assistance. (H.R. Rept. No. 760, 
102d Cong. 2d Sess. at 141 (1992).)
    Because the various types of housing projects covered by this rule 
were developed under several different programs, and over a period of 
time which spans almost two decades, there is no uniform documentation 
at HUD which evidences the population group to be served by a project. 
In many instances, the application in response to a notice of funding 
availability (NOFA) shows that a project was designed as an elderly 
housing project. However, an indication of the population group to be 
served by the housing project does not always appear in any one 
document.
    In addition, because one of the previous definitions of ``elderly 
families'' in section 3(b) of the 1937 Act included disabled families, 
it is not always clear from documents that indicate a project was 
developed for ``elderly families'' whether the project for elderly 
families was intended to mean housing for the broader eligible category 
of families (i.e., elderly families and disabled families) or for 
families who qualified by virtue of age alone. Further confusion may be 
added by the fact that for most of the period when this housing was 
being developed, HUD policy required all housing for the elderly 
(defined by age) to incorporate certain accessible features and to 
design a certain percentage of the units to be accessible for persons 
with physical disabilities. Typically, these units were made available 
to eligible families with physical disabilities, regardless of age.
    Thus, in establishing whether a project was originally designed 
primarily for occupancy by elderly families within the meaning of 
subtitle D, two distinctions must be drawn: (1) the project was 
designed primarily for elderly families (as opposed to non-elderly 
families); and (2) the project was designed for elderly families (i.e., 
seniors), and not designed for elderly families under the broader 
meaning of this term, which formerly included elderly families and 
disabled families.

II. Final Rule--Adoption of Interim Rule With Only Clarifying 
Changes

    As discussed in the May 3, 1994 interim rule, subtitle D is very 
prescriptive in establishing how the system of occupancy preferences is 
to operate (see 59 FR 22921-22922). Subtitle D establishes which 
section 8 housing projects are eligible for the election of preferences 
provided by subtitle D. Subtitle D establishes that the ``elderly 
families'' eligible to reside in covered section 8 housing projects for 
which the owner has made the election of preferences provided by 
subtitle D are those families who meet the definition of ``elderly 
families'' as set forth in section 3(b) of the 1937 Act, as amended by 
section 621 of the HCD Act of 1992. Subtitle D establishes the formula 
by which an owner will determine the number of units in the covered 
section 8 housing project that must be reserved for occupancy by 
disabled families who are not elderly or near-elderly. Subtitle D 
establishes the secondary system of preferences available to owners if 
there are insufficient numbers of elderly families and disabled 
families who are not elderly or near-elderly to occupy all the units 
reserved for such. Subtitle D also establishes the procedures to be 
followed if units remain vacant after the owner has elected to provide 
the secondary system of preferences, and the procedures to be followed 
concerning the order of selection within groups to whom a preference 
has been given. Given the statutory framework of the system of 
preferences for elderly families authorized by subtitle D, most of the 
provisions of the May 3, 1994 interim rule flow directly from the 
statute.
    One provision in the May 3, 1994 interim rule that was not 
addressed by statute and added by regulation concerns the type of 
documentation that would support an owner's claim that the owner's 
project was originally designed primarily for occupancy by elderly 
families. In the May 3, 1994 interim rule, HUD noted that with the 
exception of possible further changes to this provision (to add 
additional types of documentation that should be included in the list) 
and possible clarifying changes, public comment would not alter the 
provisions of the interim rule because of the prescriptive nature of 
the subtitle D.
    This final rule adopts the May 3, 1994 interim rule with eight 
clarifying changes, which are as follows:
    1. The final rule clarifies that the election of elderly preference 
by an owner of a covered section 8 housing project can be made at any 
time. (See Sec. 880.612a(a)(1)(i), and comparable sections in other 
parts covered by this rule.)
    2. The final rule codifies the guidance provided in the preamble to 
the May 3, 1994 interim rule that states that where an election of an 
elderly preference would have an adverse effect on non-elderly families 
on the waiting list, the owner is required to notify those families of 
the new policy (i.e., the subtitle D system of preferences) and how 
this policy may affect them. (See new Sec. 880.612a(a)(1)(iii), and 
comparable sections in other parts covered by this rule.)
    3. The final rule also codifies the preamble guidance that 
otherwise qualified families for a section 8 housing project, such as 
disabled families, near-elderly disabled families and families with 
children, who are on the waiting list for the project, cannot be 
removed from the list because of the owner's election of an elderly 
preference. (See new Sec. 880.612a(a)(1)(iv), and comparable sections 
in other parts covered by this rule.)
    4. The final rule clarifies that an owner who makes the elderly 
preference election must be able to produce, if challenged, all 
relevant documentation in the owner's possession that pertains to the 
original design of the project, not only the evidence that was 
``supporting evidence'' as the language read in the interim rule. (See 
Sec. 880.612a(a)(2)(i) and comparable sections in other parts covered 
by this rule.)
    5. The final rule clarifies that the primary source list in the 
rule is not limited to underwriting or financial documents. (See 
Sec. 800.612(a)(b)(1)(i) and comparable sections in other parts covered 
by this rule.)
    6. The final rule clarifies that in discussing project unit mix 
with a higher percentage of efficiency and one-bedroom units, higher 
percentage means more than fifty percent. (See Sec. 880.612a(b)(1)(ii) 
and comparable sections in other parts covered by this rule.)
    7. The final rule clarifies that the requirement to make vacant 
units available to otherwise eligible families if there are an 
insufficient number of families qualifying for the elderly preference 
or for the reserved units for non-elderly disabled families (or 
qualifying for the near-elderly disabled family secondary preference if 
adopted) applies to owners of covered projects who make the elderly 
preference election, and not solely to owners who elect the elderly 
preference and elect also the secondary preference as the May 3, 1994 
interim rule indicated.
    8. The final rule clarifies that projects under National Housing 
Act programs and receiving section 8 assistance may be subject to 
preferences in addition to those contained in the section 8 
regulations. (See Sec. 880.612a(g) and comparable sections in other 
parts covered by this rule.)
    With the exception of these eight changes, the final rule remains 
the same as the May 3, 1994 interim rule.
    The following section of the preamble provides a summary of the 
issues raised by the public commenters, and HUD's response to these 
issues. Although only six commenters commented upon the May 3, 1994 
interim rule (also referred to as the subtitle D rule) by the end of 
the public comment period on July 5, 1994, the six commenters raised a 
number of issues.

III. Discussion of Public Comments

    Comment. One commenter stated that interim rulemaking was 
inappropriate for the subject matter addressed by subtitle D, and HUD 
should have solicited advance public comment before issuing the 
subtitle D rule for effect.
    Response. As noted earlier in this preamble, and discussed in more 
detail in the preamble to the May 3, 1994 interim rule (59 FR 22921-
22922), very little in HUD's subtitle D rule would be altered by public 
comment because the system of occupancy preferences established by 
subtitle D allows HUD little discretion to expand or depart from this 
system by regulation. Therefore advance public comment would not have 
been practicable or necessary.
    Additionally, as noted in the preamble to the May 3, 1994 interim 
rule, HUD, in issuing the subtitle D rule, had the benefit of public 
comment received on the rule that implemented subtitle B of title VI of 
the HCD Act of 1992 (59 FR 22921-22922). Subtitle B provides public 
housing agencies (PHAs) with the option, subject to certain 
requirements, to designate public housing projects, or portions of 
these projects, for occupancy by elderly families, disabled families or 
elderly families and disabled families. HUD's final rule implementing 
subtitle B was published on April 13, 1994 (59 FR 17652). To the extent 
that the subtitle D rule which concerns section 8 housing, and the 
subtitle B rule which concerns public housing, address similar issues, 
the public comments on the subtitle B rule were taken into 
consideration in development of the May 3, 1994 interim rule.
    Comment. One commenter stated that given the recent publication of 
the notice revising HUD's Occupancy Handbook for multifamily projects, 
and the May 3, 1994 interim rule, project owners are confused about 
their obligations and responsibilities to persons with disabilities, 
and further clarification is needed.
    Response. The notice of the revision to Chapter 2 of HUD Handbook 
on Occupancy Requirements of Subsidized Multifamily Housing Programs, 
which was published on April 28, 1994 (59 FR 21992) advised that 
Chapter 2, as revised, would remain in effect pending issuance 
regulations for subtitle D, at which time further revisions to Chapter 
2 would be issued. Those revisions are now in preparation. Chapter 2 
remains in effect to the extent that it is not contradicted by the 
interim rule, and until such time as the next revision to this chapter 
is issued. The Department also intends to issue further guidance on 
subtitle D and the issue of mixed populations in the form of technical 
assistance materials.
    Comment. One commenter expressed concern that HUD has not issued 
its rule that would revise the terms ``families'' and ``elderly 
person,'' among others, in HUD's section 8 regulations to reflect the 
changes made to these terms by section 621 of the HCD Act of 1992.
    Response. The definitions of these terms in section 621 of the HCD 
Act of 1992 are applicable without issuance of a HUD regulation. On 
April 10, 1992 (57 FR 12686), before enactment of the HCD Act of 1992, 
HUD published a proposed rule that would revise, among other things, 
the definition of ``family'' in parts 812 and 912 to reflect changes 
made to this definition by the National Affordable Housing Act (NAHA) 
(Pub.L. 101-625, approved November 28, 1990). Rather than issue 
separate rulemaking to revise the definitions in parts 812 and 912 to 
reflect the changes made to certain definitions (e.g., ``elderly 
person,'' ``person with disabilities'') by the HCD Act of 1992, HUD 
determined to make these changes at the time of issuance of the final 
rule for the April 10, 1992 proposed rule. HUD anticipates publication 
of this final rule by December 1994. Again, however, the definition 
changes made by the HCD Act of 1992 are currently applicable despite 
the absence of a final rule that amends parts 812 and 912 to reflect 
these definition changes.
    Comment. Two commenters requested that the final rule on subtitle D 
require approval by HUD before an owner may make the election of 
occupancy preferences authorized by subtitle D. The commenters stated 
that HUD approval of an owner's election is the only effective and 
available means to ensure that an owner is not improperly applying the 
provisions of subtitle D to discriminate against persons with 
disabilities under the age of 62. The commenters stated that if HUD 
declined to adopt this suggestion, then, at the least, the final rule 
should require owners to report to HUD the election of an elderly 
preference.
    Response. HUD believes that to require an owner to seek approval by 
HUD before making the election of occupancy preferences authorized by 
subtitle D is without statutory support and is not consistent with 
Congressional intent.
    As discussed earlier in this preamble, subtitle B of title VI of 
the 1992 HCD Act provides PHAs with the option to designate a public 
housing project or portion of a project for occupancy by elderly 
families, disabled families, or elderly families and disabled families. 
Subtitle B further provides that before one of these three designations 
can be made, a PHA must obtain the approval of HUD through the 
submission of an allocation plan. Accordingly, for subtitle B housing, 
Congress explicitly requires prior HUD approval. There is no comparable 
provision, however, in subtitle D. HUD does not believe that this was 
an oversight on the part of the Congress, but reflects clear 
Congressional intent that the election of occupancy preferences under 
subtitle B (``designation'' as it is referred to in subtitle B) would 
require prior HUD approval, and the election of preferences under 
subtitle D would not.
    With respect to reporting the election of preference by the owner, 
HUD has determined that this reporting requirement is not necessary. 
The applicable Section 8 regulations provide for periodic reviews of 
section 8 housing projects to determine contract compliance. The 
regulations in parts 880, 881 and 883 require annual reviews by the 
contract administrator (see Secs. 880.612 and 881.612, 883.713), and 
the regulations in parts 884 and 886 require review by HUD at such 
intervals as deemed necessary to ensure that the owner is in full 
compliance with the terms and conditions of the contract. At the time 
of this review, the contract administrator or HUD, as the case may be, 
will identify those owners who have made an election of occupancy 
preference under subtitle D. HUD will revise its form that is used in 
management reviews to include identification of those projects which 
have elected the elderly preference authorized by subtitle D. 
Additionally, in reviewing occupancy procedures, the contract 
administrator will consider the operation of the title VI occupancy 
preferences along with other occupancy procedures. Finally, HUD's 
review of an owner's decision to provide preferences may also arise in 
connection with HUD civil rights complaint investigations under the 
Fair Housing Act, or compliance reviews and complaint investigations 
under section 504 of the Rehabilitation Act of 1973, as amended, or 
other applicable civil rights statutes.
    Comment. One commenter requested that the final rule exempt 
accessible units from the covered section 8 units subject to the 
elderly preference. The commenter stated that at the very least these 
units should be rented only to those persons with disabilities who are 
near-elderly and elderly and who need the accessibility features of 
particular units.
    Response. There is no basis in subtitle D for HUD to exempt 
accessible units from covered section 8 units subject to the elderly 
preference, nor is there a need for HUD to do so. In accordance with 
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's 
implementing regulations in 24 CFR part 8, as well as the Fair Housing 
Act (42 U.S.C. 3601 et seq.) and HUD's implementing regulations in 24 
CFR part 100, reasonable accommodations must be made for the needs of 
persons with disabilities who need an accessible unit. The housing 
provider is to accommodate the person either by (1) making an available 
inaccessible unit accessible (so long as doing so would not result in a 
fundamental alteration in the nature of the program or activity or 
undue financial and administrative burdens), or (2) by transferring a 
tenant who is living in an accessible unit but does not need an 
accessible unit to the inaccessible unit, and offering the accessible 
unit to the disabled family (24 CFR 8.27). However, as discussed in the 
preamble to the May 3, 1994 interim rule, an owner who has made the 
election of occupancy preference authorized by subtitle D and who is 
selecting tenants from the waiting list, can (where it is an elderly 
family's turn for admission because the reserve requirement, if any, 
has been met) give an elderly family who needs an accessible unit a 
preference over a non-elderly disabled family who also needs the 
accessible unit. Once the reserve requirement, if any, for disabled 
families has been met, the owner can also give the accessible unit to 
an elderly family who does not need the accessibility features of the 
unit even if a non-elderly disabled family has also applied for the 
unit. HUD points out that once the reserve requirement, if any, for 
disabled families has been met, the owner can give the unit to an 
elderly family who does not need the accessibility features of the unit 
only if there is no elderly family who needs the accessibility features 
of the unit.
    Comment. One commenter stated that the final rule should 
``grandfather-in'' all non-elderly persons with disabilities on the 
project waiting lists as of June 2, 1994, the effective date of the 
interim rule, and prohibit a project owner from passing over these 
persons when selecting tenants from the waiting lists.
    Response. The statute provides no authority for HUD to adopt this 
provision; to the contrary, by its plain language, the statute 
authorizes the immediate implementation of the preferences and the set 
aside. Existing residents are protected in the event that current 
occupancy of non-elderly families with disabilities exceeds the 
percentage of units under the set aside. As noted later in this 
preamble, however, owners of covered section 8 projects who make the 
election are prohibited from removing non-elderly persons with 
disabilities from the projects' waiting lists.
    Comment. Two commenters objected to any reliance on secondary 
sources to support an owner's claim that the owner's project is a 
covered section 8 housing project. The commenters stated that secondary 
sources, which reflect actions taken by owners after they obtained HUD 
financial assistance, will do nothing to illuminate the project's 
original intent and should not be utilized. The commenters suggested 
that acceptable documents should include only legally binding documents 
submitted to HUD at the time of negotiations for Federal financial 
assistance. The commenters also strongly objected to the inclusion of 
``any other historical data'' on the basis that this broad category of 
documentation would allow owners to circumvent the intended project 
eligibility requirements of subtitle D.
    Response. HUD declines to drop secondary sources as acceptable 
sources of documentation. HUD carefully considered which documents may 
evidence project eligibility for the subtitle D system of preferences, 
and determined that it was important to include secondary sources as 
acceptable documentation. As discussed in the May 3, 1994 interim rule, 
because of the various types of housing projects covered by subtitle D 
and because these housing projects were developed under several 
different programs and over a period of time which spans almost two 
decades, there is no uniform documentation at HUD which identifies the 
population group to be served by the project. Further, difficulty in 
identifying the population group to be served is added by the fact that 
the previous definition of ``elderly families'' in the 1937 Act 
included disabled families, and HUD's policy required all housing for 
the elderly (defined by age) to incorporate certain accessible features 
and to design a certain percentage of units to be accessible for 
persons with physical disabilities. The difficulty in identifying the 
population group to be served is compounded by the fact that there 
often was no specific identification of projects as elderly (i.e., 
seniors) and standard program documents generally did not identify 
projects as elderly or, if they did so, did not distinguish between 
projects designed primarily for seniors, or for persons with 
disabilities, or for both. Given these difficulties, HUD determined 
that it was important not to limit the type of evidence that would lend 
support to an owner's claim that the owner's project was originally 
designed primarily for elderly families (seniors). Accordingly, the 
final rule provides, as did the interim rule, that if the primary 
sources do not provide clear evidence of the original design of the 
project, then original design may be established through secondary 
sources, of which there must be at least two secondary sources, 
establishing the identity of the project as elderly (seniors) housing. 
Additionally, secondary sources become important where primary sources 
conflict. Where primary sources conflict, then original design may be 
established through secondary sources.
    Comment. One commenter stated that the use of project unit mix with 
a higher percentage of efficiency and one bedroom units as a secondary 
source makes no sense. The commenter stated that the size of the units 
is therefore wholly irrelevant to the original character of the 
property. Another commenter stated that if considered as a secondary 
source, project unit mix data must be applied uniformly, and HUD must 
develop and publish project configuration standards.
    Response. HUD disagrees that project unit mix is totally 
irrelevant. As stated in the preamble to the May 3, 1994 interim rule 
((59 FR 22918) and in the text of the regulation itself, a project unit 
mix with a higher percentage of efficiency and one-bedroom units may be 
particularly relevant in distinguishing elderly projects under the 
previous definition of elderly persons (in which disabled families were 
included in the definition of ``elderly families'') from non-elderly 
projects. Project unit mix, in combination with other factors such as 
the number of accessible units, may be useful in distinguishing 
projects for seniors from those serving the former broader definition 
of ``elderly families'' which included disabled families. (See 59 FR 
22918 and Sec. 880.612a(b)(1)(ii) and comparable sections in other 
parts covered by this rule.) HUD points out that, as a secondary 
source, project unit mix alone is not sufficient to establish the 
original character of the project. The project owner must be able to 
produce another secondary source to support that the project was 
originally designed primarily for occupancy by seniors.
    With respect to establishing uniform project unit mix standards, 
HUD relies on the language of the statute itself. In describing 
projects covered by subtitle D, the statute uses the term ``primarily 
designed for occupancy by elderly families'' which HUD has defined as 
having at least a majority of the units designed for elderly families. 
In the preamble to the May 3, 1994 interim rule, HUD stated:

    The Department believes that in using the term `primarily,' the 
Congress intended to limit the applicability of subtitle D to either 
the section 8 units in those covered projects in which a majority of 
the section 8 units were designed for elderly families (i.e., 
seniors), or to the section 8 units in covered projects where a 
distinct portion of the project (e.g., a tower or a wing of a 
project, but not just a floor) exists in which the majority of 
section 8 units were restricted to seniors only. Thus, section 651 
may apply to the section 8 units in an entire project originally 
designed primarily for occupancy by elderly families (``covered 
section 8 housing project''), or section 651 may apply to the 
section 8 units in a portion of such project, but only where the 
section 8 units in this project or portion of the project were 
designed primarily for seniors. (Emphasis added.) (59 FR 22916)

    To be consistent with this interpretation that ``primarily'' means 
at least a majority of the units, the rule has been revised to state 
``project unit mix with more than fifty percent of the units which are 
efficiency or one-bedroom units.''
    Comment. One commenter stated that because there will be cases 
where neither the primary nor secondary sources establish original 
design and intent or where the project owner cannot produce original 
documentation, other evidence should be considered than that listed in 
the interim rule. The commenter suggested that the final rule provide 
that if a covered project is eligible for exemption from the familial 
status provisions of the Fair Housing Act because it constitutes 
housing for older persons it is also exempt under subtitle D. The 
commenter also suggested that if the project owner has had a fair 
housing complaint filed against the owner by a non-elderly disabled 
person on the basis of the person's eligibility to reside in the 
project that this indicate's management's belief that the project was 
built to serve seniors.
    Response. HUD clearly rejects the latter suggestion. Coverage of a 
section 8 housing project under subtitle D must be based on evidence 
that the project was originally designed primarily for seniors, not 
solely on the owner's ``belief'' that it was designed primarily for 
seniors. HUD also declines to adopt the commenter's first suggestion. 
While some ``housing for older persons,'' as this term is defined in 24 
CFR part 100, subpart E, could also constitute section 8 housing that 
is covered by subtitle D, some would not.
    HUD emphasizes that the list of primary and secondary documents are 
not intended to be all inclusive, but rather provide examples of the 
types of documents that would be acceptable. The language of the rule 
itself expresses that intent by referring in both cases to ``sources 
such as'' (emphasis added) before listing the examples. (See 
Sec. 880.612a(b)(1) (i) and (ii) and comparable sections in other parts 
covered by this rule.)
    Comment. One commenter stated that documents that indicate approval 
of a project's final proposal frequently spell out the intended nature 
of a project, yet these documents may not qualify ``as any other 
underwriting or financial document collected at or before loan 
closing.''
    Response. As noted in the response to the preceding comment, the 
list of sources does not exclude other sources such as a ``final 
proposal'' approved by HUD. To avoid any implication that the source 
list is limited to underwriting or financial documents, the word 
``other'' has been removed from this section (e.g., see 
Sec. 880.612a(b)(1)(i) and comparable sections in other parts covered 
by this rule).
    Comment. One commenter stated that the language of the interim rule 
indicates that there could be five primary sources that demonstrate a 
project's eligibility and one which indicates otherwise in which case 
the owner would be required to turn to secondary sources to establish a 
project's eligibility. The commenter states that requiring an owner to 
look to secondary sources, which are inferior to primary sources, when 
a majority of sources indicate that the project was designed primarily 
for occupancy by elderly families does not make sense.
    Response. HUD agrees with the commenter that requiring an owner to 
look at secondary sources when a majority of primary sources 
``demonstrate'' the original design of the project does not make sense, 
but disagrees that the rule indicates that this is the course of action 
that an owner would have to follow. The critical language in the rule 
is ``clear evidence'' of original design. The rule states that ``In any 
case where the primary sources do not provide clear evidence of 
original design of the project for occupancy primarily by elderly 
families, including those cases where primary documents conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.'' (Emphasis added.) (See 24 CFR 
880.612a(b)(2) and comparable provisions in other parts covered by this 
rule.)
    Establishing original design, therefore, is not simply a matter of 
where the numbers fall; that is, establishing original design is not a 
matter of counting how many documents favor a project originally 
designed for seniors and how many documents oppose such design. The 
focus is to be on the type of evidence located and how clearly the 
evidence may address the issue of original design. If one primary 
source clearly (unambiguously) establishes original design of a seniors 
project, and one or more other primary sources do not specifically 
address the original design of the project and are ambiguous, the owner 
need not look to secondary sources to establish a project's 
eligibility. In this case, the owner may rely on the single primary 
source that establishes clear evidence of a project originally designed 
for seniors. Conversely, the single primary source may clearly 
establish that the project was not originally designed for seniors. 
Again, however, where the primary sources conflict (i.e., are equally 
ambiguous or equally specific), the owner must go to secondary sources. 
An example of a document that clearly specifies the project's original 
design could be the market studies projecting occupancy by seniors on 
which underwriting decisions were made.
    Comment. One commenter stated that the documentation concerning the 
project's identity must take into account the definitions of ``elderly 
family'' and ``elderly person'' as this term has been used over the 
past several years to include ``persons with disabilities.'' The 
commenter stated that ``documents using the words `elderly person' or 
`elderly family' must be viewed as evidence of an intent to serve 
people 62 years of age and older and people with disabilities.''
    Response. HUD disagrees with the commenter, and addressed this 
issue in the preamble to the May 3, 1994 interim rule. (59 FR 22917-
22918) Because one of the previous definitions of ``elderly families'' 
in section 3(b) of the 1937 Act included disabled families, it is not 
clear from documents that indicate a project was developed for 
``elderly families'' whether the project for elderly families was 
intended to mean housing for the broader eligible category of elderly 
families (i.e., elderly families and disabled families) or housing for 
families who qualified by virtue of age alone. Thus a document's 
statement that the project is a project for elderly families, in and of 
itself, would not constitute clear evidence which category of family 
was to be served, i.e., the broader category of elderly family or the 
family who qualified by age alone.
    Comment. One commenter stated that the final rule must explicitly 
require owners to make available for inspection by applicants, tenants 
and their advocates, all relevant documents regarding elderly-only 
designation, including any conflicting documents.
    Response. The interim rule provided that the owner, if challenged 
on the issue of eligibility of the project for the election, ``must be 
able to support the project's eligibility through the production of 
supporting evidence.'' (See Sec. 880.612a(a)(2)(i) and comparable 
sections in other parts covered by this rule.) HUD has revised this 
language in the final rule to provide that the owner, if challenged on 
the issue of eligibility of the project for the election, must be able 
to support the project's eligibility through the production of all 
relevant documentation in the owner's possession that pertains to the 
original design of the project.
    Comment. One commenter stated that the final rule must explicitly 
allow individual States to decide the question of how State law will 
regulate a permissive election of elderly selection preferences because 
subtitle D permits the election ``notwithstanding any other provision 
of law.'' The commenter suggested that the following language be 
included in the rule: ``Nothing in this rule is intended to limit any 
State or local law that affords disabled families greater access than 
the minimum required by this section to projects eligible for the 
preference provided by this section, nor is it intended to relieve an 
owner of fair housing obligations imposed by State or local law.''
    Response. The ``notwithstanding any other provision of law'' 
language of subtitle D (see first sentence of sections 651 and 652 of 
subtitle D; 42 U.S.C. 13611 and 13612) is not intended, as indicated by 
the commenter, to restrict or limit implementation of the elderly 
preference as authorized by subtitle D by requiring an owner to ensure 
that implementation of the subtitle D preferences is not inconsistent 
with other statutes and regulations that may address the issue of the 
degree of access to covered section 8 housing by non-elderly persons 
with disabilities. The ``notwithstanding any other provision of law'' 
is intended to do just the opposite, which is to allow an owner of a 
covered section 8 project to implement the subtitle D preferences and 
reservation of units in the manner authorized by subtitle D without 
concern whether other laws may provide for a different implementation 
of an elderly preference, or a greater percentage of units to be 
reserved for non-elderly disabled persons.
    Comment. One commenter stated that the final rule must make clear 
that a zero reservation of units for disabled families is unacceptable. 
Two commenters objected to the statement in the preamble to the May 3, 
1994 interim rule that if a covered project did not have any disabled 
families residing in the project on the two dates specified in the 
statute, the owner would not be required to reserve any units for 
disabled families.
    Response. Subtitle D clearly allows for zero reservation of units. 
The statute does not impose a minimum percentage of units to be 
reserved for nonelderly disabled families, and the subtitle D rule 
reflects this statutory scheme. Subtitle D (section 652(b) of the HCD 
Act of 1992) provides as follows:
    (b) Number of Units--Each owner required to reserve units in a 
project for occupancy under subsection (a) shall reserve a number of 
units in the project that is not less than the lesser of--
    (1) the number of units equivalent to the higher of--
    (A) the percentage of units in the project that were occupied by 
such disabled families upon the date of enactment of this Act; or
    (B) the percentage of units in the project that were occupied by 
such families upon January 1, 1992; or
    (2) 10 percent of the number of units in the project.
    The Congress could have required the minimum number to be ``not 
less than the greater of'' as opposed to ``not less than the lesser 
of,'' which would have ensured a minimum of 10 percent of the number of 
units in a covered project to be reserved for non-elderly disabled 
families. Alternatively, the Congress could have drafted the statute to 
provide that in the event the number of units occupied by disabled 
families on the two dates in paragraph (b)(1) [cited above] equaled 
zero, the minimum percentage of units to be reserved for non-elderly 
disabled families would be 10 percent or such other percentage as the 
Congress may have desired to impose. The Congress took neither of these 
courses of action, and without these or similar provisions, there is no 
question that the calculation in paragraph (b) could result in zero 
reservation of units. However, as stated in the preamble to the May 3, 
1994 interim rule, HUD believes that few, if any, covered section 8 
housing projects will fall into the category of having no disabled 
families occupying units in the project on the date of enactment of the 
HCD Act of 1992 or January 1, 1992.
    Comment. One commenter stated that the replacement of the term 
``mobility impaired'' with the term ``tenants needing the accessibility 
features of the unit'' represents a significant change. The commenter 
stated that this term departs from the language of section 504 of the 
Rehabilitation Act of 1973 and HUD's regulations in 24 CFR part 8 which 
use the term ``individuals with physical handicaps.'' The commenter 
stated that this substitution of terms will make accessible units 
available to any disabled person who can establish a need for the 
accessible features of a unit regardless of whether or not the 
individual has a physical disability.
    Response. As an initial matter, HUD points out that the term 
``tenants needing the accessibility features of the unit'' is not used 
in the subtitle D rule, but was used in the preamble to the May 3, 1994 
interim rule. (See 59 FR 22920). Secondly, HUD notes that while the 
term ``mobility impaired'' does appear in HUD's part 8 regulations (see 
24 CFR 8.22(b)) issued in June 1988, it is now recognized that this 
term does not adequately reflect the broad range of disabilities which 
may cause an individual with a disability to need a unit with 
accessible features. The term ``mobility impaired'' was too often 
perceived as synonymous with the term ``persons in wheelchairs'' and 
did not appropriately reflect persons with other types of disabilities 
who may need accessible features of a unit. The term ``tenants needing 
the accessibility features of the unit'' used in the May 3, 1994 
interim rule is not inconsistent with the language in HUD's section 504 
regulations in 24 CFR part 8. The part 8 regulations also use the term 
``applicant or occupant having [disabilities] requiring the 
accessibility features of a unit.'' (See, e.g., 24 CFR 8.27). However, 
to have been more clear as to the types of tenants who may need the 
accessibility features of a unit, the preamble to the May 3, 1994 
interim rule should have used the term ``tenants with a disability that 
makes the accessibility features of the unit necessary.''
    With respect to the commenter's concern that a project owner may 
indiscriminately assign accessible units to tenants, HUD notes that its 
section 504 regulations require owners to take reasonable 
nondiscriminatory steps to maximize the utilization of such units by 
eligible individuals whose disability requires the accessibility 
features of the particular unit. Additionally, as stated earlier in 
this preamble, where an accessible unit is not available to a person 
with disabilities who needs an accessible unit, the housing provider is 
to accommodate the person either by (1) making the unit accessible (so 
long as doing so would not result in a fundamental alteration in the 
nature of the program or activity or undue financial and administrative 
burdens), or (2) by transferring a tenant who is living in an 
accessible unit but does not need an accessible unit to the 
inaccessible unit, and offering the accessible unit to the disabled 
family. Given these requirements, it is unlikely that owners will not 
make every effort to maximize the utilization of accessible units by 
families who need the accessibility features of the unit.
    Comment. One commenter stated that the interim rule failed to 
acknowledge that subtitle D requires owners who elect an elderly 
preference to open admissions to all section 8 eligible families 
without regard to age or disability when there are vacant units in the 
project and an insufficient number of elderly families to fill those 
vacant units. Another commenter made a similar comment in stating that 
the final rule must clarify that an owner who does not elect to provide 
a secondary preference may admit any other eligible person if there is 
an insufficient number of applicants on the waiting list to fill either 
the elderly units or the units reserved for non-elderly disabled 
families.
    Response. HUD acknowledges that although the May 3, 1994 interim 
rule touches upon this issue, the language of the rule is not as clear 
on this point as it could or should be. The May 3, 1994 interim rule 
provides: ``If the owner of an elderly project who has elected to adopt 
the secondary preferences in paragraph (d) of this section determines, 
in accordance with paragraph (f) of this section, that there are an 
insufficient number of families for whom the preference, including 
secondary preference, in occupancy has been given, to fill all the 
vacant units in the elderly project, the owner shall make the vacant 
units generally available to otherwise eligible families who apply for 
housing, without regard to the preferences and reservation of units 
provided in this section.'' (Emphasis added.) (See Sec. 880.612a(e) and 
comparable sections in other parts covered by this rule.) HUD 
recognizes that this paragraph indicates that the open admission 
requirement when there are vacant units is only applicable to owners 
who elected to adopt the secondary preferences.
    This section has been revised to clarify how an owner shall make 
vacant units in an elderly project if the owner has adopted the 
secondary preferences and there are an insufficient number of 
preferences, or if the owner has not adopted the secondary preferences 
and there are an insufficient number of preferences.
    Comment. One commenter requested that the rule provide not only for 
HUD's right to review at any time the accuracy of the owner's 
identification of a project as an elderly project, but an owner's 
implementation of the system of preferences authorized by subtitle D.
    Response. There is no need for the rule to include a provision 
addressing HUD's right to review an owner's implementation of the 
system of preferences authorized by subtitle D. An owner' 
implementation of the system of occupancy preferences is subject to 
HUD's ongoing monitoring activities of covered projects, as well as 
civil rights complaint investigations and compliance reviews.
    Comment. One commenter stated that the final rule must address the 
issue of whether a tenant who was a non-elderly disabled person upon 
admission to a covered section 8 project may still be counted as non-
elderly disabled when that person reaches the age of 50. The commenter 
stated that any tenant who is counted for the purpose of determining 
whether a project is meeting its required set-aside of units for non-
elderly tenants who are disabled should continue to be counted for such 
purpose as long as the tenant continues to reside in the project 
notwithstanding the fact that the tenant reaches the age of 50.
    Response. HUD disagrees with the commenter. As discussed in an 
earlier response, the statute allows for the possibility of zero 
reservation of units. However, where there is a required reservation of 
units (which HUD anticipates will be the case in the majority of 
covered section 8 projects), HUD believes that the Congress intended 
for project owners to maintain the required percentage of units for 
non-elderly disabled persons. When a non-elderly disabled person 
reaches the age of 50, this person's unit can no longer be counted as 
part of the required percentage of units reserved for non-elderly 
disabled families. The preamble to the May 3, 1994 interim rule 
addressed this issue in part when it stated: ``In calculating actual 
utilization of units reserved for disabled families who are not elderly 
or near-elderly, units occupied by elderly families where a member of 
the family is disabled do not count as part of the required 
percentage'' (59 FR 22920).
    Comment. One commenter stated that the preamble to the May 3, 1994 
interim rule imposes an important responsibility on owners, that did 
not appear in the text of the regulation. That responsibility is to 
give notice to families on the waiting list adversely affected by the 
elderly preference. (See 59 FR 22921.) The commenter urged that this 
preamble language be included in the text of the regulation.
    Response. The commenter is correct. In the preamble to the May 3, 
1994 interim rule, HUD stated as follows:

    [W]hen an owner's decision to provide preferences to elderly 
families under subtitle D would have an adverse effect on non-
elderly families on the waiting list, the owner would be required to 
notify those families of the new policy and how this policy may 
affect them. The notification requirement would be triggered if the 
current percentage of disabled families who are neither elderly nor 
near-elderly exceeds the minimum required percentage, and non-
elderly families on the waiting list (including those with 
disabilities) may be passed over for covered section 8 units for the 
elderly, or if the project is one of the few which will have no 
units set aside for such disabled families under subtitle D.

HUD had intended to include this notification requirement in the May 3, 
1994 interim rule, and its omission was inadvertent. This requirement 
appears in this final rule with one change. (See new 
Sec. 880.612a(a)(1)(iii) and comparable sections in other parts covered 
by this rule.) The final rule provides that notification is triggered 
if the percentage of disabled families who are neither elderly nor 
near-elderly ``equals or exceeds'' the minimum required percentage.
    The purpose of requiring this notice is to alert non-elderly 
families on the waiting list where the owner's election of the 
preference scheme would possibly have an ``adverse effect'' on them. 
Once the percentage of non-elderly disabled families in occupancy ``is 
equal to'' the required percentage determined under subtitle D, non-
elderly families may be passed over for covered section 8 units, 
unless, of course, the next unit to become vacant is a unit occupied by 
a non-elderly family.
    Comment. One commenter stated that the preamble to the May 3, 1994 
interim rule makes the point that owners are not allowed to use the 
interim rule to remove applicants from the waiting list, and that this 
point should be included in the text of the regulations.
    Response. HUD agrees with the commenter, and as noted earlier in 
this preamble has added a new paragraph (a)(1)(iii) to the rule which 
makes this point. (See new Sec. 880.612a(a)(1)(iv) and comparable 
sections in other parts covered by this rule.)
    Other Comments for Clarifying Changes or Editorial Corrections. 
Several other comments requested adoption of preamble language in the 
rule for clarity purposes or recommended editorial changes to certain 
of the regulatory provisions.
    Response. The significant clarifying changes have been individually 
addressed in this section of the preamble. With respect to other 
comments requesting clarifying changes, HUD determined that these 
requests for changes did not address significant issues that needed to 
be addressed individually in this preamble. In many cases, HUD 
determined that the clarification was not needed because the May 3, 
1994 interim rule clearly and adequately addressed the issue or other 
HUD regulations addressed the issue of concern expressed by the 
commenter. An example of the former situation is one commenter's 
request that the subtitle D rule state that the subtitle D preferences 
do not apply to unassisted units. Since the rule clearly states that 
the subtitle D preference system applies to assisted, vacant units, HUD 
determined that there was no need to adopt the language suggested by 
the commenter. A few comments concerning clarification involved 
commenters requests to provide examples of application of subtitle D to 
certain circumstances. This, however, is the type of guidance best 
addressed by a handbook or other technical assistance materials, which 
HUD is now preparing.

IV. Other Matters

Executive Order 12866

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

Environmental Impact

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

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive order 12612, Federalism, has determined that the policies 
contained in this final rule will not have substantial direct effects 
on States or their political subdivisions, or the relationship between 
the Federal government and the states, or on the distribution of power 
and responsibilities among the various levels of government. 
Specifically, the final rule is directed to owners of multifamily 
housing projects, and will not impinge upon the relationship between 
the Federal Government and State and local governments. As a result, 
the 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 final rule does not 
have potential for significant impact on family formation, maintenance, 
and general well-being within the meaning of the order. This final rule 
implements the system of preferences authorized by subtitle D of title 
VI of the 1992 HCD Act, which provides that owners of certain section 8 
covered projects that were originally designed primarily for occupancy 
by elderly families (i.e., families whose heads, spouses or sole 
members are 62 years or older) may elect to give preference in 
occupancy to vacant units in the project to elderly families. Although 
subtitle D provides for preferences for elderly families in projects 
meeting the conditions established by subtitle D, subtitle D also 
requires that owners of such projects must reserve no less then a 
minimum number of units in these projects for disabled families who are 
not elderly or near-elderly. The minimum number is determined in 
accordance with the formula established by statute.
    Since the subtitle D preference system provides a primary 
preference for elderly families, and a secondary preference for 
disabled families who are near-elderly, there is the possibility that 
this statutory system of preferences would limit the availability of 
certain section 8 housing for (1) disabled families who are not elderly 
or near-elderly (if an owner gives preference to elderly families for 
units), and (2) such families with children, and thus adversely impact 
the maintenance and well-being of these families. (Although owners can 
apply the same preferences and reservation of units to families with 
children as to families without children, owners cannot restrict 
admission to any units because of familial status as long as the family 
qualifies for the unit on the basis of the relevant age or disability 
criterion for admission.) The Department believes that the number of 
projects that would be eligible for the preferences provided by 
subtitle D is limited, and thus, the impact on family maintenance and 
well being would not be significant within the meaning of the order.

Regulatory Flexibility Act

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

Regulatory Agenda

    This rule was listed as sequence number 1803 in the Department's 
Semiannual Agenda of Regulations published on November 14, 1994 (59 FR 
57632, 57657) in accordance with Executive Order 12866 and the 
Regulatory Flexibility Act.

Catalog of Federal Domestic Assistance Programs

    The Catalog of Federal Domestic Assistance program number is 
14.156.

List of Subjects

24 CFR Part 880

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 881

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 883

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 884

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements, Rural areas.

24 CFR Part 886

    Grant programs--housing and community development, Lead poisoning, 
Rent subsidies, Reporting and recordkeeping requirements.

    Accordingly, 24 CFR parts 880, 881, 883, 884, and 886 are amended 
as follows:

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 
CONSTRUCTION

    1. The authority citation for 24 CFR part 880 continues to read as 
follows:

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

    2. Section 880.612a is revised to read as follows:


Sec. 880.612a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families.
    (1) Election by owners of eligible projects. (i) An owner of a 
project assisted under this part (including a partially assisted 
project) that was originally designed primarily for occupancy by 
elderly families (an ``eligible project'') may, at any time, elect to 
give preference to elderly families in selecting tenants for assisted, 
vacant units in the project, subject to the requirements of this 
section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (iii) An owner who elects to provide a preference to elderly 
families in accordance with this section is required to notify families 
on the waiting list who are not elderly that the election has been made 
and how the election may affect them if:
    (A) The percentage of disabled families currently residing in the 
project who are neither elderly nor near-elderly (hereafter, 
collectively referred to as ``non-elderly disabled families'') is equal 
to or exceeds the minimum required percentage of units established for 
the elderly project in accordance with paragraph (c)(1) of this 
section, and therefore non-elderly families on the waiting list 
(including non-elderly disabled families) may be passed over for 
covered section 8 units; or
    (B) The project, after making the calculation set forth in 
paragraph (c)(1) of this section, will have no units set aside for non-
elderly disabled families.
    (iv) An owner who elects to give a preference for elderly families 
in accordance with this section shall not remove an applicant from the 
project's waiting list on the basis of having made the election.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of all relevant documentation in the 
possession of the owner that pertains to the original design of the 
project.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations under the Fair Housing Act (42 
U.S.C. 3601 through 3619), or compliance reviews and complaint 
investigations under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and other applicable statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families. (1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: The application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
underwriting or financial document collected at or before loan closing; 
or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with more than fifty percent 
of efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where primary sources do not provide clear evidence 
of original design of the project for occupancy primarily by elderly 
families, including those cases where primary sources conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by non-elderly disabled families.
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of--
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
An owner shall make vacant units in an elderly project generally 
available to otherwise eligible families who apply for housing, without 
regard to the preferences and reservation of units provided in this 
section if either:
    (1) The owner has adopted the secondary preferences and there are 
an insufficient number of families for whom elderly preference, reserve 
preference, and secondary preference has been given, to fill all the 
vacant units; or
    (2) The owner has not adopted the secondary preferences and there 
are an insufficient number of families for whom elderly preference, and 
reserve preference has been given to fill all the vacant units.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 880.601(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 880.613. Projects under National Housing Act programs and 
receiving section 8 assistance may be subject to preferences in 
addition to those contained in Sec. 880.613 which also must be applied 
in selecting applicants among each respective group.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).

 
PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR 
SUBSTANTIAL REHABILITATION

    3. The authority citation for 24 CFR part 881 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.

    4. Section 881.612a is revised to read as follows:


Sec. 881.612a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families.
    (1) Election by owners of eligible projects. (i) An owner of a 
project assisted under this part (including a partially assisted 
project) that was originally designed primarily for occupancy by 
elderly families (an ``eligible project'') may, at any time, elect to 
give preference to elderly families in selecting tenants for assisted, 
vacant units in the project, subject to the requirements of this 
section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (iii) An owner who elects to provide a preference to elderly 
families in accordance with this section is required to notify families 
on the waiting list who are not elderly that the election has been made 
and how the election may affect them if:
    (A) The percentage of disabled families currently residing in the 
project who are neither elderly nor near-elderly (hereafter, 
collectively referred to as ``non-elderly disabled families'') is equal 
to or exceeds the minimum required percentage of units established for 
the elderly project in accordance with paragraph (c)(1) of this 
section, and therefore non-elderly families on the waiting list 
(including non-elderly disabled families) may be passed over for 
covered section 8 units; or
    (B) The project, after making the calculation set forth in 
paragraph (c)(1) of this section, will have no units set aside for non-
elderly disabled families.
    (iv) An owner who elects to give a preference for elderly families 
in accordance with this section shall not remove an applicant from the 
project's waiting list solely on the basis of having made the election.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of all relevant documentation in the 
possession of the owner that pertains to the original design of the 
project.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations under the Fair Housing Act (42 
U.S.C. 3601 through 3619), or compliance reviews and complaint 
investigations under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and other applicable statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families. (1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
underwriting or financial document collected at or before loan closing; 
or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with more than fifty percent 
of efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where primary sources do not provide clear evidence 
of original design of the project for occupancy primarily by elderly 
families, including those cases where primary sources conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by non-elderly disabled families.
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of--
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of this paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
An owner shall make vacant units in an elderly project generally 
available to otherwise eligible families who apply for housing, without 
regard to the preferences and reservation of units provided in this 
section if either:
    (1) The owner has adopted the secondary preferences and there are 
an insufficient number of families for whom elderly preference, reserve 
preference, and secondary preference has been given, to fill all the 
vacant units; or
    (2) The owner has not adopted the secondary preferences and there 
are an insufficient number of families for whom elderly preference, and 
reserve preference has been given to fill all the vacant units.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 881.601(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 881.613. Projects under National Housing Act programs and 
receiving section 8 assistance may be subject to preferences in 
addition to those contained in Sec. 881.613 which also must be applied 
in selecting applicants among each respective group.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE 
HOUSING AGENCIES

    5. The authority citation for 24 CFR part 883 continues to read as 
follows:

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

    6. Section 883.704a is revised to read as follows:


Sec. 883.704a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families.
    (1) Election by owners of eligible projects. (i) An owner of a 
project assisted under this part (including a partially assisted 
project) that was originally designed primarily for occupancy by 
elderly families (an ``eligible project'') may, at any time, elect to 
give preference to elderly families in selecting tenants for assisted, 
vacant units in the project, subject to the requirements of this 
section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (iii) An owner who elects to provide a preference to elderly 
families in accordance with this section is required to notify families 
on the waiting list who are not elderly that the election has been made 
and how the election may affect them if:
    (A) The percentage of disabled families currently residing in the 
project who are neither elderly nor near-elderly (hereafter, 
collectively referred to as ``non-elderly disabled families'') is equal 
to or exceeds the minimum required percentage of units established for 
the elderly project in accordance with paragraph (c)(1) of this 
section, and therefore non-elderly families on the waiting list 
(including non-elderly disabled families) may be passed over for 
covered section 8 units; or
    (B) The project, after making the calculation set forth in 
paragraph (c)(1) of this section, will have no units set aside for non-
elderly disabled families.
    (iv) An owner who elects to give a preference for elderly families 
in accordance with this section shall not remove an applicant from the 
project's waiting list solely on the basis of having made the election.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of all relevant documentation in the 
possession of the owner that pertains to the original design of the 
project.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations under the Fair Housing Act (42 
U.S.C. 3601 through 3619), or compliance reviews and complaint 
investigations under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and other applicable statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families. (1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
underwriting or financial document collected at or before loan closing; 
or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with more than fifty percent 
of efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where primary sources do not provide clear evidence 
of original design of the project for occupancy primarily by elderly 
families, including those cases where primary sources conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by non-elderly disabled families.
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of--
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of this paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
An owner shall make vacant units in an elderly project generally 
available to otherwise eligible families who apply for housing, without 
regard to the preferences and reservation of units provided in this 
section if either:
    (1) The owner has adopted the secondary preferences and there are 
an insufficient number of families for whom elderly preference, reserve 
preference, and secondary preference has been given, to fill all the 
vacant units; or
    (2) The owner has not adopted the secondary preferences and there 
are an insufficient number of families for whom elderly preference, and 
reserve preference has been given to fill all the vacant units.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 883.702(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 883.714. Projects under National Housing Act programs and 
receiving section 8 assistance may be subject to preferences in 
addition to those contained in Sec. 883.714 which also must be applied 
in selecting applicants among each respective group.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW 
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING 
PROJECTS

    7. The authority citation for 24 CFR part 884 continues to read as 
follows:

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

    8. Section 884.223a is revised to read as follows:


Sec. 884.223a  Preference for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families.
    (1) Election by owners of eligible projects. (i) An owner of a 
project assisted under this part (including a partially assisted 
project) that was originally designed primarily for occupancy by 
elderly families (an ``eligible project'') may, at any time, elect to 
give preference to elderly families in selecting tenants for assisted, 
vacant units in the project, subject to the requirements of this 
section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (iii) An owner who elects to provide a preference to elderly 
families in accordance with this section is required to notify families 
on the waiting list who are not elderly that the election has been made 
and how the election may affect them if:
    (A) The percentage of disabled families currently residing in the 
project who are neither elderly nor near-elderly (hereafter, 
collectively referred to as ``non-elderly disabled families'') is equal 
to or exceeds the minimum required percentage of units established for 
the elderly project in accordance with paragraph (c)(1) of this 
section, and therefore non-elderly families on the waiting list 
(including non-elderly disabled families) may be passed over for 
covered section 8 units; or
    (B) The project, after making the calculation set forth in 
paragraph (c)(1) of this section, will have no units set aside for non-
elderly disabled families.
    (iv) An owner who elects to give a preference for elderly families 
in accordance with this section shall not remove an applicant from the 
project's waiting list solely on the basis of having made the election.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of all relevant documentation in the 
possession of the owner that pertains to the original design of the 
project.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations under the Fair Housing Act (42 
U.S.C. 3601 through 3619), or compliance reviews and complaint 
investigations under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and other applicable statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families. (1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i) of this section, or 
at least two items from the sources (``secondary'' sources) listed in 
paragraph (b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
underwriting or financial document collected at or before loan closing; 
or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with more than fifty percent 
of efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where primary sources do not provide clear evidence 
of original design of the project for occupancy primarily by elderly 
families, including those cases where sources documents conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by non-elderly disabled families.
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of--
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of this paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
An owner shall make vacant units in an elderly project generally 
available to otherwise eligible families who apply for housing, without 
regard to the preferences and reservation of units provided in this 
section if either:
    (1) The owner has adopted the secondary preferences and there are 
an insufficient number of families for whom elderly preference, reserve 
preference, and secondary preference has been given, to fill all the 
vacant units; or
    (2) The owner has not adopted the secondary preferences and there 
are an insufficient number of families for whom elderly preference, and 
reserve preference has been given to fill all the vacant units.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 884.214(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 884.226. Projects under National Housing Act programs and 
receiving section 8 assistance may be subject to preferences in 
addition to those contained in Sec. 884.226 which also must be applied 
in selecting applicants among each respective group.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).

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

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

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

    12. Section 886.329a is revised to read as follows:


Sec. 886.329a  Preferences for occupancy by elderly families.

    (a) Election of preference for occupancy by elderly families.
    (1) Election by owners of eligible projects. (i) An owner of a 
project involving substantial rehabilitation and assisted under this 
part (including a partially assisted project) that was originally 
designed primarily for occupancy by elderly families (an ``eligible 
project'') may, at any time, elect to give preference to elderly 
families in selecting tenants for assisted, vacant units in the 
project, subject to the requirements of this section.
    (ii) For purposes of this section, a project eligible for the 
preference provided by this section, and for which the owner makes an 
election to give preference in occupancy to elderly families is 
referred to as an ``elderly project.'' ``Elderly families'' refers to 
families whose heads of household, their spouses or sole members are 62 
years or older.
    (iii) An owner who elects to provide a preference to elderly 
families in accordance with this section is required to notify families 
on the waiting list who are not elderly that the election has been made 
and how the election may affect them if:
    (A) The percentage of disabled families currently residing in the 
project who are neither elderly nor near-elderly (hereafter, 
collectively referred to as ``non-elderly disabled families'') is equal 
to or exceeds the minimum required percentage of units established for 
the elderly project in accordance with paragraph (c)(1) of this 
section, and therefore non-elderly families on the waiting list 
(including non-elderly disabled families) may be passed over for 
covered section 8 units; or
    (B) The project, after making the calculation set forth in 
paragraph (c)(1) of this section, will have no units set aside for non-
elderly disabled families.
    (iv) An owner who elects to give a preference for elderly families 
in accordance with this section shall not remove an applicant from the 
project's waiting list solely on the basis of having made the election.
    (2) HUD approval of election not required. (i) An owner is not 
required to solicit or obtain the approval of HUD before exercising the 
election of preference for occupancy provided in paragraph (a)(1) of 
this section. The owner, however, if challenged on the issue of 
eligibility of the project for the election provided in paragraph 
(a)(1) of this section must be able to support the project's 
eligibility through the production of all relevant documentation in the 
possession of the owner that pertains to the original design of the 
project.
    (ii) The Department reserves the right at any time to review and 
make determinations regarding the accuracy of the identification of the 
project as an elderly project. The Department can make such 
determinations as a result of ongoing monitoring activities, or the 
conduct of complaint investigations under the Fair Housing Act (42 
U.S.C. 3601 through 3619), or compliance reviews and complaint 
investigations under section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) and other applicable statutes.
    (b) Determining projects eligible for preference for occupancy by 
elderly families. (1) Evidence supporting project eligibility. Evidence 
that a project assisted under this part (or portion of a project) was 
originally designed primarily for occupancy by elderly families, and is 
therefore eligible for the election of occupancy preference provided by 
this section, shall consist of at least one item from the sources 
(``primary'' sources) listed in paragraph (b)(1)(i), or at least two 
items from the sources (``secondary'' sources) listed in paragraph 
(b)(1)(ii) of this section:
    (i) Primary sources. Identification of the project (or portion of a 
project) as serving elderly (seniors) families in at least one primary 
source such as: the application in response to the notice of funding 
availability; the terms of the notice of funding availability under 
which the application was solicited; the regulatory agreement; the loan 
commitment; the bid invitation; the owner's management plan, or any 
underwriting or financial document collected at or before loan closing; 
or
    (ii) Secondary sources. Two or more sources of evidence such as: 
lease records from the earliest two years of occupancy for which 
records are available showing that occupancy has been restricted 
primarily to households where the head, spouse or sole member is 62 
years of age or older; evidence that services for elderly persons have 
been provided, such as services funded by the Older Americans Act, 
transportation to senior citizen centers, or programs coordinated with 
the Area Agency on Aging; project unit mix with more than fifty percent 
of efficiency and one-bedroom units [a secondary source particularly 
relevant to distinguishing elderly projects under the previous section 
3(b) definition (in which disabled families were included in the 
definition of ``elderly families'') from non-elderly projects and which 
in combination with other factors (such as the number of accessible 
units) may be useful in distinguishing projects for seniors from those 
serving the broader definition of ``elderly families'' which includes 
disabled families]; or any other relevant type of historical data, 
unless clearly contradicted by other comparable evidence.
    (2) Sources in conflict. If a primary source establishes a design 
contrary to that established by the primary source upon which the owner 
would base support that the project is an eligible project (as defined 
in this section), the owner cannot make the election of preferences for 
elderly families as provided by this section based upon primary sources 
alone. In any case where primary sources do not provide clear evidence 
of original design of the project for occupancy primarily by elderly 
families, including those cases where primary sources conflict, 
secondary sources may be used to establish the use for which the 
project was originally designed.
    (c) Reservation of units in elderly projects for non-elderly 
disabled families. The owner of an elderly project is required to 
reserve, at a minimum, the number of units specified in paragraph 
(c)(1) of this section for occupancy by non-elderly disabled families.
    (1) Minimum number of units to be reserved for non-elderly disabled 
families. The number of units in an elderly project required to be 
reserved for occupancy by non-elderly disabled families, shall be, at a 
minimum, the lesser of:
    (i) The number of units equivalent to the higher of--
    (A) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families on October 
28, 1992; and
    (B) The percentage of units assisted under this part in the elderly 
project that were occupied by non-elderly disabled families upon 
January 1, 1992; or
    (ii) 10 percent of the number of units assisted under this part in 
the eligible project.
    (2) Option to reserve greater number of units for non-elderly 
disabled families. The owner, at the owner's option, and at any time, 
may reserve a greater number of units for non-elderly disabled families 
than that provided for in paragraph (c)(1) of this section. The option 
to provide a greater number of units to non-elderly disabled families 
will not obligate the owner to always provide that greater number to 
non-elderly disabled families. The number of units required to be 
provided to non-elderly disabled families at any time in an elderly 
project is that number determined under paragraph (c)(1) of this 
section.
    (d) Secondary preferences. An owner of an elderly project also may 
elect to establish secondary preferences in accordance with the 
provisions of this paragraph (d) of this section.
    (1) Preference for near-elderly disabled families in units reserved 
for elderly families. If the owner of an elderly project determines, in 
accordance with paragraph (f) of this section, that there are an 
insufficient number of elderly families who have applied for occupancy 
to fill all the vacant units in the elderly project reserved for 
elderly families (that is, all units except those reserved for the non-
elderly disabled families as provided in paragraph (c) of this 
section), the owner may give preference for occupancy of such units to 
disabled families who are near-elderly families.
    (2) Preference for near-elderly disabled families in units reserved 
for non-elderly disabled families. If the owner of an elderly project 
determines, in accordance with paragraph (f) of this section, that 
there are an insufficient number of non-elderly disabled families to 
fill all the vacant units in the elderly project reserved for non-
elderly disabled families as provided in paragraph (c) of this section, 
the owner may give preference for occupancy of these units to disabled 
families who are near-elderly families.
    (e) Availability of units to families without regard to preference. 
An owner shall make vacant units in an elderly project generally 
available to otherwise eligible families who apply for housing, without 
regard to the preferences and reservation of units provided in this 
section if either:
    (1) The owner has adopted the secondary preferences and there are 
an insufficient number of families for whom elderly preference, reserve 
preference, and secondary preference has been given, to fill all the 
vacant units; or
    (2) The owner has not adopted the secondary preferences and there 
are an insufficient number of families for whom elderly preference, and 
reserve preference has been given to fill all the vacant units.
    (f) Determination of insufficient number of applicants qualifying 
for preference. To make a determination that there are an insufficient 
number of applicants who qualify for the preferences, including 
secondary preferences, provided by this section, the owner must:
    (1) Conduct marketing in accordance with Sec. 886.321(a) to attract 
applicants qualifying for the preferences and reservation of units set 
forth in this section; and
    (2) Make a good faith effort to lease to applicants who qualify for 
the preferences provided in this section, including taking all feasible 
actions to fill vacancies by renting to such families.
    (g) Federal preferences. An owner that gives preferences to elderly 
families and reserves units for non-elderly disabled families in 
accordance with this section also shall select applicants among each 
respective group in accordance with the Federal preferences contained 
in Sec. 886.337. Projects under National Housing Act programs and 
receiving section 8 assistance may be subject to preferences in 
addition to those contained in Sec. 886.337 which also must be applied 
in selecting applicants among each respective group.
    (h) Prohibition of evictions. An owner may not evict a tenant 
without good cause, or require that a tenant vacate a unit, in whole or 
in part because of any reservation or preference provided in this 
section, or because of any action taken by the Secretary pursuant to 
subtitle D (sections 651 through 661) of title VI of the Housing and 
Community Development Act of 1992 (42 U.S.C. 13611 through 13620).

    Dated: November 30, 1994.
Nicolas P. Retsinas,


Assistant Secretary for Housing-Federal Housing Commissioner.

[FR Doc. 94-31212 Filed 12-20-94; 8:45 am]
BILLING CODE 4210-27-P