[Federal Register Volume 60, Number 41 (Thursday, March 2, 1995)]
[Rules and Regulations]
[Pages 11836-11842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4889]




[[Page 11835]]

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Part VI





Department of Housing and Urban Development





_______________________________________________________________________



Office of Assistant Secretary for Housing--Federal Housing Commissioner



_______________________________________________________________________



24 CFR Part 890



Supportive Housing for Persons With Disabilities; Management; Interim 
Rule

  Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules 
and Regulations   
[[Page 11836]] 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Assistant Secretary for Housing--Federal Housing Commissioner

24 CFR Part 890

[Docket No. R-95-1766; FR-3337-I-01]
RIN 2502-AF87


Supportive Housing for Persons With Disabilities; Management

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

ACTION: Interim rule.

-----------------------------------------------------------------------

SUMMARY: This interim rule establishes the requirements related to 
management and operation of the Supportive Housing for Persons with 
Disabilities Program. The purpose of the Supportive Housing for Persons 
with Disabilities Program is to enable persons with disabilities to 
live with dignity and independence within their communities by 
expanding the supply of supportive housing that is designed to 
accommodate the special needs of such persons and provides supportive 
services that address the individual health, mental health, and other 
needs of such persons. Included in a companion interim rule in today's 
Federal Register for the management and operation of projects funded by 
the Supportive Housing for the Elderly Program are amendments which add 
both Supportive Housing programs to the list of projects covered by the 
pet ownership requirements, and which apply the wage and claim consent 
form requirements to both programs.

DATES: Effective Date: April 13, 1995.
    Sunset Provisions: Sections 890.600 through 890.650 shall expire 
and shall not be in effect after October 2, 1996, unless changes in 
this interim rule are published as a final rule, or the Department 
publishes a notice in the Federal Register to extend the effective 
date.
    Comments due date: May 1, 1995.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Rules Docket Clerk, Office of the General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street SW., Washington, DC 20410-0500. Communications should 
refer to the above docket number and title. A copy of each 
communication submitted will be available for public inspection during 
regular business hours (weekdays 7:30 a.m. to 5:30 p.m.) at the above 
address.

FOR FURTHER INFORMATION CONTACT: Margaret Milner, Acting Director, 
Office of Elderly and Assisted Housing, Department of Housing and Urban 
Development, 451 Seventh Street SW., Room 6130, Washington, DC 20410, 
telephone (202) 708-4542; (TDD) (202) 708-4594. (These are not toll-
free numbers).

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

    The information collection requirements contained in this interim 
rule have been approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520), and 
assigned OMB control number 2502-0470.

II. Justification for Interim Rulemaking

    In general, the Department publishes a rule for public comment 
before issuing a rule for effect, in accordance with its own 
regulations on rulemaking, 24 CFR part 10. However, part 10 provides 
for exceptions from that general rule when the agency finds good cause 
to omit advance notice and public participation. The good cause 
requirement is satisfied when prior public procedure is 
``impracticable, unnecessary, or contrary to the public interest'' (24 
CFR 10.1). The Department finds that good cause exists to publish this 
interim rule for effect without first soliciting public comment, in 
that prior public procedure is unnecessary. These management rules vary 
only slightly from previous management requirements for the section 
202/162 direct loan program for persons with disabilities. This interim 
rule furthers the legislative mandate of section 811 of the Cranston-
Gonzalez National Affordable Housing Act, as amended, and it involves 
only minor interpretations of that statute. The section 811 capital 
advance program currently is operating under a series of interim rules. 
The Department intends to publish a final rule that will incorporate 
public comments for all aspects of the section 811 capital advance 
program.
    Furthermore, the Department finds that prior public procedure would 
be impracticable. The Department has awarded capital advances since 
1991, and many of these projects are approaching the management phase 
or have become operational. Management requirements are needed 
immediately to assure transition from the development phase to the 
management phase.

III. Sunset of Interim Rule

    In accordance with the Department's policy on interim rules, the 
amendments made by this interim rule shall expire 18 months after the 
effective date of this interim rule, unless extended by notice 
published in the Federal Register, or adopted by a final rule published 
on or before the 18-month anniversary date of the effective date of 
this interim rule.

IV. Background

    The Supportive Housing for Persons with Disabilities Program is 
authorized by section 811 of the Cranston-Gonzalez National Affordable 
Housing Act (the NAHA Act), as amended by the Housing and Community 
Development Act of 1992 (1992 Act). Under the program, which is 
implemented in 24 CFR part 890, assistance is provided to nonprofit 
organizations to expand the supply of supportive housing for persons 
with disabilities. Such assistance is provided as (1) capital advances 
and (2) project rental assistance contracts. Capital advances may be 
used to finance the acquisition with rehabilitation, acquisition 
without rehabilitation (group homes only), construction or 
rehabilitation of a structure, and acquisition of property from the 
Resolution Trust Corporation (group homes and independent living 
facilities) to be used as supportive housing for persons with 
disabilities. This assistance may also cover the cost of real property 
acquisition, site improvement, conversion, demolition, relocation, and 
other expenses that the Secretary determines are necessary to expand 
the supply of supportive housing for persons with disabilities.
    On June 12, 1991, the Department published an interim rule (56 FR 
27070) implementing section 811 of the NAHA to establish the Supportive 
Housing for Persons with Disabilities Program. That interim rule, which 
enabled the program to be funded for FY-1991, described application 
procedures and program requirements, selection of applications and 
duration of fund reservation requirements. A second interim rule was 
published on August 12, 1992 (57 FR 36330) to provide the development-
related requirements (closing of capital advances and requirements 
related to project rental assistance contracts) of the program. The 
program was the subject of further amendments by the 1992 Act, which 
were implemented by a third interim rule published on May 5, 1993 (58 
FR 26816). All three interim rules are codified at 24 CFR part 890.
    Today's interim rule (subpart F, part 890) completes the 
establishment of the program by providing the requirements for 
management and operation of projects funded under the program. After 
the period of public comment is [[Page 11837]] completed on this 
interim rule, the Department will develop a final rule based on all 
previous rules.

V. Summary of Interim Rule          (Subpart F)

    Subpart F provides the responsibilities of the Owner, requirements 
of the replacement reserve, selection and admission requirements for 
tenants, obligations of tenants, provisions regarding overcrowded and 
underoccupied units, lease requirements, and requirements regarding 
termination of tenancy, modifications of leases, security deposits and 
vacancy payments.
    The subpart F requirements are similar to existing requirements for 
the Section 202 Projects for Nonelderly Handicapped Families and 
Individuals receiving assistance under section 202(h) of the Housing 
Act of 1959. See 24 CFR 885.940-885.985.

Owner Responsibilities

    The responsibilities of an Owner under part 890 include marketing, 
management and maintenance, contracting for services, submission of 
financial and operating statements, project fund accounting and 
reporting. Marketing must be conducted in accordance with a HUD-
approved affirmative fair housing marketing plan and all Federal, State 
or local fair housing and equal opportunity requirements. The Owner is 
responsible for all management functions. These functions include 
selection and admission of tenants, required reexaminations of incomes 
for households occupying assisted units or residential spaces, 
collection of tenant payments, termination of tenancy and eviction, and 
all repair and maintenance functions (including ordinary and 
extraordinary maintenance and replacement of capital items). All 
functions must be performed in compliance with equal opportunity 
requirements. The section 811 Owner must also establish and maintain a 
replacement reserve to aid in funding extraordinary maintenance, and 
repair and replacement of capital items.
    The Owner is required to adopt written tenant selection procedures 
which ensure nondiscrimination in the selection of tenants and that are 
(1) consistent with the purpose of improving housing opportunities for 
very low-income persons with disabilities; and (2) reasonably related 
to program eligibility and an applicant's ability to perform the 
obligations of the lease. The Owner must comply with all 
nondiscrimination authorities. The Owner must accept applications for 
admission to the project in the form prescribed by HUD. Applicant 
households applying for assisted units (or residential spaces in a 
group home) must complete a certification of eligibility as part of the 
application for admission.
    The Owner is also responsible for determining whether applicants 
are eligible for admission and for the selection of households. To be 
eligible for admission, an applicant must be a disabled person (as 
defined in Sec. 890.105); must meet any project occupancy requirements 
approved by HUD under Sec. 890.305(a)(1); must meet the disclosure and 
verification requirements for Social Security Numbers, as provided by 
24 CFR part 750; must sign and submit consent forms for the obtaining 
of wage and claim information from State Wage Information Collection 
Agencies, as provided by 24 CFR part 760; and must be a very low-income 
family, as defined by Sec. 890.105. Owners shall make selections in a 
nondiscriminatory manner without regard to considerations such as race, 
religion, color, sex, national origin, familial status, or disability. 
However, an Owner may, with the approval of the Secretary, limit 
occupancy within housing developed under this part to persons with 
disabilities who have similar disabilities and require a similar set of 
supportive services in a supportive housing environment. Under certain 
circumstances, HUD may permit the leasing of units to ineligible 
families under Sec. 890.515. If the Owner determines that the household 
is eligible and is otherwise acceptable and units (or residential 
spaces in a group home) are available, the Owner will assign the 
household a unit or residential space in a group home. If the household 
will occupy an assisted unit, the Owner will assign the household a 
unit of the appropriate size in accordance with HUD's general occupancy 
guidelines. If no suitable unit (or residential space in a group home) 
is available, the Owner will place the household on a waiting list for 
the project and notify the household when a suitable unit or 
residential space may become available. If the waiting list is so long 
that the applicant would not be likely to be admitted for the next 12 
months, the Owner may advise the applicant that no additional 
applications for admission are being considered for that reason.
    If the Owner determines that an applicant is ineligible for 
admission or the Owner is not selecting the applicant for other 
reasons, the Owner will promptly notify the applicant in writing of the 
determination, the reasons for the determination, and that the 
applicant has a right to request a meeting to review the rejection, in 
accordance with HUD requirements.
    Records on applicants and approved eligible households, which 
provide racial, ethnic, gender and place of previous residency data 
required by HUD, must be retained for three years. The Owner must 
reexamine the income and composition of the household at least every 12 
months. Upon verification of the information, the Owner must make 
appropriate adjustments in the total tenant payment in accordance with 
part 813, as modified by Sec. 890.105, and must determine whether the 
household's unit size is still appropriate. The Owner must adjust 
tenant payment and the project rental assistance payment and must carry 
out any unit transfer in accordance with HUD standards.

Household Responsibilities

    Households under the program are required to do the following: (1) 
Pay amounts due under the lease directly to the Owner; (2) supply such 
certification, release, information, or documentation as the Owner or 
HUD determines necessary, including information and documentation 
relating to the disclosure and verification of Social Security Numbers, 
as provided by 24 CFR part 750, and the signing and submission of 
consent forms for the obtaining of wage and claim information from 
State Wage Information Collection Agencies, as provided by 24 CFR part 
760; (3) allow the Owner to inspect the dwelling unit or residential 
space at reasonable times and after reasonable notice; (4) notify the 
Owner before vacating the dwelling unit or residential space; and (5) 
use the dwelling unit or residential space solely for residence by the 
household, and as the household's principal place of residence. The 
household may not assign the lease or transfer the unit or residential 
space, nor may it occupy, or receive assistance for the occupancy of a 
unit or residential space governed under this part while occupying, or 
receiving assistance for occupancy of, another unit assisted under any 
Federal housing assistance program, including any section 8 program.

Lease

    The term of the lease may not be less than one year. Unless the 
lease has been terminated by appropriate action, upon expiration of the 
lease term, the household and Owner may execute a new lease for a term 
not less than one year, or may take no action. If no action is taken, 
the lease will automatically be [[Page 11838]] renewed for successive 
terms of one month. The Owner shall use the lease form prescribed by 
HUD. The Owner may not use any of the prohibited provisions specified 
by HUD. In addition to required provisions of the lease form, the Owner 
may include a provision in the lease permitting the Owner to enter the 
leased premises, at any time, without advance notice where there is 
reasonable cause to believe that an emergency exists or that health or 
safety of a family member is endangered. The provisions of 24 CFR part 
247 apply to all decisions by an Owner to terminate the tenancy or 
modify the lease of a household residing in a unit (or residential 
space in a group home).

Security Deposit

    At the time of the initial execution of the lease, the Owner will 
require each household occupying an assisted unit (or residential space 
in a group home) to pay a security deposit in an amount equal to one 
month's tenant payment or $50, whichever is greater. The household is 
expected to pay the security deposit from its own resources and other 
available public or private resources. The Owner may collect the 
security deposit on an installment basis. The Owner must place the 
security deposits in a segregated interest-bearing account.

Utility Allowances

    The Owner must submit an analysis of any utility allowances 
applicable in an independent living complex. Such data as changes in 
utility rates and other facts affecting utility consumption should be 
provided as part of this analysis to permit appropriate adjustments in 
the utility allowances for assisted units. In addition, if utility rate 
changes would result in a cumulative increase of 10 percent or more in 
the most recently approved utility allowances, the Owner must advise 
HUD and request approval of new utility allowances. Whenever a utility 
allowance for an assisted unit is adjusted, the Owner will promptly 
notify affected households and make a corresponding adjustment of the 
tenant payment and the amount of the project rental assistance payment.

Vacancy Payments

    Vacancy payments under the Project Rental Assistance Contract 
(PRAC) will not be made unless the conditions for receipt of these 
project rental assistance payments are fulfilled. For each unit (or 
residential space in a group home) that is not leased as of the 
effective date of the PRAC, the Owner is entitled to vacancy payments 
in the amount of 50 percent of the per unit operating cost (or pro rata 
share of the group home operating cost) for the first 60 days of 
vacancy, if the Owner: (1) Conducted marketing in accordance with 
Sec. 890.600(a) and otherwise complied with Sec. 890.600; (2) has taken 
and continues to take all feasible actions to fill the vacancy; and (3) 
has not rejected any eligible applicant except for good cause 
acceptable to HUD. If an eligible household vacates an assisted unit 
(or residential space in a group home) the Owner is entitled to vacancy 
payments in the amount of 50 percent of the approved per unit operating 
cost (or pro rata share of the group home operating cost) for the first 
60 days of vacancy if the Owner: (1) Certifies that it did not cause 
the vacancy by violating the lease, the PRAC, or any applicable law; 
(2) notified HUD of the vacancy or prospective vacancy and the reasons 
for the vacancy upon learning of the vacancy or prospective vacancy; 
(3) has fulfilled and continues to fulfill the requirements specified 
in Sec. 890.600(a) (2) and (3) and Sec. 890.645(b) (2) and (3); and (4) 
for any vacancy resulting from the Owner's eviction of an eligible 
household, certifies that it has complied with Sec. 890.630. If the 
Owner collects payments for vacancies from other sources (tenant 
payment, security deposits, payments under Sec. 890.635(c), or 
governmental payments under other programs), the Owner shall not be 
entitled to collect vacancy payments to the extent these collections 
from other sources plus the vacancy payment exceed the approved per 
unit operating cost.

HUD Reviews

    HUD shall conduct periodic on-site management reviews of the 
Owner's compliance with the requirements of part 890.

HUD Issuances

    The Department intends to amend the Handbook 4350.3, Occupancy 
Requirements of Subsidized Multifamily Housing Programs, with these new 
part 890 requirements.

VI. Other Matters

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50 
implementing section 102(2)(C) of the National Environmental Policy Act 
of 1969, 42 U.S.C. 4332. The Finding of No Significant Impact is 
available for public inspection and copying between 7:30 a.m. and 5:30 
p.m. weekdays at the Office of the Rules Docket Clerk, 451 Seventh 
Street, SW., Room 10276, Washington, DC 20410-0500.

Regulatory Flexibility Act

    Under 5 U.S.C. 605(b), (the Regulatory Flexibility Act), the 
undersigned hereby certifies that this interim rule does not have a 
significant economic impact on a substantial number of small entities. 
The interim rule would provide capital advances to private nonprofit 
organizations to expand the supply of supportive housing for persons 
with disabilities. Although small entities will participate in the 
program, the interim rule would not have a significant impact on them.

Executive Order 12606, the Family

    The General Counsel, as the Designated Official for Executive order 
12606, the Family, has determined that the provisions of this interim 
rule will not have a significant impact on family formation, 
maintenance or well being. No significant change in existing HUD 
policies or programs will result from promulgation of this interim 
rule, as those policies and programs relate to family concerns.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order No. 12611--Federalism, has determined that this 
interim rule does not involve the preemption of State law by Federal 
statute or regulation and does not have federalism impacts.

Regulatory Agenda

    This interim rule was listed as sequence 1809 in the Department's 
Semiannual Agenda of Regulations published on November 14, 1994 (59 FR 
57632, 57658) under Executive Order 12866 and the Regulatory 
Flexibility Act.

Catalog of Federal Domestic Assistance

    The program number is 14.181, Supportive Housing for Persons with 
Disabilities.

List of Subjects in 24 CFR Part 890

    Civil rights, Grant programs--housing and community development, 
Individuals with disabilities, Loan programs--housing and community 
development, Low and moderate income housing, Mental health programs, 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, part 890 of 
title 24 of the [[Page 11839]] Code of Federal Regulations is amended 
as follows:

PART 890--SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

    1. The authority citation for part 890 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 8013.

    2. Section 890.100 is amended by adding paragraph (d) to read as 
follows:


Sec. 890.100  Purpose and policy.

* * * * *
    (d) Effective date of regulation. Sections 890.600 through 890.650 
shall expire and shall not be in effect after October 2, 1996, unless 
changes in this interim rule are published as a final rule, or the 
Department publishes a notice in the Federal Register to extend the 
effective date.
    3. Part 890 is amended by adding subpart F to read as follows:

Subpart F--Project Management

Sec.
890.600  Responsibilities of Owner.
890.605  Replacement reserve.
890.610  Selection and admission of tenants.
890.615  Obligations of the household.
890.620  Overcrowded and underoccupied units.
890.625  Lease requirements.
890.630  Termination of tenancy and modification of lease.
890.635  Security deposits.
890.640  Adjustment of utility allowances.
890.645  Conditions for receipt of vacancy payments for assisted 
units.
890.650  HUD review.

Subpart F--Project Management


Sec. 890.600  Responsibilities of Owner.

    (a) Marketing. (1) The Owner must commence and continue diligent 
marketing activities not later than 90 days before the anticipated date 
of availability for occupancy of the group home or the anticipated date 
of availability of the first unit in an independent living complex. 
Market activities shall include the provision of notices of the 
availability of housing under the program to operators of temporary 
housing for the homeless in the same housing market.
    (2) Marketing must be done in accordance with a HUD-approved 
affirmative fair housing marketing plan and all Federal, State or local 
fair housing and equal opportunity requirements. The purpose of the 
plan and requirements is to achieve a condition in which eligible 
households of similar income levels in the same housing market area 
have a like range of housing choices available to them regardless of 
discriminatory considerations such as their race, color, creed, 
religion, familial status, disability, sex or national origin.
    (3) At the time of PRAC execution, the Owner must submit to HUD a 
list of leased and unleased assisted units (or in the case of a group 
home, leased and unleased residential spaces) with a justification for 
the unleased units or residential spaces, in order to qualify for 
vacancy payments for the unleased units or residential spaces.
    (b) Management and maintenance. The Owner is responsible for all 
management functions. These functions include selection and admission 
of tenants, required reexaminations of incomes for households occupying 
assisted units or residential spaces, collection of tenant payments, 
termination of tenancy and eviction, and all repair and maintenance 
functions (including ordinary and extraordinary maintenance and 
replacement of capital items). All functions must be performed in 
compliance with equal opportunity requirements.
    (c) Contracting for services. (1) With HUD approval, the Owner may 
contract with a private or public entity for performance of the 
services or duties required in paragraphs (a) and (b) of this section. 
However, such an arrangement does not relieve the Owner of 
responsibility for these services and duties. All such contracts are 
subject to the restrictions governing prohibited contractual 
relationship described in Sec. 890.105 (definition of Owner) (These 
prohibitions do not extend to management contracts entered into by the 
Owner with the Sponsor or its non-profit affiliate).
    (2) Consistent with the objectives of Executive Orders 11625, 12432 
and 12138, the Owner will promote awareness and participation of 
minority and women's business enterprises in contracting and 
procurement activities.
    (d) Submission of financial and operating statements. The Owner 
must submit to HUD:
    (1) Within 60 days after the end of each fiscal year of project 
operations, financial statements for the project audited by an 
independent public accountant and in the form required by HUD; and
    (2) Other statements regarding project operation, financial 
conditions and occupancy as HUD may require to administer the PRAC and 
to monitor project operations.
    (e) Use of project funds. The Owner shall maintain a separate 
interest bearing project fund account in a depository or depositories 
which are members of the Federal Deposit Insurance Corporation or 
National Credit Union Share Insurance Fund and shall deposit all tenant 
payments, charges, income and revenues arising from project operation 
or ownership to this account. All project funds are to be deposited in 
Federally insured accounts. All balances shall be fully insured at all 
times, to the maximum extent possible. Project funds must be used for 
the operation of the project (including required insurance coverage), 
and to make required deposits to the replacement reserve under 
Sec. 890.605, in accordance with HUD-approved budget. Any remaining 
project funds in the project funds account (including earned interest) 
following the expiration of the fiscal year shall be deposited in a 
Federally-insured residual receipts account within 60 days following 
the end of the fiscal year. Withdrawals from this account may be made 
only for project purposes and with the approval of HUD. If there are 
funds remaining in the residual receipts account when the mortgage is 
satisfied, such funds shall be returned to HUD.
    (f) Reports. The Owner shall submit such reports as HUD may 
prescribe to demonstrate compliance with applicable civil rights and 
equal opportunity requirements. See Sec. 890.610(a). (Approved by the 
Office of Management and Budget under control number 2502-0470).


Sec. 890.605  Replacement reserve.

    (a) Establishment of reserve. The Owner shall establish and 
maintain a replacement reserve to aid in funding extraordinary 
maintenance and repair and replacement of capital items.
    (b) Deposits to reserve. The Owner shall make monthly deposits to 
the replacement reserve in an amount determined by HUD.
    (c) Level of reserve. The reserve must be built up to and 
maintained at a level determined by HUD to be sufficient to meet 
projected requirements. Should the reserve reach that level, the amount 
of the deposit to the reserve may be reduced with the approval of HUD.
    (d) Administration of reserve. Replacement reserve funds must be 
deposited with HUD or in a Federally-insured depository in an interest-
bearing account(s) whose balances(s) are fully insured at all times. 
All earnings including interest on the reserve must be added to the 
reserve. Funds may be drawn from the reserve and used only in 
accordance with HUD guidelines and with the approval of, or as directed 
by, HUD. [[Page 11840]] 


Sec. 890.610  Selection and admission of tenants.

    (a) Written tenant selection procedures. The Owner shall adopt 
written tenant selection procedures which ensure nondiscrimination in 
the selection of tenants and that are consistent with the purpose of 
improving housing opportunities for very low-income persons with 
disabilities; and reasonably related to program eligibility and an 
applicant's ability to perform the obligations of the lease. The Owner 
must comply with the following nondiscrimination authorities: section 
504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and the 
implementing regulations at 24 CFR part 8; the Fair Housing Act (42 
U.S.C. 3600-3619) and the implementing regulations at 24 CFR parts 100, 
108, 109, and 110; Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d) and the implementing regulations at 24 CFR part 1; section 3 of 
the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the 
implementing regulations at 24 CFR part 135; the Age Discrimination Act 
of 1975 (42 U.S.C. 6101-6107) and the implementing regulations at 24 
CFR part 146; Executive Order 11246 (as amended), 3 CFR, 1964-1965 
COMP., p. 339, and the implementing regulations at 41 CFR Chapter 60; 
the regulations implementing Executive Order 11063 (Equal Opportunity 
in Housing), 3 CFR, 1959-1963 COMP., p. 652, at 24 CFR part 107; the 
Americans with Disabilities Act (42 U.S.C. 12101 et seq.) to the extent 
applicable; and other applicable Federal, State and local laws 
prohibiting discrimination and promoting equal opportunity. While local 
residency requirements are prohibited, local residency preferences may 
be applied in selecting tenants only to the extent that they are not 
inconsistent with affirmative fair housing marketing objectives and the 
Owner's HUD-approved affirmative fair housing marketing plan. 
Preferences may not be based on the length of time the applicant has 
resided in the jurisdiction. With respect to any residency preference, 
persons expected to reside in the community as a result of current or 
planned employment will be treated as residents. Owners shall promptly 
notify in writing any rejected applicant of the grounds for any 
rejection. Additionally, owners shall maintain a written, chronological 
waiting list showing the name, race, gender and ethnicity and date of 
each person applying for the program.
    (b) Application for admission. The Owner must accept applications 
for admission to the project in the form prescribed by HUD. Applicant 
households applying for assisted units (or residential spaces in a 
group home) must complete a certification of eligibility as part of the 
application for admission. Applicant households must meet the 
disclosure and verification requirements for Social Security Numbers, 
as provided by 24 CFR part 750. Applicant families must sign and submit 
consent forms for the obtaining of wage and claim information from 
State Wage Information Collection Agencies, as provided by 24 CFR part 
760. Both the Owner and the applicant household must complete and sign 
the application for admission. On request, the Owner must furnish 
copies of all applications for admission to HUD.
    (c) Determination of eligibility and selection of tenants. The 
Owner is responsible for determining whether applicants are eligible 
for admission and for the selection of households. To be eligible for 
admission, an applicant must be a disabled person (as defined in 
Sec. 890.105); must meet any project occupancy requirements approved by 
HUD under Secs. 890.265(c)(14) and 890.305(a)(1); must meet the 
disclosure and verification requirements for Social Security Numbers, 
as provided by 24 CFR part 750; must sign and submit consent forms for 
the obtaining of wage and claim information from State Wage Information 
Collection Agencies, as provided by 24 CFR part 760; and must be a very 
low-income family, as defined by Sec. 890.105. An Owner, may with the 
approval of the Secretary, limit occupancy within housing developed 
under this part to persons with disabilities who have similar 
disabilities and require a similar set of supportive services in a 
supportive housing environment. Owners shall make selections in a 
nondiscriminatory manner without regard to considerations such as race, 
religion, color, sex, national origin, familial status, or disability. 
However, an Owner may, with the approval of the Secretary, limit 
occupancy within housing developed under this part to persons with 
disabilities who have similar disabilities and require a similar set of 
supportive services in a supportive housing environment. Under certain 
circumstances, HUD may permit the leasing of units to ineligible 
families under Sec. 890.515.
    (d) Unit assignment. If the Owner determines that the household is 
eligible and is otherwise acceptable and units (or residential spaces 
in a group home) are available, the Owner will assign the household a 
unit or residential space in a group home. If the household will occupy 
an assisted unit, the Owner will assign the household a unit of the 
appropriate size in accordance with HUD's general occupancy guidelines. 
If no suitable unit (or residential space in a group home) is 
available, the Owner will place the household on a waiting list for the 
project and notify the household when a suitable unit or residential 
space may become available. If the waiting list is so long that the 
applicant would not be likely to be admitted for the next 12 months, 
the Owner may advise the applicant that no additional applications for 
admission are being considered for that reason.
    (e) Ineligibility determination. If the Owner determines that an 
applicant is ineligible for admission or the Owner is not selecting the 
applicant for other reasons, the Owner will promptly notify the 
applicant in writing of the determination, the reasons for the 
determination, and the applicant's right to request a meeting to review 
the rejection, in accordance with HUD requirements. The review, if 
requested, may not be conducted by a member of the Owner's staff who 
made the initial decision to reject the applicant. The applicant may 
also exercise other rights (e.g., rights granted under Federal, State 
or local civil rights laws) if the applicant believes he or she is 
being discriminated against on a prohibited basis.
    (f) Records. Records on applicants and approved eligible 
households, which provide racial, ethnic, gender and place of previous 
residency data required by HUD, must be retained for three years. See 
Sec. 890.610(a).
    (g) Reexamination of household family income and composition.--(1) 
Regular reexaminations. The Owner must reexamine the income and 
composition of the household at least every 12 months. Upon 
verification of the information, the Owner must make appropriate 
adjustments in the total tenant payment in accordance with part 813 of 
this chapter, as modified by Sec. 890.105, and must determine whether 
the household's unit size is still appropriate. The Owner must adjust 
tenant payment and the project rental assistance payment, and must 
carry out any unit transfer in accordance with HUD standards. At the 
time of reexamination under paragraph (g)(1) of this section, the Owner 
must require the household to meet the disclosure and verification 
requirements for Social Security Numbers, as provided by 24 CFR part 
750. For requirements regarding the signing and submitting of consent 
forms by families for obtaining of wage and claim information from 
State Wage Information Collection Agencies, see 24 CFR part 760. 
[[Page 11841]] 
    (2) Interim reexaminations. The household must comply with the 
provisions in its lease regarding interim reporting of changes in 
income. If the Owner receives information concerning a change in the 
household's income or other circumstances between regularly scheduled 
reexaminations, the Owner must consult with the household and make any 
adjustments determined to be appropriate. See 24 CFR 750.10(d)(2)(i) 
for the requirements for the disclosure and verification of Social 
Security Number at interim reexaminations involving new household 
members. For requirements regarding the signing and submitting of 
consent forms by families for the obtaining of wage and claim 
information from State Wage Information Collection Agencies, see 24 CFR 
part 760. Any change in the household's income or other circumstances 
that result in an adjustment in the total tenant payment, tenant 
payment, and project rental assistance payment must be verified.
    (3) Continuation of project rental assistance payment. (i) A 
household shall remain eligible for project rental assistance payment 
until the total tenant payment equals or exceeds the gross rent (or a 
pro rata share of the gross rent in a group home). The termination of 
subsidy eligibility will not affect the household's other rights under 
its lease. Project rental assistance payment may be resumed if, as a 
result of changes in income, rent or other relevant circumstances 
during the term of the PRAC, the household meets the income eligibility 
requirements of 24 CFR part 813 (as modified in Sec. 890.105) and 
project rental assistance is available for the unit or residential 
space under the terms of the PRAC. The household will not be required 
to establish its eligibility for admission to the project under the 
remaining requirements of paragraph (c) of this section.
    (ii) A household's eligibility for project rental assistance 
payment may be terminated in accordance with HUD requirements for such 
reasons as failure to submit requested verification information, 
including information related to disclosure and verification of Social 
Security Numbers, as provided by 24 CFR part 750 or failure to sign and 
submit consent forms for the obtaining of wage and claim information 
from State Wage Information Collection Agencies (as provided by 24 CFR 
part 760).


Sec. 890.615  Obligations of the household.

    (a) Requirements. The household shall:
    (1) Pay amounts due under the lease directly to the Owner;
    (2) Supply such certification, release of information, consent, 
completed forms or documentation as the Owner or HUD determines 
necessary, including information and documentation relating to the 
disclosure and verification of Social Security Numbers, as provided by 
24 CFR part 750, and the signing and submission of consent forms for 
the obtaining of wage and claim information from State Wage Information 
Collection Agencies, as provided by 24 CFR part 760;
    (3) Allow the Owner to inspect the dwelling unit or residential 
space at reasonable times and after reasonable notice;
    (4) Notify the Owner before vacating the dwelling unit or 
residential space; and
    (5) Use the dwelling unit or residential space solely for residence 
by the household and as the household's principal place of residence.
    (b) Prohibitions. The household shall not:
    (1) Assign the lease or transfer the unit or residential space; or
    (2) Occupy, or receive assistance for the occupancy of, a unit or 
residential space governed under this part while occupying, or 
receiving assistance for occupancy of, another unit assisted under any 
Federal housing assistance program, including any section 8 program.


Sec. 890.620  Overcrowded and underoccupied units.

    If the Owner determines that because of change in household size, 
an assisted unit is smaller than appropriate for the eligible household 
to which it is leased, or that the assisted unit is larger than 
appropriate, project rental assistance payment with respect to the unit 
will not be reduced or terminated until the eligible household has been 
relocated to an appropriate alternate unit. If possible, the Owner 
will, as promptly as possible, offer the household an appropriate 
alternate unit. The Owner may receive vacancy payments for the vacated 
unit if the Owner complies with the requirements of Sec. 890.645.


Sec. 890.625  Lease requirements.

    (a) Term of lease. The term of the lease may not be less than one 
year. Unless the lease has been terminated by appropriate action, upon 
expiration of the lease term, the household and Owner may execute a new 
lease for a term not less than one year or may take no action. If no 
action is taken, the lease will automatically be renewed for successive 
terms of one month.
    (b) Termination by the household. All leases may contain a 
provision that permits the household to terminate the lease upon 30 
days advance notice. A lease for a term that exceeds one year must 
contain such provision.
    (c) Form. The Owner shall use the lease form prescribed by HUD. In 
addition to required provisions of the lease form, the Owner may 
include a provision in the lease permitting the Owner to enter the 
leased premises, at any time, without advance notice where there is 
reasonable cause to believe that an emergency exists or that health or 
safety of a family member is endangered.


Sec. 890.630  Termination of tenancy and modification of lease.

    The provisions of part 247 of this title apply to all decisions by 
an Owner to terminate the tenancy or modify the lease of a household 
residing in a unit (or residential space in a group home).


Sec. 890.635  Security deposits.

    (a) Collection of security deposit. At the time of the initial 
execution of the lease, the Owner will require each household occupying 
an assisted unit (or residential space in a group home) to pay a 
security deposit in an amount equal to one month's tenant payment or 
$50, whichever is greater. The household is expected to pay the 
security deposit from its own resources and other available public or 
private resources. The Owner may collect the security deposit on an 
installment basis.
    (b) Security deposit provisions applicable to units.--(1) 
Administration of security deposit. The Owner must place the security 
deposits in a segregated interest-bearing account. The amount of the 
segregated, interest-bearing account maintained by the Owner must at 
all times equal the total amount collected from the households then in 
occupancy plus any accrued interest and less allowable administrative 
cost adjustments. The Owner must comply with any applicable State and 
local laws concerning interest payments on security deposits.
    (2) Household notification requirement. In order to be considered 
for the refund of the security deposit, a household must provide the 
Owner with a forwarding address or arrange to pick up the refund.
    (3) Use of security deposit. The Owner, subject to State and local 
law and the requirements of paragraphs (b)(1) and (b)(3) of this 
section, may use the household's security deposit balance as 
reimbursement for any unpaid amounts which the household owes under the 
lease. Within 30 days (or shorter time if required by State or local 
[[Page 11842]] law) after receiving notification under paragraph (b)(2) 
of this section the Owner must:
    (i) Refund to a household which does not owe any amount under the 
lease the full amount of the household's security deposit balance;
    (ii) Provide to a household owing amounts under the lease a list 
itemizing each amount, along with a statement of the household's rights 
under State and local law. If the amount which the Owner claims is owed 
by the household is less than the amount of the household's security 
deposit balance, the Owner must refund the excess balance to the 
household. If the Owner fails to provide the list, the household will 
be entitled to the refund of the full amount of the household's 
security deposit balance.
    (4) Disagreements. If a disagreement arises concerning 
reimbursement of the security deposit, the household will have the 
right to present objections to the Owner in an informal meeting. The 
Owner must keep a record of any disagreements and meetings in a tenant 
file for inspection by HUD. The procedures of paragraph (b)(4) of this 
section do not preclude the household from exercising its rights under 
State or local law.
    (5) Decedent's interest in security deposit. Upon the death of a 
member of a household, the decedent's interest, if any, in the security 
deposit will be governed by State or local law.
    (c) Reimbursement by HUD for assisted units. If the household's 
security deposit balance is insufficient to reimburse the Owner for any 
amount which the household owes under the lease for an assisted unit or 
residential space and the Owner has provided the household with the 
list required by paragraph (b)(3)(ii) of this section, the Owner may 
claim reimbursement from HUD for an amount not to exceed the lesser of:
    (1) The amount owed the Owner, or
    (2) One month's per unit operating cost, minus the amount of the 
household's security deposit balance. Any reimbursement under this 
section will be applied first toward any unpaid tenant payment due 
under the lease. No reimbursement may be claimed for any unpaid tenant 
payment for the period after termination of the tenancy. The Owner may 
be eligible for vacancy payments following a vacancy in accordance with 
the requirements of Sec. 890.645.

(Approved by the Office of Management and Budget under control 
number 2502-0470.)


Sec. 890.640  Adjustment of utility allowances.

    The Owner must submit an analysis of any utility allowances 
applicable in an independent living complex. Such data as changes in 
utility rates and other facts affecting utility consumption should be 
provided as part of this analysis to permit appropriate adjustments in 
the utility allowances for assisted units. In addition, when utility 
rate changes would result in a cumulative increase of 10 percent or 
more in the most recently approved utility allowances, the Owner must 
advise HUD and request approval of new utility allowances. Whenever a 
utility allowance for an assisted unit is adjusted, the Owner will 
promptly notify affected households and make a corresponding adjustment 
of the tenant payment and the amount of the project rental assistance 
payment.


Sec. 890.645  Conditions for receipt of vacancy payments for assisted 
units.

    (a) General. Vacancy payments under the PRAC will not be made 
unless the conditions for receipt of these project rental assistance 
payments set forth in this section are fulfilled.
    (b) Vacancies during rent-up. For each unit (or residential space 
in a group home) that is not leased as of the effective date of the 
PRAC, the Owner is entitled to vacancy payments in the amount of 50 
percent of the per unit operating cost (or pro rata share of the group 
home operating cost) for the first 60 days of vacancy, if the Owner:
    (1) Conducted marketing in accordance with Sec. 890.600(a) and 
otherwise complied with Sec. 890.600;
    (2) Has taken and continues to take all feasible actions to fill 
the vacancy; and
    (3) Has not rejected any eligible applicant except for good cause 
acceptable to HUD.
    (c) Vacancies after rent-up. If an eligible household vacates an 
assisted unit (or residential space in a group home) the Owner is 
entitled to vacancy payments in the amount of 50 percent of the 
approved per unit operating cost (or pro rata share of the group home 
operating cost) for the first 60 days of vacancy if the Owner:
    (1) Certifies that it did not cause the vacancy by violating the 
lease, the PRAC, or any applicable law;
    (2) Notified HUD of the vacancy or prospective vacancy and the 
reasons for the vacancy upon learning of the vacancy or prospective 
vacancy;
    (3) Has fulfilled and continues to fulfill the requirements 
specified in Sec. 890.600(a) (2) and (3) and Sec. 890.645(b) (2) and 
(3); and
    (4) For any vacancy resulting from the Owner's eviction of an 
eligible household, certifies that it has complied with Sec. 890.630.
    (d) Prohibition of double compensation for vacancies. If the Owner 
collects payments for vacancies from other sources (tenant payment, 
security deposits, payments under Sec. 890.635(c), or governmental 
payments under other programs), the Owner shall not be entitled to 
collect vacancy payments to the extent these collections from other 
sources plus the vacancy payment exceed the approved per unit operating 
cost.


Sec. 890.650  HUD review.

    HUD shall conduct periodic on-site management reviews of the 
Owner's compliance with the requirements of this part.

    Dated: December 27, 1994.
Jeanne K. Engel,
General Deputy Assistant Secretary for Housing--Federal Housing 
Commissioner.
[FR Doc. 95-4889 Filed 3-1-95; 8:45 am]
BILLING CODE 4210-27-P