[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Rules and Regulations]
[Pages 34660-34728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15906]
[[Page 34659]]
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Part III
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Public and Indian Housing
_______________________________________________________________________
24 CFR Part 882 et al.
Conforming Section 8 Certificate and Voucher Programs; Final Rule
_______________________________________________________________________
Office of Administration
_______________________________________________________________________
Submission of Proposed Information Collection to OMB; Notice
Federal Register / Vol. 60, No. 127 / Monday, July 3, 1995 / Rules
and Regulations
[[Page 34660]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Parts 882, 887, 982, and 983
[Docket No. R-95-1628; FR-2294-F-02]
RIN 2577-AB14
Section 8 Certificate and Voucher Programs Conforming Rule
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This rule combines and conforms rules for tenant-based rental
assistance under the rental certificate and the rental voucher
programs. This rule also amends requirements for project-based
assistance under the rental certificate program.
EFFECTIVE DATE: Information collections in this rule must be reviewed
by the Office of Management and Budget under the Paperwork Reduction
Act of 1980. Upon OMB approval of the information collections, HUD will
publish a notice in the Federal Register announcing the effective date
of the rule and adding the OMB approved control numbers. It is
anticipated that this OMB approval process will be concluded, and that
the rule will be made effective, by 60 days after the date of
publication of this rule.
FOR FURTHER INFORMATION CONTACT: Madeline Hastings, Director, Rental
Assistance Division, Room 4204. Telephone numbers (202) 708-2841
(voice); (202) 708-0850 (TDD). (These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The information collection requirements contained in this rule have
been submitted to the Office of Management and Budget (OMB) for review
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). See
the Notice of Information Collections published elsewhere in today's
issue of the Federal Register, inviting public comment on the estimated
burden on the public associated with the rule. (Of course, as part of
this process, it is possible that there will be changes made to the
information collections.) No person may be subjected to a penalty for
failure to comply with these information collection requirements until
they have been approved and assigned an OMB control number, to be
announced by separate notice in the Federal Register.
Discussion
History and Scope of Rule
On February 24, 1993 HUD published a comprehensive proposed rule to
combine and conform the rules for tenant-based Section 8 rental
assistance under the certificate and voucher programs. (58 FR 11292)
The proposed rule would also have amended requirements for project-
based assistance under the Section 8 certificate program.
HUD received approximately 400 comments on the proposed rule that
generally approve the broad purpose of the rule. Comments object to
particular features of the rule. Many of the objections pertain to
provisions implementing statutory requirements, particularly the
requirement that an owner notify HUD when terminating tenancy for a
business or economic reason, and the prohibition of discrimination by
multifamily owners against certificate or voucher holders.
On July 18, 1994 HUD published the first portion of the
comprehensive rule for the tenant-based program: The final rule on
unified admission procedures. (59 FR 36662) At that time, part 982,
subparts A and E were added. Today's final rule covers other aspects of
the comprehensive rule for the tenant-based programs, adding 8 subparts
and reserving 3 other subparts. The rule also contains the regulations
for the project-based certificate program, included in part 983.
Today's final rule does not include requirements concerning:
--Calculation of the rent and housing assistance payment for the tenant
or project-based programs.
--``Special housing types'': program variants to meet special housing
needs, such as congregate housing, shared housing, single room
occupancy housing and independent group residences.
HUD will issue a final rule on these subjects. Until the final rule
is issued, these subjects will be governed by requirements in the
existing program rules. The final rule may also include further
revisions of program admission procedures, or subjects in today's final
rule.
I. Requirements and Plans for HA Administration of Program
A. Demonstrating HA Authority and Jurisdiction
The rule provides that an HA must furnish HUD a legal opinion on
the HA's jurisdiction and authority to administer the tenant-based
programs. (Sec. 982.51) A comment suggests that agencies already
participating in the program should be exempt from this requirement.
The new rule does not add a new requirement. Since the beginning of
the tenant-based programs, agencies have had to provide evidence of the
HA authority and of the area where the HA was authorized to operate the
programs under State and local law. A correct determination of the HA
jurisdiction has important consequences for day to day administration
of the program by the HA. Families may move anywhere in the HA
jurisdiction, and outside the HA jurisdiction, under portability
procedures. The new rule does not automatically require any new
submission by the HA if the HA legal opinion is already on file with
HUD, and gives HUD the necessary evidence of the HA jurisdiction and
operating area. Of course, the HA must furnish new information if there
is a change in State law or legal authority, such as a court decision
determining the HA jurisdiction.
Under the old program regulations and handbook, the HA was required
to show the governmental jurisdiction in which the HA was ``not legally
barred'' by State law from entering and administering assistance
contracts for program participants. This formulation emphasized the
freedom of the participant to lease a unit anywhere the HA was not
legally prohibited from administering assistance. Since the beginning
of portability, a participant family could move outside the
jurisdiction of the original HA (for non-resident applicants,
portability applies after the first year in the program). In the final
rule, the term ``jurisdiction'' is defined as the area where the HA is
authorized to administer the program under State or local law.
(Sec. 982.4)
B. HA Local Policies
The HA must adopt a plan that states HA local policies for running
the tenant-based program. Under the proposed rule, the HA adopted local
policies governing all major aspects of HA program administration. In
accordance with past practice, the HA would have been required to adopt
both an ``administrative plan'' for general program administration, and
a separate ``equal opportunity plan'' for compliance with fair housing
requirements. The proposed rule provided that the HA administrative
plan and equal opportunity plan be approved in advance by HUD.
Comments largely commend HUD for allowing HAs broad discretion to
adopt local policies for operation of the tenant-based program. HUD
should
[[Page 34661]]
direct what subjects must be covered by HA administrative policies,
while leaving HAs discretion on how to regulate the prescribed
subjects. Comments particularly welcome new regulatory provisions
confirming that an HA may adopt local policies concerning family
absence from the assisted unit, program participation after break up of
the assisted family, maximum security deposit, and enforcement of
participant obligations. (Provisions on these subjects are discussed
later in the preamble.)
However, HA comments express concern with the cost and
administrative burden of adopting and revising HA policies. Comments
ask clarification of a proposed provision stating that the HA must
revise the administrative plan or equal opportunity plan to change the
policies covered by the plan. Comments recommend combining the equal
opportunity and administrative plans.
Comments discuss the difficulty and delay in securing HUD approval
for new HA policies. Some comments recommend a regulatory time limit
for HUD review of the HA policy.
Comments suggest that the HA should be required to give notice of
proposed changes in HA policies to participants and interested
organizations or advocates, and that the HA should be required to give
copies of the HA policies to each applicant or participant.
On reconsideration, HUD has made a number of changes in the
provisions on HA local policies:
--Merging the equal opportunity and administrative plans into a single
plan;
--Limiting the subjects that must be contained in the plan; and
--Eliminating the blanket requirement for HUD advance approval of HA
policies in the administrative plan.
In the final rule, HUD has decided to eliminate the requirement for
separate administrative and equal opportunity plans. An HA's
discretionary policies will be contained in the administrative plan.
This change eliminates the artificial distinction between equal
opportunity issues and ordinary administrative policies. The final rule
removes the requirement for separate overlapping or duplicative
coverage under the prior equal opportunity and administrative plans,
such as policies for selection of program participants. All aspects of
program administration must be consistent with the HA's obligation to
operate the program in accordance with civil rights requirements.
Under the terms of the proposed rule, the administrative plan would
have been a comprehensive statement of HA local policies for
administration of the program. Under the final rule, the mandatory
coverage of the administrative plan is only focussed on equal
opportunity requirements and programmatic policies for the specific
areas listed in the rule. (Sec. 982.54(d)) While HA policy and practice
in other areas (such as financial management) have a vital role in
operation of the tenant-based program, HUD review and oversight will
focus on the results of HA policies, not on whether the HA has adopted
a written policy to achieve these results (or has obtained HUD approval
for such a policy).
Besides listing specific subjects that had to be included in the
administrative plan, the proposed rule also would have required the HA
to include unspecified ``other local HA policies'' for administration
of the program. In the final rule, this residual category is deleted.
The HA is only required to cover the specific subjects listed in the
rule. In defining this mandatory coverage, HUD does not express any
view that other matters are not important, or that the HA should not
adopt formal written policies for the guidance of program officials.
However, the decision whether to adopt such additional policies is left
to the local judgment and managerial experience of the individual HA.
Before this rule, the HA was required to submit the administrative
plan for HUD approval. In the final rule, this requirement is deleted.
For most purposes, the HA may adopt and revise HA policies without
asking for HUD approval. However, the policies in the administrative
plan must comply with HUD requirements. The HA must give HUD a copy of
the administrative plan. (Sec. 982.54(b))
By eliminating the HUD approval requirement, the new rule
substantially increases the HA's day-to-day autonomy in administration
of the program, and minimizes HUD interference in HA policy decisions.
At the same time, HUD retains the authority for necessary oversight and
audit of HA operations. If HA policies violate HUD requirements, the HA
must revise the administrative plan to comply with HUD requirements.
(Sec. 982.54(b)) Instead of using HUD administrative resources for
routine review and approval of policies in the HA administrative plans,
HUD can concentrate available HUD staff on discovery and correction of
the most serious HA problems in managing the program.
Since the rule generally lifts the requirement for prior HUD
approval of HA administrative policies, an HA can revise its policy
more quickly and easily. The HA does not need to wait for HUD approval,
or negotiate changes in HA policy to satisfy the HUD reviewer, so there
is no need to consider or establish a deadline for HUD review of the HA
administrative plan, as suggested by some comments.
Comments ask if changes in the administrative plan must be approved
by the HA board. The final rule provides that the administrative plan
and any revisions of the plan must be formally adopted by the HA board
or other authorized officials. (Sec. 982.54(a))
In certain key areas, HUD rules will continue to mandate advance
HUD approval of HA policies. Residency preferences for selection of
applicants must be approved by HUD. (Sec. 982.208(b) (59 FR 36687, July
18, 1994)) As required by law, the HA family self-sufficiency (FSS)
action plan must also be approved by HUD. (42 U.S.C. 1437u(g)(1)) (If
FSS policies are contained in an HA's administrative plan, the policies
must be moved to the HA's FSS action plan.)
Comments state that the HA administrative plan should include HUD
requirements, not just HA discretionary policies. HA comments ask if an
HA must amend the administrative plan whenever HUD revises regulations
or other requirements. The final rule provides that an administrative
plan must state HA policy ``on matters for which the HA has discretion
to establish local policies.'' (Sec. 982.54(a))
Since the final rule does not require that the HA revise the
administrative plan to merely echo HUD regulations or other
requirements, the HA is only required to revise the administrative plan
to reflect the exercise of policy choices by the individual HA. By
definition, HUD ``requirements'' are binding on the HA in any case.
For practical administration of the program, HAs may elect to
develop procedures or guidance for HA staff that reflect both HUD
requirements and the HA's policy decisions in accordance with HUD
requirements. As noted above, the rule no longer requires that the
administrative plan must be approved in advance by HUD, so it is less
critical to distinguish between HA policy mandated by HUD, as opposed
to HA policy adopted in accordance with local HA discretion.
The final rule drops a proposed provision that would have required
an HA to adopt policies to encourage participation by eligible
families. Since many eligible families are eager to participate in the
program, and most HAs have long waiting lists, HAs have
[[Page 34662]]
little need to stimulate family interest and demand for participation.
C. Equal Opportunity Requirements
The rule lists federal civil rights law and regulations that apply
to the tenant-based programs. (Sec. 982.53)
Requirements under Section 3 of the Housing and Community
Development Act of 1983 apply to construction or rehabilitation under
the Section 8 program, but do not apply to Section 8 tenant-based
assistance. Under the final rule, reference to Section 3 requirements
is moved to 24 CFR part 983, which contains the requirements for
projects constructed or rehabilitated under the Section 8 project-based
certificate program. (Sec. 982.11(c)(3)) HAs are encouraged to recruit
qualified program staff in a manner that furthers Section 3 goals.
Comments recommend that the rule should require HA compliance with
State and local fair housing laws. HUD believes that the federal
program rule and program enforcement should only require compliance
with federal fair housing requirements. State and local governments can
of course impose additional requirements. The federal regulation is not
intended to pre-empt the operation of such State or local laws.
Some comments recommend that the rule should impose extensive
additional fair housing procedures, including HA help for persons who
need assistance in presenting a claim for illegal discrimination; HA
collection of fair housing data and HA analysis of barriers to housing
choice; and fair housing training of HA staff. As noted above, HA
operation of the program is subject to civil rights statutes and
regulations. In addition, the basic structure of the tenant-based
program is a powerful instrument for promoting housing choice by low
income and minority families.
An HA must certify that it will comply with equal opportunity
regulations and requirements. (Sec. 982.53(c)) A comment notes that the
certification is unnecessary, since the HA must follow the law in any
case. HUD agrees that the HA is bound by the law and regulations, but
retains the requirement for equal opportunity certification, in
accordance with historical practice in HUD programs. The certification
is not burdensome, and reminds the HA of its responsibility to
administer its tenant-based program in accordance with the federal fair
housing requirements.
II. Funding and HA Application for Funding
A. Competition for Funds; Criteria for Selection
Some program funding is distributed by HUD to HAs through a
competitive process. So HAs can compete for such funding, the
Department publishes a public notice in the Federal Register, called a
``Notice of Funding Availability'' or ``NOFA''. The HUD Reform Act of
1989 provides that the Federal Register notice must state the
``criteria'' for selection of applicants. The competitive criteria in a
Federal Register NOFA may include any objective measure of housing
need, project merit and efficiency. (HUD Reform Act of 1989, Section
102(a)(3), Pub. L. 101-235, 103 Stat. 1990; 42 U.S.C. 3545(a)(3))
Under the law, HUD must publish a description of how to apply for
assistance under the NOFA, including any deadlines. (Id. section
102(a)(2)) The Reform Act requirements are implemented in a HUD
regulation at 24 CFR part 12. The Section 8 program regulation
describes the procedure for HUD publication of a NOFA to govern
competitive award of funds in accordance with part 12
(Sec. 982.101(c)), for HA submission of applications in accordance with
the NOFA (Sec. 982.102(b)), and for evaluation of HA applications based
on selection criteria in the NOFA (Sec. 982.103(a)(2)).
In recent years, HUD has published a number of NOFAs each federal
fiscal year to distribute Section 8 tenant-based funding for various
purposes identified in the appropriation act and conference report. For
example, in federal fiscal year 1994, HUD published separate NOFAs
stating criteria for award of program funding distributed under a
statutory fair share formula, for funds set aside for homeless persons
with disabilities, for homeless veterans with severe psychiatric or
substance abuse disorders, for family self-sufficiency (FSS) program
coordinators, for elderly service coordinators and for the family
unification program.
Some public comments object to award of funding under selection
criteria in a Federal Register NOFA. The comments recommend that
criteria for award of funds should be determined in a full dress
rulemaking, with notice and opportunity for public comment. Comments
indicate that the competitive criteria should be included in the
standing program regulation.
Comments also object to criteria used by HUD to select HA
applications for funding. Comments state that the selection criteria
should give greater weight to efforts to further fair housing, and
should penalize an applicant HA that has a residency preference or
other policies that have an ``exclusionary'' effect. Comments state
that the criteria for selection should give funding preference to HAs
that do not use a residency preference for selection of applicants, and
that have an open waiting list.
The competitive selection scheme under a HUD NOFA may emphasize the
administrative capability of applicant HAs. Comments claim that
application of this HUD selection criterion to distribution of fair
share funding in some metropolitan areas tends to favor a suburban HA
(with greater presumed administrative competence) over the HA for a
core city. Comments also claim that emphasis on the capability
criterion is too subjective. Other comments recommend that funding
should be distributed by formula, rather than by a competitive process.
HUD believes that award of competitive funds according to criteria
stated in a Federal Register notice carries out precisely the process
intended by the 1989 HUD Reform Act, and the regulation adopted by HUD
to implement the Reform Act requirements (24 CFR part 12). HUD is not
required to establish competitive criteria by notice and comment
rulemaking.
Funding for individual HUD programs, such as the Section 8 tenant-
based assistance programs, is typically appropriated by the Congress in
each separate fiscal year. Each year Congress determines the amount of
funding available for different purposes. The breakdown of Section 8
program funding is not definitively known until enactment of the
appropriation act. (The detailed breakdown is generally expressed in a
Table that is included in the Conference Report.) In this context, the
use of a notice and comment rulemaking process to determine criteria
for competitive award of funds in each fiscal year would paralyze the
administrative process, prevent the timely award of appropriated funds,
and deny flexibility in determining appropriate criteria for award of
funding under the annual appropriation.
Comments recommend that HUD adopt new procedures for denial of HA
funding applications. The comments suggest that HUD should give the
rejected applicant a written statement or checklist of the reasons for
denial of the HA's application. Comments also suggest that a rejected
applicant should be granted the right to appeal HUD's funding decision.
For funding awarded by a competitive process, HUD has issued
regulations
[[Page 34663]]
under the HUD Reform Act of 1989. These regulations give broad public
access to documentation of the basis for HUD decision on HA funding
applications. The Reform Act rule provides that HUD must ensure that
documentation on each application is ``sufficient to indicate the basis
on which HUD provided or denied the assistance.'' (24 CFR 12.14(b)(1))
Under the Reform Act rule, this documentation is available for public
inspection for five years. (12.14(b)(2)) The rule for tenant-based
assistance is revised to add a cross-reference to the documentation and
public inspection requirements under the Reform Act rule.
(Sec. 982.103(b)(3))
HUD has not accepted the recommendation to afford the HA applicant
a right to appeal HUD's decision on HA funding applications, or to
delay distribution of funds pending hearing on an HA appeal. HUD is
deeply concerned that the grant of such a right would severely delay or
paralyze the process for award of funds, would encourage fruitless and
distracting appeals and litigation, and would result in major waste and
diversion of administrative energies by HUD and the HAs. HUD seeks to
award competitive funding by a fair and expeditious competition,
carried out in accordance with criteria stated in a published NOFA.
However, HUD will not encumber this process by adding the right to a
formal appeal or hearing for the HA. Sometimes NOFAs provide a
procedure for correction of allocation inequities.
B. Amount of Funding: Units or Dollars
Several comments ask HUD to provide funding to an HA for a specific
number of units, rather than for a fixed allocation (amount) of funds.
Under the certificate program, the HA was formerly required to maintain
a HUD-approved unit distribution (by bedroom size), using the funding
provided under the consolidated ACC, including any amendment funding.
(Under the ACC, there is a separate ACC term for each funding
increment.) In the voucher program, the unit distribution is not
established by HUD. The HA is responsible for management of available
voucher funding under the consolidated ACC. HUD did not provide voucher
funding for ACC amendments to support a pre-determined unit mix. The HA
controlled the use of available voucher funding by setting the level of
subsidy for each family (payment standard), and by controlling
admissions to the program.
Under recent amendments of regulatory selection requirements for
both the certificate and the voucher programs, admission from the
waiting list may no longer be based on family size. (Sec. 982.204(d),
as amended 7/18/94, 59 FR 36662 et seq.; see preamble discussion at
36666-36667) This change automatically eliminated possible inequities
caused by disparities of wait-times for families of different sizes.
The length of wait does not depend on the size of the family. In
addition, the regulation change eliminated the problems and
complexities of administering separate sub-lists for different unit
sizes, as well as the requirement for the HA to maintain (in the
certificate program) a HUD-determined unit distribution.
Comments ask if the HA will be required to maintain a HUD-approved
unit distribution by bedroom size. Since the HA is prohibited from
selection by unit size for tenant-based assistance, the HA is not
required to maintain a HUD-approved unit distribution.
HUD believes that the new regulatory and administrative system is a
better way of managing program funds. In the annual appropriation
process, the Congress appropriates specific dollar amounts of funding
(budget authority), rather than funding to support a specific number of
units under each HA's consolidated ACC. HUD cannot guarantee that the
funding that is appropriated by the Congress, and obligated by HUD to a
specific HA, will support the changing number of units that will result
from the HA's admission of families without regard to unit size, under
the system provided in HUD's new regulation. Rather, the HA is in the
best position to manage the available funding committed to the HA, so
that the HA can continue to provide assistance for families already
admitted to the program.
C. Family Unification
The proposed rule recites statutory requirements governing award of
funding appropriated for ``family unification'' (also called ``foster
child care'')--which is special Section 8 certificate program funding
to avoid the need to place or keep children in out-of-home care.
Comments recommend against providing categorical funding for family
unification, object to limits on competition for family unification
funds, and question why family unification does not apply to vouchers.
Some comments support special funding for this purpose.
The final rule deletes the rule provisions stating statutory
requirements governing family unification set-asides. When the Congress
provides funding for family unification, statutory and other
requirements can be stated in the NOFA offering any family unification
funding for public competition and award.
III. Annual Contributions Contract and HA Administration of Program
A. Annual Contributions Contract
Comments recommend that funding for all increments in an HA's
certificate or voucher program should be combined in a consolidated
annual contributions contract (ACC). Under this rule and under current
HUD practice, all funding for an HA's Section 8 tenant-based programs
is provided under a single consolidated ACC, with separate ACC
attachments that show all funding for the HA's certificate and voucher
programs.
The final rule provides that commitments for all the funding
increments in an HA's certificate and voucher programs are listed in
one consolidated contractual document called the consolidated annual
contributions contract (consolidated ACC). (Sec. 982.151(a)(2)) The
final rule eliminates a proposed provision that would have required
separate consolidated ACCs for an HA's certificate and voucher
programs. In most respects, the certificate and voucher tenant-based
programs are identical. In 1994, HUD combined the ACC forms for these
programs into a single consolidated ACC. The single consolidated ACC
provides a common contractual basis for unified administration of the
tenant-based programs.
B. Administrative Fees
Administrative fees are paid by HUD to cover HA costs to run the
Section 8 tenant-based assistance program. (Sec. 982.152) Fees must be
approved by HUD. The rule describes the purposes for which fees are
paid. The rule does not state how fees are calculated. The calculation
of fees in each federal fiscal year is affected by the HUD budget and
annual appropriations, and may be affected by other temporary
legislation.
Section 8(q) of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(q))
states requirements for determining administrative fees in the
certificate and voucher tenant-based programs. However, the Section
8(q) requirements only apply if the HUD appropriation act so provides.
Under the terms of HUD appropriations since federal fiscal year 1989,
Section 8(q) requirements apply to calculation of administrative fees
for so called ``incremental'' units. Generally, ``incremental units''
are new federally-assisted units, as contrasted with
[[Page 34664]]
renewal or replacement of expiring assistance. Other units are not
subject to Section 8(q) (generally, units funded before fiscal year
1989 and funding for renewal or replacement). HUD has full discretion
to set HA fees for such units.
HA comments recommend increases in HA administrative fees. Comments
disagree with HUD's statement, in the preamble of the proposed rule,
that administrative fees generally exceed the amount needed to
administer the program. Comments point out that HAs are now required to
carry out many new tasks, such as administration of family self
sufficiency, portability and assistance for special populations, such
as homeless persons or persons with AIDS. Comments urge that the
administrative fee be based on measurement of the time needed to
accomplish tasks required by HUD rules.
The rule is intended to provide a regulatory framework for periodic
determination of administrative fee. The detailed procedures for fee
calculation are not described in the permanent program rule. From time
to time, HUD issues notices and handbooks explaining how to compute the
applicable fees in accordance with the appropriations and other
governing laws.
Comments recommend allowing a one-time fee for implementation of
the new rule. This comment is not adopted. This rule does not radically
change existing program procedures. In certain respects, the rule will
significantly simplify HA administration of the program. Any change in
program requirements entails some administrative burden in changing
existing management practice. However, HUD does not anticipate that the
transition to operation under the new rule will cause problems
justifying a higher administrative fee.
C. Ongoing Administrative Fee
1. How Calculated
HUD pays a fee to the HA for every month after a unit is ``under
Housing Assistance Payments (HAP) Contract''. This is called the
``ongoing administrative fee''. In accordance with current program
practice, the proposed rule provided that the ongoing fee for a unit
equals a HUD specified percentage of the Section 8 existing housing
fair market rent for a two-bedroom unit (regardless of the actual unit
size). In present program usage, different fee percentages apply to
different types of units in the HA's tenant-based program. A ``blended
fee'' percentage is calculated for the HA's whole certificate or
voucher program, reflecting the proportions of these different unit
types in the HA's program.
The proposed rule did not state the percentage of the FMR that is
used to calculate the administrative fee, but provided that the
percentage will be ``HUD-specified''. For units where the ongoing fee
is calculated under Section 8(q) of the U.S.H. Act (42 U.S.C. 1437f(q))
(to date, only ``incremental'' units), the statute provides that the
amount of the administrative fee is 8.2 percent of the fair market rent
for a two bedroom unit.
HUD is currently considering how the administrative fee system
should be revised to fairly and adequately compensate HAs to administer
the program. In the future, administrative fees may or may not be
calculated as a percentage of the fair market rent. Since the future
fee system is not known, the final rule does not provide that the
ongoing administrative fee is calculated as a percentage of the fair
market rent.
The final rule states only that the ongoing fee is established by
HUD. As in the past, the ongoing fee is paid for each program unit
under HAP contract on the first day of the month. (Sec. 982.152(b)(1))
This change leaves flexibility for future adoption of a new
administrative fee system. However, under current law, the ongoing fee
for units under Section 8(q) remains 8.2 percent of the two-bedroom
fair market rent. On January 24, 1995, HUD published a notice revising
the method for calculating administrative fees for units that are not
subject to Section 8(q). (60 FR 4764)
By law, an HA that administers Section 8 assistance may contract to
make assistance payments to itself as a Section 8 owner. (42 U.S.C.
1437f(a)) The final rule adds a new provision confirming that HUD may
pay a lower ongoing administrative fee for HA-owned units.
(Sec. 982.152(b)(3))
2. Higher Ongoing Fee--For Small Program or Program Operating in Large
Area
For units subject to Section 8(q), the law provides that HUD may
decide to increase the ongoing administrative fee ``if necessary to
reflect the higher costs of administering small programs and programs
operating over large geographic areas''. (U.S.H. Act, Section 8(q)(1),
42 U.S.C. 1437f(q)(1)) The proposed rule would have provided that HUD
could approve a higher ongoing fee for an HA program operating over a
``large area''. Such fees may only be approved ``if appropriations are
available'' for this purpose.
Comments state that HUD should not pay a higher fee for an HA that
operates in a large region. Comments want HUD to clarify the meaning of
``large area''. Comments ask HUD to allow a higher fee for an HA that
must service portability families outside the HA's normal State-law
jurisdiction. Comments state that the rule should allow higher ongoing
fees in other cases (not just for an HA operating in a large area),
including higher fees to compensate for ``extenuating problems''.
Comments recommend that the ability to pay higher fees should not be
tied to availability of appropriations.
Unlike Section 8(q), the proposed rule would not have permitted a
higher ongoing fee for ``small programs''. Comments state that the
proposed rule discriminates against HAs with small programs. They state
that the rule should allow a higher fee for small programs, such as
small rural programs, as well as programs operating in larger areas.
HUD can only pay administrative fees from funds (budget authority)
appropriated by the Congress. HUD has amended the final rule to provide
that HUD may decide to approve a higher ongoing fee in the two cases
allowed by the Congress under Section 8(q)--for small programs and for
programs operating in large areas. (Sec. 982.152(b)(2))
The two cases stated in the rule include the major circumstances
where a higher ongoing fee may be justified. An HA operating in a large
area may incur higher expenses to service the assisted units, for
example, because of longer trips to inspect program units scattered in
rural communities, than an HA whose units are clustered closer to HA
offices. HAs with small programs may not benefit from economies of
scale in administration of the program.
The rule does not give HAs that operate in large areas or with
small programs any right to a higher ongoing fee. HUD has full
discretion whether to approve any increase over the normal ongoing fee.
At this time, HUD will not attempt, as suggested by comment, to
further define in this rule when a higher fee may be approved for a
``large'' geographic area or a ``small'' HA program. The field office
will apply these concepts on a case by case basis, in accordance with
HUD Headquarters instructions, to determine if an HA needs a higher fee
for proper administration of its individual program.
D. Preliminary Fee
HUD pays a preliminary fee for each new unit added to the HA
program. (By law, the maximum preliminary fee for
[[Page 34665]]
Section 8(q) units is $275 (42 U.S.C. 1437f(q)(2)(A)(i)), or $300 for
preliminary costs in the family self sufficiency (FSS) program (42
U.S.C. 1437u(h)(1)).) The preliminary fee is primarily used to cover HA
costs to lease up new units under the ACC (but not for turnover or
renewal of program units).
An HA is required to document amounts spent for preliminary costs,
up to the allowable per unit maximum. The HA is only compensated for
qualifying expenses actually ``incurred''. Public comments recommend
eliminating the requirement for an HA to present cost justification in
order to collect a preliminary fee. The comment is not adopted. The
rule is revised to specify, as required by law (for units subject to
Section 8(q)), that preliminary fees cover the cost of preliminary
expenses that the HA ``documents it has incurred'' in connection with
new funding from HUD. (42 U.S.C. 1437f(q)(2)(A)(i); Sec. 982.152(c)(2))
In the past, HAs were required to submit justification to HUD for
payment of the preliminary fee. Under this rule, HAs are no longer
required to submit up-front justification to HUD to receive the fees.
However, HAs must maintain accounting records that document preliminary
costs incurred by the HA, and must make the documentation available
when requested for audit by HUD.
Some comments recommend that HUD should eliminate a separate
preliminary fee, or that a preliminary fee should only be paid for a
new program. HAs should be compensated through the ongoing
administrative fees. Other comments recommend that HUD should pay a
preliminary fee for every new leasing by an assisted family, not just
for the initial lease-up of a new funding increment. At this time, HUD
is retaining provision for a separate preliminary fee as authorized by
current law for fees calculated under Section 8(q) of the U.S. Housing
Act of 1937 (when so provided in HUD's appropriation). As noted above,
HUD is considering modification of the current system for calculating
ongoing administrative fees.
E. Family Self-Sufficiency
The proposed rule would have provided that the preliminary fee may
be used to cover ongoing expenses for family self-sufficiency (FSS)
program activities. Some comments approve the provision for payment of
ongoing family self-sufficiency expenses from the administrative fee.
Other comments object that the use of preliminary fee for this purpose
would reduce the amount available to the HA for preliminary costs. FSS
is an ongoing program. HAs may not have additional program increments
(to generate preliminary fees that may be used for payment of FSS
costs). Comments recommend payment of a special fee for FSS.
The final rule adds authorization for approval of a fee for HA
costs to coordinate supportive services for families participating in
the FSS program. (Sec. 982.152(a)(1)(v)) This special FSS fee is not
linked or limited to FSS coordinator costs in connection with a new
funding increment.
F. Helping Families Find Housing
In accordance with current practice, the proposed rule would have
provided that HUD may approve a ``hard-to-house'' fee to cover the cost
of special assistance to a family with three or more minors. Unlike the
preliminary fee, a hard-to-house fee was to be paid whenever a
qualifying family moved to a new assisted unit, not just for new
program funding. The proposed rule also would have provided that a
hard-to-house fee would not be paid for a unit that is owned by the HA.
Comments recommend an increase in the amount of the hard-to-house
fee, and that the HA should be paid a hard-to-house fee to cover costs
to help a family with a child under seven find a lead-free unit.
Comments urge that the hard-to-house fee should also be paid for
leasing of an HA-owned unit, since the HA must follow the same
procedures as for a private dwelling unit.
Other comments suggest elimination of the hard-to-house fee, or
recommend that HUD should not pay a hard-to-house fee unless the HA has
in fact made special efforts to house a large family. Unlike the
preliminary fee, HUD does not currently require the HA to document
actual costs or administrative effort. The hard-to-house fee is paid
for every qualifying move.
Section 8(q) provides that HUD may determine reasonable fees
for: ``the costs incurred in assisting families who experience
difficulty (as determined by the Secretary) in obtaining appropriate
housing under the programs * * *.'' (42 U.S.C. 1437f(q)(2)(A)(ii))
The final rule provides only that HUD may approve administrative fees
for ``cost to help families who experience difficulty renting
appropriate housing * * *.'' (Sec. 982.152(a)(1)(iii)) The final rule
does not use the term ``hard-to-house'', and does not specify that the
fee is only paid for a family with three or more minors. HUD is
examining all aspects of the administrative fee system. HUD will
consider when HUD should pay an additional fee so that the HA can give
the family additional help in finding a rental unit.
G. Help for Elderly and Disabled
Under a 1992 law, Section 8(q) administrative fees may be used to
employ or retain coordinators of supportive services for elderly or
disabled families who receive tenant-based assistance. (42 U.S.C.
1437f(q)(3)(A), as amended by Section 675 of the Housing and Community
Development Act of 1992, 106 Stat. 3828) The rule is revised to provide
that HUD may approve administrative fees to cover HA cost to coordinate
supportive services for elderly and disabled families.
(Sec. 982.152(a)(1)(iv)) Supportive services include a wide range of
assistance for the elderly and disabled, such as health services,
nonmedical counseling, personal care, case management and other
appropriate services. (See 42 U.S.C. 13631(c))
H. Audit Costs
The rule provides that HUD may approve an administrative fee to
cover cost of audit by an independent public accountant.
(Sec. 982.152(a)(1)(vi)) Currently, HUD pays a fee to cover costs of
required audit by an independent public accountant (IPA). Public
comment states HUD should list this special type of fee in the proposed
rule. HUD agrees, and has revised the rule to specify that HUD may
approve a separate fee for IPA audit costs.
I. Other Costs
In addition to the listing of specific fees that may be approved by
HUD, the final rule provides that HUD may pay an additional
administrative fee for ``other extraordinary costs'' approved by HUD.
(Sec. 982.152(a)(1)(vii)). This category leaves HUD flexibility to
approve additional amounts needed by an HA for special purposes.
The final rule does not provide for a special portability fee.
Portability fees will be eliminated beginning in federal fiscal year
1996.
J. HA Responsibilities
The rule contains a list of some basic HA responsibilities in
administration of the tenant-based programs. (Sec. 982.153) Comments
suggest some additions to the list of HA responsibilities. The final
rule revises and supplements the list of HA responsibilities as stated
in the proposed rule. The final rule provides that:
--The HA determines who can live in the assisted unit, at admission and
during the family's participation in the program. (Sec. 982.153(b)(8))
This new provision is consistent with other
[[Page 34666]]
provisions concerning the HA's authority to determine when a group of
persons qualifies as a ``family'' (Sec. 982.201(c)(3)), to select
families for admission to the program (part 982, subpart E), and to
approve additional occupants of the assisted unit. (Sec. 982.551(h)(2))
--The HA must encourage owners to make units available for leasing in
the program, including owners of suitable units located outside areas
of poverty and racial concentration. (Sec. 982.153(b)(4))
--The HA is responsible for conducting an ``informal review'' of
certain HA decisions concerning an applicant for participation in the
program. (Sec. 982.153(b)(19) and Sec. 982.554) The final rule restores
the distinction in the existing rule between an ``informal review'' of
HA decisions concerning an applicant for participation, and an
``informal hearing'' on HA decisions concerning a family that is
already admitted to the program. (See Sec. 982.554 and Sec. 982.555)
--The HA must obtain and verify evidence of citizenship and eligible
immigration status, as required by HUD regulations implementing
statutory restrictions on assisted occupancy by certain noncitizens.
(Sec. 982.153(b)(9); see 24 CFR part 812)
--The HA must establish and adjust a utility allowance for tenant-
supplied utilities. (Sec. 982.153(b)(16))
--The HA must administer an FSS program. (Sec. 982.153(b)(22))
The final rule also specifies that the HA bears responsibility to
affirmatively further fair housing goals, as well as to comply with
equal opportunity requirements. (Sec. 982.153(b)(5))
K. Administrative Fee Reserve
The rule codifies ACC and handbook provisions concerning the
``administrative fee reserve'' (Sec. 982.155) This account was formerly
called the ``operating reserve''. The administrative fee reserve is
credited with excess administrative fees earned by an HA in prior
years. Generally, if funds in the reserve are not needed for program
administration (to the end of the last ACC funding increment), the HA
has broad discretion to use administrative fee reserve funds for
``other housing purposes''. The purposes must be consistent with State
and local law. (Sec. 982.155(b)(1)) The allowable purposes may include
housing purposes not connected with the Section 8 programs.
In any HA fiscal year, the HA must use fee reserve funds for
program administrative expenses in excess of HUD administrative fees
for the year. Such use has precedence over HA use of the fee reserve
for other non-program housing purposes. HUD may prohibit use of the fee
reserve for certain purposes. (Sec. 982.155(b)(1)) In addition, if the
HA fails to administer the program adequately, the HUD field office may
freeze HA use of fee reserve funds, or may direct the HA to use fee
reserve funds to improve program administration or to restore funds
disbursed for ineligible expenses. (Sec. 982.155(b)(3))
Comments recommend that HUD should relinquish any control over HA
funds in the administrative fee reserve. Administrative fees should be
treated like payments to other contractors for services rendered.
Comments also ask HUD to clarify when the HA may use fee reserve funds
for ``other housing purposes.''
These recommendations are not adopted. Funds in an HA's
administrative fee reserve were paid to the HA by HUD to administer the
HA's Section 8 program. It is important to assure that fee reserve
funds are used first to cover HA administrative costs of the HA's
Section 8 program, and only then are used for other housing-related
purposes. The regulatory standard for use of fee reserve funds leaves
the HA great flexibility to apply the funds for local housing purposes.
In accordance with historical program practice, the rule provides
that the HUD field office may freeze or direct use of reserve funds if
the HA has not ``adequately administered'' any Section 8 program.
(Sec. 982.155(b)(3)) Comment asks HUD to clarify the methodology for
determining when the HA is not adequately administering the program.
HUD believes that the regulatory formula provides sufficient
guidance on the basis for freezing HA use of funds in the
administrative fee reserve. This provision is designed to protect
program funds, and provide a remedy for serious or systemic violations
of program requirements by an HA. Such violations can occur in many
ways. HUD requires a broad authority to restrict HA use of
administrative fee reserve funds if the HA is not running the program
in accordance with HUD requirements.
The final rule adds three limitations on the HA's authority to use
the administrative fee reserve for ``other housing purposes'':
--The HA board of commissioners or other authorized HA officials must
establish the maximum amount that may be charged against the
administrative fee reserve without specific approval.
(Sec. 982.155(b)(2))
--The HA may only use the reserve for other housing purposes if the
funds are not needed to cover HA administrative expenses through the
end of HUD's funding commitment under the consolidated ACC--that is, to
the end of the term of the last expiring funding increment.
(Sec. 982.155(b)(1))
--HUD may prohibit use of administrative fee reserve funds for
specified purposes. (Sec. 982.155(b)(1))
L. Depositary
Program funds must be deposited to and disbursed from the HA's
account with a financial institution acting as program depositary.
(Sec. 982.156) The HUD field office can freeze depositary funds by
giving notice to the depositary institution that prohibits the
depositary from permitting HA withdrawals. In the final rule, the HUD
notice is called a ``freeze notice''.
Comments say that HUD also should notify the HA when the depositary
is frozen. HUD agrees. The rule is revised to provide that HUD must
give the HA a copy of the freeze notice from HUD to the depositary.
M. Budget and Expenditure
Under the rule, the HA must comply with HUD program regulations and
other requirements. (Sec. 982.52(a)) HUD requirements include the
financial management procedures required by HUD. The rule does not
state the details of HUD-required budget and accounting procedures.
The final rule is revised to state that the HA may only use program
funds in accordance with a HUD-approved budget. (Sec. 982.157(b)(1))
The budget must be submitted to HUD at such time and in such form as
HUD requires. (Sec. 982.157(a)) Previously, these requirements were
stated in the consolidated ACC, but were not explicitly recited in the
program rule.
Comments recommend that the Department should consolidate the
budget and requisition process for the certificate and voucher
programs. The Department agrees, and has established uniform budget
procedures for the tenant-based programs. Of course, the budget process
must continue to reflect statutory differences in the program subsidy
computation for the certificate and voucher programs.
Comments ask HUD to eliminate separate budgeting and financial
reporting for renewal funding (funding to provide continued assistance
after the end of an ACC funding commitment). HUD procedures already
have been changed to combine budgets and financial accounting for new
units and renewals.
[[Page 34667]]
N. Program Records
The rule codifies and clarifies basic requirements governing the
HA's obligation to maintain and retain program records. (Sec. 982.158)
Comments approve HUD's clarification of requirements for retention of
program records.
Comments recommend that HUD should reduce the burden of accounting
and record-keeping requirements. Comments suggest that the rule should
describe what record media are allowed or disallowed, and should
specify that record-keeping requirements apply to any form of
permanent, retrievable record (including electronic records), not just
paper files.
The rule provides that HUD and the Comptroller General must be
allowed full and free access to program accounts and records.
(Sec. 982.158(c). See 42 U.S.C. 1435) Comments suggests that the rule
should state specifically that such access must be reasonable, so that
examination of HA records doesn't jeopardize HA operation.
The final rule does not describe what record-keeping media are
allowed or prohibited by HUD. Such details will be provided in program
handbooks or notices. However, the rule is revised to specify that
program records must be in the form prescribed by HUD.
(Sec. 982.158(a))
Since HAs now make extensive use of computers in management of the
program, and since HAs often maintain major program record systems in
computerized form, the rule specifies that the HA must comply with HUD
requirements governing ``computerized or electronic forms of record-
keeping''. (Sec. 982.158(a)) In the rule, HUD also recognizes and
addresses the special problems in examination and audit of computerized
records. Effective examination of such records may require knowledge of
the system (hardware and software), and of passwords, commands and
instructions needed to access data held in the system. The final rule
specifically provides that the HA must grant the examiner (HUD or the
GAO) full and free access:
``to computerized or other electronic records, and to any computers,
equipment or facilities containing such records, and shall provide
any information or assistance needed to access the records.''
(Sec. 982.158(c))
The rule is also revised by restating terminology and language for
consistency and simplicity. In particular, the rule now refers to
``records'', to cover all the various accounts, forms and documentation
used to maintain program information, and including all of the media in
which such data may be maintained.
HUD has not adopted the recommendation to specify that access must
be reasonable. Of course, all requirements should be administered in a
reasonable fashion.
An HA administering Section 8 is not subject to federal Freedom of
Information Act (FOIA) and Privacy Act requirements. Comments recommend
that an HA should be required to make program records available for
public inspection as under the FOIA. This recommendation is not
adopted. The decision whether to release or deny release of program
information generally rests in the discretion of the HA, subject to any
restrictions under State or local law (but see Sec. 813.109(b)
concerning disclosure of information obtained pursuant to the family's
verification release or consent).
O. Conflict of Interest
Under the rule, certain officials or employees of an HA,
contractors, subcontractors or agents of an HA, and members of
Congress, are prohibited from holding a direct or indirect interest in
any program contract or arrangement. (Sec. 982.161(a)) Members of these
classes must disclose their interest or prospective interest to the HA
and to HUD. (Sec. 982.161(b)) As in the past, a HUD field office may
waive the conflicts requirements ``for good cause'' in an individual
case. (Sec. 982.161(c))
A comment recommends that a request for waiver should be deemed
automatically allowed unless rejected in 30 days. This recommendation
is not adopted.
P. Contract Forms
The HA must use the contract and other program forms prescribed by
HUD. (Sec. 982.162) Comment asks that HUD list the forms. The
regulation lists certain basic program contracts that must be used.
However, the rule does not give a complete list of the contracts and
other program forms. A HUD handbook or other HUD directive will list
the HUD-prescribed forms. There is no reason to clutter the regulation
with this information.
Q. Fraud Recovery
Comments state that an HA has no incentive to recover program funds
lost because of bad debts or fraud. In response, HUD notes that
existing regulations permit an HA to retain fifty percent of Section 8
fraud losses that the HA is able to recover from a family or owner by
litigation, court order or repayment agreement. (24 CFR part 792;
Section 326(d) of the Housing and Community Development Act of 1981 (42
U.S.C. 1437f note), as amended by 106 Stat. 3711, 10/28/92) The law and
regulation are intended to encourage HAs to investigate and pursue
fraud and abuse in the Section 8 program. The rule contains a cross-
reference to the separate regulation on Section 8 fraud recoveries.
(Sec. 982.163)
IV. Leasing a Unit
A. Information When Family Is Selected
1. Briefing and Information Packet
When a family is selected to participate, the family needs to know
how the program works. The HA gives the family an oral briefing, and an
information packet. In the HA briefing, the family receives a broad
description of how the program works, family and owner
responsibilities, and areas where the family can lease a unit. The
information packet reinforces the briefing, and supplies more detailed
information to the family. The final rule modifies requirements on the
briefing and information packet. (Sec. 982.301)
In the final rule, several elements are removed from the listing of
items that must be covered in the oral briefing, but are included in
the written information packet--a description of the housing quality
standards (HQS), and of factors the family should consider in renting a
unit.
The final rule drops a proposed provision that would have required
the HA to give prospective landlords information about the family's
rental history or about drug-trafficking by family members. Under the
final rule, the HA has the choice whether to furnish this type of
information to landlords. (Sec. 982.307(b)(2)) The HA is only required
to tell a prospective Section 8 landlord (from information in HA
records) the family's current address, and the family's current and
prior landlord. The HA policy on furnishing other information about the
family to landlords must be stated in the HA administrative plan.
(Sec. 982.54(d)(7)) The HA policy must be stated in the information
packet for the family. (Sec. 982.301(b)(8))
The oral briefing and information packet must explain where the
family may lease a unit, inside and outside the HA jurisdiction.
(Sec. 982.301(a)(1)(iii) and Sec. 982.301(b)(5)) If the family
qualifies to move outside the HA jurisdiction under portability, the
briefing and information packet must explain how portability works.
(Sec. 982.301(a)(2) and Sec. 982.301(b)(5))
The final rule adds a new provision that if the jurisdiction
includes any high poverty census tract, and if the family
[[Page 34668]]
is living in such a census tract, the HA briefing must explain the
advantages of moving to an area that does not have a concentration of
poor families, such as improved employment, educational opportunities
and decreased dropout rates. In the briefing, the HA may not discourage
the family from choosing to live anywhere in the HA jurisdiction, or
outside the HA jurisdiction under portability procedures.
(Sec. 982.301(a)(3))
The final rule provides that the briefing packet must include a
copy of the HUD prescribed ``lease addendum'' (required lease
language), and the form of request for lease approval. (Sec. 982.301(b)
(6) and (7))
The proposed rule would have required that the HA supply the family
certain types of information on prevention of lead-based paint
poisoning. The final rule provides that the HA must give the family the
HUD-prescribed lead-based paint brochure. (Sec. 982.301(b)(11))
2. Information About Landlords
The proposed rule would have provided that if requested by the
family, the HA would give the family available information about
prospective landlords. Comments state that the HA should provide
information about ``units'', rather than about prospective
``landlords''. Other comments state that the HA should not be allowed
to release landlord information without the landlord's consent, or that
HAs may be accused of steering families to landlords in particular
areas. HUD has not followed these suggestions.
The final rule requires that the briefing packet include a list of
landlords or other parties known to the HA who may be willing to lease
a unit to the family, or help the family find a unit.
(Sec. 982.301(b)(13)) The list may include owners or rental agents for
specific properties or units known to the HA (for example, an apartment
house with units rented to other program participants), or entities
that may provide access to numerous units and locations in the local
market, such as real estate agents, rental agents or social service
agencies with listings of possible rental openings. The HA may or may
not provide a listing of specific ``units''. The name of a single
listing agent may provide access to many specific units in the local
housing market.
In providing listings to assist a family, the HA is subject to
general program requirements designed to protect the family's practical
and legal freedom to search for an available unit. The HA may not
discourage the family from choosing to live anywhere in the HA
jurisdiction, or outside the HA jurisdiction under portability
procedures. (Sec. 982.301(a)(2)). The HA may not directly or indirectly
reduce the family's opportunity to select among available units.
(Sec. 982.353(f)) These general requirements apply both to the
provision of landlord and agent listings to the family, and to other
aspects of program administration. The HA may not design such lists in
order to steer families to particular areas, thereby reducing a
family's opportunity to select available units, or discouraging the
family from living anywhere the family may choose.
At the same time, the rule leaves the HA broad discretion and
authority to provide information to families in a practical and helpful
way. The HA is not required to provide a listing of every possible
landlord known to the HA. The rule does not state that the HA must
provide any specific number of listings.
Comments suggest that the HA should be required to give the tenant
a list of owners that are barred from participation, so families don't
waste time. HUD agrees that such information might be helpful in some
markets, or for some owners or units. However, HUD is not persuaded
that this practice will be universally beneficial, or should be
mandated by federal regulation. In many cases, it may be difficult for
tenants to correlate lists of barred ``owners'' with listings of units
available for rental in the local market.
3. Information for Disabled Persons
The proposed rule would have required that if a member of the
family were disabled, the HA must have provided information about
current ``available'' accessible units known to the HA. Comments state
that the HA does not know whether housing is available. Comments also
state that the HA should be required to give the family information
available to the HA of locations and contacts for accessible housing or
other assistance.
HUD agrees that HAs can only furnish available information on
possible openings in accessible units. The final rule provides that at
the request of a family that includes a disabled person the HA must
provide a current listing of accessible units ``known to the HA that
may be available'' for rental to program participants.
(Sec. 982.301(b)(14) (emphasis supplied))
Comments suggest that the oral briefing should use appropriate
procedures for communication with the disabled. Existing HUD
regulations at 24 CFR part 8 prohibit discrimination against disabled
persons in administration of HUD assistance programs. Section 8.6 of
these regulations requires recipients to take appropriate steps to
assure effective communication with applicants and beneficiaries. The
present rule is revised by adding a reference to these requirements.
(Sec. 982.301(a)(4))
B. Giving an Owner Information About a Family
The proposed rule would have provided that the HA must give a
prospective owner information in the HA's possession about rental
history or drug-trafficking by members of the family.
Some comments agree that HUD should require or allow the HA to
release information about the family to a prospective Section 8 owner.
The comments claim that providing the information to owners will
improve relations between the HA and landlords. Comments state that the
HA should both inform the family about the owner, and the owner about
the family.
Other comments contend that the HA should not act as a
clearinghouse for tenant information. HUD should not require or allow
an HA to give landlords information about prospective tenants.
Determination of tenant suitability is the responsibility of the owner.
The HA should not be involved in owner screening of tenants. The owner
can check tenant references. The proposed and final rule provide that
the HA must tell the owner that the HA has not screened the family for
suitability, and that such screening is the owner's responsibility.
Comments agree that the HA should so inform the owner.
The rule is revised to add a new provision stating that:
``Owners are permitted and encouraged to screen families on the
basis of their tenancy histories. An owner may consider a family's
background with respect to such factors as:
(1) Payment of rent and utility bills;
(2) Caring for a unit and premises;
(3) Respecting the rights of others to the peaceful enjoyment of
their housing;
(4) Drug-related criminal activity or other criminal activity
that is a threat to the life, safety or property of others; and
(5) Compliance with other essential conditions of tenancy.''
(Sec. 982.307(a)(2))
Comments state that the release of information about a family to
prospective owners may expose the HA to potential legal liability, or
violate confidentiality requirements under federal or State law. The
obligation for the HA to give landlords information on prospective
tenants adds a new bureaucratic requirement, and forces an HA to
maintain rental or behavioral data on individual tenants. Comments note
that HA release of tenant information
[[Page 34669]]
may block the family's effort to find suitable housing.
Comments ask HUD to clarify what types of ``rental history'' must
be communicated to a prospective landlord: Whether this term means
rent-paying history, and whether the requirement is limited to bona
fide file information or first hand information.
Other comments note HA files may contain hearsay, or inaccurate or
disputed information about the family. Comments state that the HA
should not release tenant information unless the HA obtained the
information as the family's landlord, or has other direct knowledge
that the information is truthful. Comments state that the HA should not
give out information without a release from the tenant, or that the
family should have the right to challenge information in the HA file.
HA communication gives legitimacy to allegations of a prior landlord.
Comments also suggest that landlords don't need information from the HA
since landlords can check references, and criminal convictions are a
matter of public record.
The final rule provides that when a family wants to lease a
dwelling unit, the HA ``may offer'' an owner HA information about
family tenancy history or drug trafficking. (Sec. 982.307(b)(2)) The
rule does not require the HA to release the information.
However, the final rule provides that the HA must give the owner:
--The family's current address, as shown in the HA records.
--The name and address (if known to the HA) of the landlord at the
family's current and prior address. (Sec. 982.307(b)(1))
The final rule requires the information packet for a newly selected
family to include a statement of the HA policy on providing information
to owners. (Sec. 982.301(b)(8)) The HA must give the same types of
information to all families and to all owners. (Sec. 982.307(b)(3))
Under the final rule, the policy on release of family information
to prospective landlords rests in the hands of the HA, the local agency
charged with administration of the tenant-based program. The final rule
merely confirms that HAs ``may'' offer the owner information about the
family in the HA's possession, thus confirming that there is no federal
bar to release of tenant information. However, the choice to exercise
this option is the election of the HA. Some HAs will wish to release
available information on program families, to enhance general owner
confidence and willingness to lease units under the tenant-based
programs. Other HAs will elect to avoid the legal exposure and
potential administrative problems in processing or releasing tenant
information.
In some States, there may be State or local laws affecting release
of tenant information to owners. Such laws may require the release of
such information, or may restrict the release of the information. The
federal regulation is not intended to pre-empt the operation of such
State or local laws.
If the HA wants to release tenant information, the HA must adopt a
policy on providing information to owners. The release of information
by the HA may not be left to casual ad hoc decisions of HA officials,
but must be based on an explicit HA policy.
C. Requesting HA Approval To Lease a Unit
After a family is selected, the HA issues a certificate or voucher
to the family. The family may search for a unit. The family must get HA
approval to lease a unit with assistance in the program. The final rule
restates and clarifies the procedure for requesting HA approval.
(Sec. 982.302; Sec. 982.303; Sec. 982.305; Sec. 982.306)
The proposed rule would have provided that the family requested
approval to rent the unit, but did not refer to a ``request for lease
approval''. The old program rules provided that a family submitted a
request for lease approval to the HA. Public comments state the rule
should keep the requirement to submit a request for lease approval.
Comments note that a request for lease approval is signed by the
landlord, confirms the landlord's agreement to rent the unit, and gives
basic information on terms of the proposed leasing. The form of the
request for lease approval facilitates review by the HA.
The final rule provides that the family must submit a request for
lease approval, and a copy of the proposed lease, during the term of
the certificate or voucher. (Sec. 982.302(c)) The HA has the discretion
to permit a family to submit more than one request at a time.
(Sec. 982.302(b)) The final rule also states that the HA may specify
the procedure for requesting approval to lease a unit, and that the
family must submit the request ``in the form and manner required by the
HA''. (Sec. 982.302(d))
D. Term of Certificate or Voucher
The family must request lease approval during the term of the
certificate or voucher issued by the HA. Extension or suspension of the
term gives the family more time to find a unit and request HA approval.
(Sec. 982.302; Sec. 982.303)
Comments offer different recommendations on the extent of HA
discretion to limit the term of a certificate or voucher. Some comments
stress that an HA should be required to give a family ample time to use
a certificate or voucher. Other comments state that HAs should have
broad discretion to set local policies on the certificate or voucher
term, and concerning any extension or suspension of the term. Comments
note that the administrative plan should include the HA standards for
granting extensions of the term.
Comments assert that the initial term should be longer than 60
days, or that the HA should be required to extend the initial term.
Some comments state that families need more time to find housing, or to
find units in non-minority or non-poverty neighborhoods. A comment
recommends that the certificate or voucher should have an initial 120
day term. The comment states that the HA should be required to grant
further extension if the family has made reasonable efforts to find
housing during the initial term.
Other comments state that HUD should retain the maximum 120 day
term (60 days plus an extension of up to 60 days) as under the old
rule. 120 days is a reasonable time to find a unit. Comments also state
that allowing HA discretion to set longer terms allows too much
variation between local HA programs.
Some comments state that the rules should require the HA to suspend
(toll) running of the term when the family has asked the HA for
approval to lease a unit, and is waiting for HA action on the family's
request. Unless the HA grants a suspension, the term continues to run,
and the family may be discouraged from trying to lease a unit in non-
minority or non-poverty areas. The family cannot control the time used
by the HA in deciding to approve or disapprove the unit. The family may
not have time to find another unit if the original unit is disapproved.
Other comments suggest that suspension is unfair to other applicants
waiting for housing.
Under previous HUD rules, the initial term of a certificate or
voucher was a minimum of 60 days. At its discretion, the HA could
extend the initial term up to a maximum of 120 days from the beginning
of the initial term. This basic 60 day to 120 day pattern is continued
in the final rule. The proposed rule did not set any maximum term. The
HA could decide whether to grant extensions, and the length of any
[[Page 34670]]
extension. The final rule provides, as under the old rule, that the
initial term plus any extensions may not exceed a total of 120 days.
(Sec. 982.303(b)(1))
The family may ask the HA to extend the term up to the 120 maximum
as a reasonable accommodation for a disabled person.
(Sec. 982.303(b)(2)) If the HA believes that a longer time is necessary
for this purpose in a special case, HUD will consider a request for
regulatory waiver of the 120 day maximum.
At its discretion, in accordance with HA policy as described in the
administrative plan, an HA may grant a ``suspension'' (tolling) of the
certificate or voucher term if the family submits a request for lease
approval during the term of a certificate or voucher. (Sec. 982.303(c))
``Suspension'' means stopping the clock on the term of a family's
voucher or certificate after the family submits a request for lease
approval. (Sec. 982.4; Sec. 982.54(d)(2)) The final rule permits the HA
to grant a suspension for ``any part of'' the period running from the
family's request for lease approval up to the time when the HA approves
or denies the request. (Sec. 982.303(c))
The rule requires the HA to establish in the administrative plan a
policy on when and whether extensions or suspension of the term may be
granted, including how the HA decides whether to grant extensions or
suspensions, and the length of any extension or suspension.
(Sec. 982.54(d)(2))
E. HA Approval To Lease a Unit
The HA must determine that a unit meets program requirements.
Before approving rental of a unit with assistance under the program,
the HA must determine that:
--The unit is eligible housing;
--HA inspection shows that condition of the unit satisfies the housing
quality standards (HQS);
--The lease is approvable and includes the ``lease addendum'' language
required by HUD;
--The rent to owner is reasonable; and
--If the unit will be assisted under the certificate program, the total
of contract rent plus any allowance for tenant-paid utilities does not
exceed the FMR/exception rent limit. (Sec. 982.305(a)) The HA may not
execute a HAP contract until all these requirements are satisfied.
The rule provides that all of the following actions must be
completed before the beginning of the lease term:
--The HA has inspected the unit, and determined that the unit satisfies
the HQS;
--The landlord and the tenant have executed the lease; and
--The HA has approved leasing of the unit in accordance with HUD
requirements. (Sec. 982.305(b))
A public comment states that the rule should allow an HA to execute
the HAP contract up to 60 days after commencement of the lease. Another
comment argues that execution of the HAP contract before the HA has
approved the unit would force the HA to pay rent to the owner before
the HA has approved the unit and the lease. The final rule is
consistent with the recommendations in these comments.
The final rule requires that the HAP contract must be executed no
later than 60 days from the beginning of the lease term.
(Sec. 982.305(c)(1)) However, the HA must use ``best efforts'' to
execute the HAP contract before the beginning of the lease term. The HA
may not approve the unit or execute the HAP contract until the HA has
determined that the unit and lease meet all program requirements.
(Sec. 982.305(a))
Comments object to the requirement that the lease must be executed
before the beginning of the lease term. The final rule retains this
requirement.
From the beginning of the lease term, the family's tenancy must be
subject to the statutory and basic tenancy requirements stated in the
required lease addendum. By execution of the lease, containing the
required provisions, the lease requirements are contractually binding
on the owner and the tenant. The lease makes explicit the intention of
the family and the owner to establish a tenancy in accordance with
requirements of the tenant-based programs.
Lease execution before commencement of the lease term is not
difficult. Each family is given a copy of the lease addendum in the
information packet. In general, owners are also familiar with this
requirement. The requirement to execute the lease before the
commencement of the term is also consistent with general practice in
the private rental market.
The HA may not approve the unit or execute the HAP contract, until
the HA determines that the tenancy meets all program requirements (as
listed in the rule). (Sec. 982.305(a)) The HA must make ``best
efforts'' to execute the HAP contract before the beginning of the lease
term. (Sec. 982.305(c)(1)) The HAP contract must be executed within a
maximum of 60 calendar days from the beginning of the lease term.
(Sec. 982.305(c)(1)) In accordance with normal administrative fee
procedures, the HA receives its administrative fee for each whole month
the unit is under lease.
The rule is revised to clarify what happens if the HAP contract is
not executed before the beginning of the lease term. The final rule
provides that:
--The HA may not pay any housing assistance payment to the owner until
the HAP contract has been executed. (Sec. 982.305(c)(2))
--If the HAP contract is executed during the first 60 days of the lease
term, the HA will pay housing assistance payments after execution of
the HAP contract (in accordance with the terms of the HAP contract), to
cover the portion of the lease term before execution of the HAP
contract (a maximum of 60 days). (Sec. 982.305(c)(3))
--Any HAP contract executed after the 60 days period is void, and the
HA may not pay any housing assistance payment to the owner.
(Sec. 982.305(c)(4))
Comments recommend that the rule should require the HA to approve
the unit and lease in a specific short period from submission of the
family request for lease approval. A period of 7 days is suggested. The
recommendation to prescribe a rigid uniform period from family
submission to HA approval is not adopted. The imposition of a uniform
deadline is not practical for HAs operating in different housing
markets, and as applied to the special circumstances of particular
cases--for example, time needed so that an owner can correct HQS
deficiencies. As noted above, however, the HA must execute the HAP
contract within 60 days after commencement of the tenancy.
F. HA Disapproval of Owner
1. Mandatory Denial
The rule requires that the HA must not approve rental of a unit
from an owner if the owner is subject to certain federal sanctions
(debarment, suspension or denial of participation under 24 CFR part
24). (Sec. 982.306(a)) The HA may or may not know that an owner is
subject to these sanctions. The final rule therefore specifies that the
HA's obligation to reject the owner only applies if the HA has been
informed of this fact by HUD or some other source.
The proposed rule would also have provided that the HA could never
approve rental from the owner if HUD had initiated an enforcement
action under the Fair Housing Act. The final rule is revised to provide
that the HA must not approve rental from the owner if so directed by
HUD when the owner has been the subject of equal opportunity
enforcement proceedings.
[[Page 34671]]
(Sec. 982.306(b)) Automatic disapproval of owners who have committed
fair housing violations might operate to deny housing opportunities for
low-income or minority families. Such automatic denial may be
inconsistent with fair housing policies. The appropriate remedy should
therefore be determined by HUD in the circumstances of the particular
case.
In addition, the final rule broadens the description of the
proceedings for which such rejection should apply. The HA must
disapprove the owner (when directed by HUD) if:
--The federal government has instituted an administrative or judicial
action against the owner for violation of the Fair Housing Act or other
federal equal opportunity requirements, and such action is pending.
--A court or administrative agency has determined that the owner
violated the Fair Housing Act or other federal equal opportunity
requirements. (Sec. 982.306(b))
The new provisions cover fair housing enforcement actions:
--By administrative or judicial action.
--For violation of the Fair Housing Act or other equal opportunity
requirements.
Comments suggest that the HA should only be required to reject an
owner because of complaints referred by the HA to a fair housing
enforcement agency. This comment is not adopted. Rejection of an owner
supports federal fair housing statutes, regardless of whether the
complaint originated with the HA itself.
2. Discretionary Denial
The rule provides that the HA has administrative discretion to deny
approval to lease a unit from an owner in certain other specified
cases. (Sec. 982.306(c))
The proposed rule would have provided that the HA could deny
approval if the owner had not paid State or local real property taxes.
Comments both support and object to allowing or requiring the HA to
refuse approval of an assisted tenancy on this ground. The final rule
permits the HA to deny approval if the owner has not paid State or
local real estate taxes, fines or assessments. (Sec. 982.306(c)(6)) The
rule does not direct the HA to exercise this authority. Each local HA
has administrative discretion whether or not to reject owner
participation for this reason. By rejecting participation of owners who
have not paid local levies, the HA gives the locality leverage for
collection of delinquent accounts. Under the final rule, the HA may
exercise this discretion for non-payment of local fines or assessments,
in addition to local real property taxes.
The proposed rule would have provided that the HA could deny
approval to lease a unit from an owner who had committed fraud or made
any false statement in connection with any federal housing program. The
final rule amends and broadens this language to provide that the HA may
deny approval if the owner has committed ``fraud, bribery or any other
corrupt or criminal act'' in connection with a federal housing program.
(Sec. 982.306(c)(2))
The revision protects the integrity and purpose of federal housing
assistance. The revision is intended to make clear that the HA has
broad authority to reject participation of a Section 8 owner who has
engaged in bribery or any other corrupt or criminal activity related to
a federal housing program. The HA may decline to accept an owner,
regardless of whether the owner's crime meets the technical indicia of
``fraud'' as defined by federal or State law. In a parallel revision,
the rule also provides that the HA may deny or terminate assistance for
a family that has committed corrupt or criminal acts in a federal
housing program. (Sec. 982.551(k); Sec. 982.552(b)(5))
The rule provides that the HA may reject an owner who has engaged
in ``drug-trafficking''. (Sec. 982.306(c)(3)) As defined in the rule
(Sec. 982.4), this term refers to commercial drug-dealing (manufacture,
sale or distribution of narcotics), but does not cover illegal drug
use. Comments ask why the rule only allows the HA to reject an owner
who engages in drug-trafficking, but not for any other drug-related
criminal activity. HUD believes that the rule is appropriately targeted
at allowing the HA to bar drug dealing owners from its program.
The HA may reject an owner with a ``history or practice'' of
violating Section 8 HQS or applicable housing standards under other
federal housing programs. (Sec. 982.306(c)(4)) Comments mistakenly
assert that the rule would require the HA to reject a unit if any owner
has a history of minor HQS violation. In fact, the rule leaves the
decision whether to reject an owner to the HA's administrative
discretion. Comments recommend that HUD should define ``history or
practice''. HUD believes that this is a sufficient description of the
case to be covered. The individual HA may more precisely focus on types
of owner behavior that should be reason for rejecting owner
participation.
The rule specifies that for purpose of the provisions on HA
disapproval of an owner, the term ``owner'' includes a ``principal or
other interested party''. (Sec. 982.306(e)) Rental real estate is often
held by a legal entity such as a limited partnership or corporation,
rather than an individual. A real estate investor may have an interest
in various properties held in the name of different legal entities, or
may have an interest in various partnerships or enterprises. The rule
clarifies that the ``owner'' is not merely the nominal entity that
holds legal title to the property to be rented, but also covers other
persons with an actual interest in the property. In applying the
authority for rejection of an ``owner'' in specific cases, the HA may
penetrate the veil of the form of ownership. The HA may deny approval
to rent a unit from an entity in which the principal or other
interested parties have engaged in activities that are grounds for
denial. For example, the HA may deny approval to rent from a
partnership where a general or limited partner has committed fraud in
connection with a federal housing program.
Comments recommend that HUD should require disclosure of any
individual or corporation with an ownership interest of more than 10
percent. The HA may require a prospective owner to disclose ownership
information, so that the HA can determine if the owner should be
rejected or approved. However, HUD will not direct HAs to require
disclosure, and will not regulate the nature or form of owner
disclosure.
Comments recommend that HUD should allow an HA to reject an owner
who has used foul language or threats against HA staff or tenants. This
comment is not adopted.
3. HA Policy
Comments suggest that an HA should not have discretion to decide
the criteria for disapproving owners. The HA should only determine
whether an owner has committed an action that is grounds for
disapproval. Comments also recommend that the rule should require an HA
to use the same criteria for approval or disapproval of all owners.
Comments state that HUD should only permit disapproval based on
reliable and credible evidence, and that the HA should only be allowed
to disapprove an owner because of ``recent'' owner action.
The final rule provides that the HA administrative plan must
include the HA policies on disapproval of owners. (Sec. 982.54(d)(8))
Since HUD has eliminated the requirement for HUD approval of the
administrative plan, the HA policies on owner approval are not
routinely submitted for HUD review or
[[Page 34672]]
approval. (Of course, HA administrative policy and practice are subject
to HUD audit, review and required revision.)
HAs may only reject owners for any of the grounds listed in the
rule. However, HAs retain broad discretion is deciding whether and how
to exercise the authority to reject owners for any of the allowable
discretionary grounds. The HA may determine the practicality and
benefit of rejecting owners for such grounds, in the locality, and as
applied to the circumstances of each individual case.
The decision to reject the owner rests in the discretion of the HA.
HUD will not require the HA to establish any special type of process or
evidentiary standard. HUD believes that the imposition of such
requirements would discourage HAs from rejecting owners for good and
substantial reasons, such as the owner's practice of renting units that
violate local code. The rule confirms explicitly that owners do not
have a right to participate in the program. (Sec. 982.306(d)) Therefore
the rejection of an owner's participation does not affect any owner
right or property interest. The HA may exercise its discretion to
reject an owner in accordance with local policy, and available
information.
G. Tenancy
1. Tenant Definition
The proposed rule would have added a new definition of the term
``tenant''. The proposed definition would have provided that a tenant
was the ``adult'' member of the assisted family who executed the lease
as lessee of the dwelling unit. Comments state that the new definition
is helpful, and approve adding this defined term.
The final rule revised the proposed definition by removing the
provision that the tenant must be an ``adult'' member of the family. In
the final rule, the term ``tenant'' is defined as ``the person or
persons (other than a live-in-aide) who executes the lease as lessee of
the dwelling unit''. (Sec. 982.4) The rule text clarifies that a tenant
must have legal capacity to enter into a lease under State and local
law. (Sec. 982.308(a)).
2. Approval of Lease
Any new lease or revision must be approved by the HA. Before
approval, the HA must determine that the lease meets program
requirements under the rule. (Sec. 982.308(b))
A lease must be executed by the tenant and the owner before the
beginning of the lease term. (Sec. 982.305(b)(2)) The lease must also
be approved by the HA before the beginning of the term.
(Sec. 982.305(b)(3)) Any new lease or revision must be approved in
advance by the HA, and must comply with program requirements.
(Sec. 982.308(b); Sec. 982.309(e)(1))
The rule provides that if the tenant and the owner enter into a new
lease or revision, the HA and owner must enter into a new HAP contract
to subsidize the tenancy under the new lease or revision.
(Sec. 982.309(e)(1)) Comments recommend eliminating the requirement for
execution of a new HAP for this purpose. This recommendation is not
adopted. The rule continues to require the use of a simple and uniform
process for commencement of the assisted tenancy--by execution of a
lease and HAP contract in each case. The HAP contract expresses the
HA's agreement to subsidize the tenancy under the new or revised lease.
3. Contents of Lease
The proposed rule would have required the lease to include word-
for-word all provisions required by HUD, and barred any provisions
prohibited by HUD. The lease language required by HUD is called the
``lease addendum''. (Sec. 982.308(c)(1)) The final rule provides that
the lease must include word-for-word all provisions required by HUD.
(Sec. 982.308(c)(2)) The rule provides that if there is any conflict
between the provisions required by HUD (lease addendum) and other
provisions of the lease, the provisions required by HUD shall control.
(Sec. 982.308(c)(3))
The lease addendum must state that certain types of lease
provisions are prohibited. (Sec. 982.308(d)) The statement of
prohibited lease provisions for the certificate and voucher programs in
the proposed rule is the same as language previously used in the old
voucher rule. This language is similar to, but more simply and clearly
stated, than the description of prohibited lease provisions in the old
certificate rule. A comment recommends that HUD should use the version
of prohibited lease provisions in the old certificate rule. This
comment is not adopted.
In all cases, the assisted lease must include the verbatim language
of the lease addendum. An HA may develop a model program lease that may
be offered for use by families and owners. A model lease must include
the language of the lease addendum, and must comply with program
requirements. However, the new rule prohibits the HA from requiring
families and owners to use a model program lease prescribed by the HA.
(Sec. 982.308(c)(2))
HA comments object to the prohibition against requiring use of an
HA model lease. Comments state that use of a model lease saves an HA
the cost of reviewing leases to assure compliance with required lease
provisions. HUD believes that mandating use of a model lease may unduly
restrict family choice of available housing. Owners may refuse to
execute program leases in the form of the HA-prescribed model lease
rather than using a form of lease familiar to the owner.
Comments recommend that the HA should be permitted to disapprove a
lease that does not comply with State or local law. This comment is
adopted. The final rule provides that the HA may review the proposed
lease to determine if the lease complies with State or local law, and
may decline to approve the lease if it does not comply with State or
local law. (Sec. 982.308(f)) It should be emphasized, however, that the
federal rule does not require that the HA review the lease for
compliance with State or local law. The decision to undertake such
review, or to decline lease approval for this reason lies in the HA's
discretion.
4. Term of Tenancy
The rule provides that the initial term of the lease must be for at
least one year, and must provide for ``automatic renewal'' after the
initial term. The lease may renew by an automatic indefinite extension
or by automatic extension for successive definite terms (for example,
month-to-month or year-to-year). (Sec. 982.309(b) (1) and (2))
The lease terminates if any of the following occurs:
--The owner terminates the lease.
--The tenant terminates the lease.
--The owner and the tenant agree to terminate the lease.
--The HA terminates the HAP contract.
--The HA terminates assistance for the family. (Sec. 982.309(b)(3))
The term of the lease and the HAP contract are the same. The term
of the HAP contract follows the term of the lease. (Sec. 982.309(a)(1))
The lease ends when the HAP contract ends. (Sec. 982.309(b)(2)(iv)) The
HAP contract ends when the lease ends. (Sec. 982.309(a)(2))
Comments approve the clarification that the initial lease term is
one year. Comments also approve the new language on automatic extension
of the initial year term, noting that the new regulation clears up
confusion under the prior rule. (Sec. 982.309(b) (1) and (2))
The owner may offer the family a new lease, for a term beginning at
any time after the initial term. The owner must give the tenant at
least 60 days written
[[Page 34673]]
notice of the offer. Comments recommend that the owner should also be
required to send the HA a copy of the offer. The comment is adopted.
(Sec. 982.309(e)(2))
Rent to the owner and the family share of rent may change during
the assisted lease. The rule does not require the execution of a new
lease or HAP contract for a change in family share in accordance with
HUD requirements, or a change in rent to owner in accordance with the
HA approved lease.
5. Termination of Tenancy
The rule and the statute provide that an owner may terminate an
assisted tenancy for serious or repeated violation of the lease,
violation of tenancy obligations under federal, State or local law, or
other good cause. (42 U.S.C. 1437f(d)(1)(B)(ii); Sec. 982.310) The
final rule provides that the owner may terminate tenancy for these
grounds ``during the term of the lease''. (Sec. 982.310(a)) The federal
requirements for termination of tenancy only apply during the term of
the assisted lease, but do not apply after a termination of the
assisted lease--for example, where the lease has terminated
automatically because the HAP contract has terminated.
Other Good Cause
As under the old rule, the rule provides that ``other good cause''
for termination of tenancy by the owner may include, but is not limited
to, any of the following examples:
--Failure by the family to accept the offer of a new lease or revision;
--A family history of disturbance of neighbors or destruction of
property, or of living or housekeeping habits resulting in damage to
the unit or premises;
--The owner's desire to use the unit for personal or family use; or
--A business or economic reason for termination of the tenancy (such as
sale of the property, renovation of the unit, desire to lease the unit
at a higher rental). (Sec. 982.310(d))
Comments recommend that HUD give more definition of ``other good
cause'', and suggest that the existing provisions have been used as
``legal loopholes'' for owner eviction of tenants. The recommendation
is not adopted. The statute permits eviction after the first year for
``other good cause'', as well as for family violation of the lease.
Eviction for good cause is not a ``loophole'', as asserted by the
comment, but is a ground for eviction specifically provided in the
statute. If an owner seeks to evict for this reason, the existence or
non-existence of cause is determined by the court in the owner's
eviction action. The good cause provisions in the present rule are
largely the same as provisions promulgated by the Department in 1984
for the certificate program (and subsequently incorporated in
regulations for the voucher program). In the preamble to the 1984 rule,
the Department noted that:
``a comprehensive regulatory definition of good cause in the
Section 8 Existing Housing Program (i.e., the certificate program)
is neither possible or desirable. The good cause category should
remain open to case by case determination by the courts. It is a
prime virtue of this statutory category that it permits termination
by owner in types of cases which cannot be readily foreseen.'' (49
FR 12233, March 29, 1984)
The rule recites key ``examples'' of cases that may be good cause,
but explicitly states that ``other good cause'' is not limited to the
listed examples. In the 1984 rule, HUD stated that:
``The good cause concept should be flexible and open to
application in concrete cases, but there is a critical need to
provide explicit regulatory assurance to prospective section 8
owners that legitimate owner concerns will be recognized as grounds
for termination of tenancy * * *. (T)his assurance may be essential
to promote broad participation by owners.'' (Id.)
Criminal Activity
The rule provides that the owner may evict a tenant for any
criminal action that threatens persons who reside in the ``premises''
or the ``immediate vicinity''. (Sec. 982.310(c)) In the rule,
``premises'' is defined as the building or complex in which the
dwelling unit is located, including common areas and grounds.
(Sec. 982.4) Comments support allowing eviction because of threats to
persons who reside in the vicinity. However, comments also recommend
that HUD should allow the owner to evict because of criminal activity
that is a threat to the owner's representative or staff.
An owner may only terminate a tenancy in Section 8 existing housing
for the grounds specified in the law. (42 U.S.C. 1437f(d)(1)(B)) The
rule implements statutory provisions which explicitly confirm that the
owner may evict a tenant for criminal activity that is a threat to
residents. The statute does not refer to criminal activity that is a
threat to other persons, who do not reside in the housing or the
vicinity, and does not refer to representatives of the owner. However,
threats or harm to owner representatives by the assisted household or
its guests may be ground for eviction if the threatening activity
constitutes a serious or repeated lease violation or is ``other good
cause'' for eviction of the tenant.
The rule permits an owner to evict the tenant for drug-related
criminal activity ``on or near'' the premises. (Sec. 982.310(c)(3))
Comments state that the program should not assist persons who engage in
drug-trafficking, whether the activity occurs on or off the premises.
The law provides that the owner may terminate tenancy because of any
drug-related criminal activity ``on or near'' the assisted premises.
(42 U.S.C. 1437f(d)(1)(B)(iii)) The language of the HUD rule follows
the eviction standard prescribed in the law.
During the term of an assisted lease, an owner may not evict a
tenant for drug crime unless the crime takes place ``on or near'' the
housing (unless the behavior is a serious or repeated lease violation
or is otherwise ``other good cause'' for eviction of the tenant).
However, the HA may terminate program assistance for drug-related
criminal activity or violent criminal activity by a family member,
regardless of where the criminal activity takes place. (Sec. 982.553)
HUD has explained the reason for this policy:
``The Department has not limited the proscribed (drug-related or
violent criminal) activities under this rule to activities carried
out on or near the premises. Section 8 certificates and housing
vouchers are a very mobile form of housing assistance. The holder
can lease suitable housing with Federal subsidy assistance anywhere
in the PHA's jurisdiction, in the metropolitan area, or in a
contiguous metropolitan area. If a PHA were (only) permitted to
terminate assistance for activities on or near the assisted
premises, the deterrent effect of this policy would be substantially
diminished because the family could lease housing outside the area
where the family member engages in the proscribed activities.
Furthermore, if the rule were limited to activities engaged in on or
near the premises which are being leased with Section 8 assistance,
the rule would not authorize a PHA to deny Section 8 assistance to a
former public housing tenant evicted for drug-dealing in public
housing * * *.'' (55 FR 28538, 28540, July 11, 1990)
The lease terminates when the HA terminates assistance for the family.
(Sec. 982.309(b)(3)(v))
Under the law and this rule, the owner may evict for drug crime
``on or near'' the premises. Comments suggest that the rule should
cover crime in an adjoining street, alley or other public right of way.
In this rule, HUD tracks the statutory standard, and does not attempt
to further define when a crime location is considered ``near'' the
assisted project or building. In general, this standard would cover
drug crime in a street or other right of way that adjoins the project
or building where a Section 8 unit is located. A landlord-tenant court
[[Page 34674]]
can apply the statutory standard to the circumstances of a particular
case.
6. Nature of Assisted Tenancy
Comments claim that the rule provides for a perpetual lease, and
discourages owner participation. Comments state that the rule prohibits
the owner from selling the assisted unit, and allows the HA to reduce
owner rents at will. Comments state that rule should allow termination
of tenancy without cause by the family or the owner after the first
year of the lease term. Comments assert that the owner is locked in,
whereas the family can terminate the lease on 60 days notice at the end
of the first year. By contrast, other comments claim that the rule
undermines existing protections for the tenant.
In fact, the rule does not undermine existing protections for the
tenant or the owner. Rather, HUD believes that the rule reflects a
reasonable balance between the interest of the assisted tenant and the
owner within the context of the existing law. On the one hand, the
lease protects the tenant against arbitrary and ungrounded termination
by the owner. On the other hand, the owner is not locked in, but may
terminate the tenancy for lease violation or other good cause.
After the initial year, the family may terminate the tenancy on
notice to the owner. After the initial year, the owner may terminate
the tenancy for other good cause--specifically including a ``business
or economic reason'' for termination of the tenancy. The rule does not,
as claimed by the comments, prohibit the owner from selling the unit.
The rule specifically states that a business reason for termination
after the initial year may include ``sale of the property''.
(Sec. 982.310(d)(1)(iv))
7. Notice by Owner
Notice of Grounds for Termination
By law, the owner must give the tenant a written notice that
specifies the grounds for termination of tenancy. (42 U.S.C.
1437f(d)(1)(B)(iv))
The proposed rule would have provided that the owner's notice of
grounds for termination could have been combined with and run
concurrently with any notices required under State or local law.
Comments suggest that the owner should be required to give the notice
of grounds with owner's notice to vacate, not later with the summons,
complaint or other pleading. HUD should require a minimum notice period
before commencement of the eviction action. The comment notes that
advance notice of eviction allows time for the tenant to negotiate a
resolution, and gives an opportunity for the HA to protect both the
tenant and the HA interest.
The final rule clarifies that the owner must give notice of the
grounds for eviction at or before commencement of the eviction action.
(Sec. 982.310(e)(1)(i)) The notice may be included in, or may be
combined with, any other owner eviction notice to the tenant.
(Sec. 982.310(e)(1)(ii)) Such other owner eviction notice means a
notice to vacate, or a complaint or other initial pleading used under
State or local law to commence an eviction action.
(Sec. 982.310(e)(2)(i))
Comments recommend that the rule require notice with sufficient
specificity to prepare a defense. The rule does not specify the form or
contents of the statutory notice. The rule also does not prescribe the
point at which the notice must be given, so long as the owner gives
notice of grounds at or before commencement of the eviction action.
Comments propose that the owner should be required to notify the HA
at the same time as the tenant. The final rule provides that the owner
must give the HA a copy of any owner eviction notice to the tenant.
(Sec. 982.310(e)(2)(ii))
Termination of HAP Contract--90 Days Notice
The owner must give 90 days notice before a termination of a
tenant-based HAP contract because of:
--Owner ``opt-out''.
--``Expiration'' of the HAP contract.
The owner must give written notice of the termination to the family,
the HA and HUD. (42 U.S.C. 1437f(c)(9) and (10), Sec. 982.455(b)(3))
The rule provides that expiration occurs in two cases:
--Automatic termination of the HAP contract. The proposed rule would
have provided that the contract terminates automatically three months
after the last housing assistance payment. The final rule now provides
that the HAP contract terminates six months (180 calendar days) after
the last housing assistance payment. (Sec. 982.455(a))
--A HUD determination to terminate the HAP contract because there is
insufficient funding to support continued assistance for the family.
``Opt-out'' refers to owner termination of tenancy for a business
or economic reason. (Sec. 982.455(b)(2)(ii); see 42 U.S.C. 1437f(c)(9))
On receiving the owner notice, the HUD field office must review the
notice and consider whether there are additional actions which should
be taken to avoid the termination. (Sec. 982.455(b)(4)(i)) The final
rule adds a new provision clarifying that the owner may proceed with
eviction whether HUD approves or disapproves, or fails to complete the
required review of the owner notice before expiration of the 90 day
review period. (Sec. 982.455(b)(4)(iv))
For a unit assisted under the certificate program, the proposed
rule would have provided that when HUD received notice of an opt-out or
expiration, HUD would have been required to offer the owner the
opportunity to enter into a new HAP contract at the maximum rent
allowed for a new program tenancy (subject to the FMR/exception rent
limit and the reasonable rent limit). The final rule provides that HUD
must offer a new HAP contract only when the owner gives notice of an
opt-out, but not in the case of an expiration.
(Sec. 982.455(b)(4)(ii)(B))
Comments recommend that the 90 days notice procedure should apply
to a termination because an owner wants to use the unit for personal or
family use. HUD should evaluate the lawfulness of the termination, and
offer incentives for the owner to keep the unit in the program. This
comment is not adopted. In the tenant-based programs, an ``opt-out''
only applies to an owner's termination of tenancy for a business or
economic reason.
Comments recommend that the requirement to give notice of grounds
for eviction should not apply to an owner opt-out. This comment is not
adopted. Owner's 90 days opt-out notice must state the reasons for the
termination, and will simultaneously satisfy the requirement to give
notice of grounds for termination.
8. Rent
Nonpayment of Housing Assistance Payment
The final rule provides that the family is not responsible for
payment of the portion of rent to owner covered by the housing
assistance payment under the HAP contract between the owner and the HA.
(Sec. 982.310(b)(1); Sec. 982.451(c)(4)(iii)) The HA failure to pay the
housing assistance payment to the owner is not a violation of the lease
between the tenant and the owner. During the HAP contract term, the
owner may not terminate the tenancy of the family for nonpayment of
this amount. (Sec. 982.310(b)(2))
Application of Tenant Payments
Comments recommend that the rule should specify how tenant payments
are applied. The comments state that HUD
[[Page 34675]]
should require that tenant payments must first be applied to current
rent, and that any excess should be first applied to other rent, and
only then to other non-rent purposes. The comment is not adopted. HUD
has no reason for such micromanagement of the Section 8 tenancy. HUD
will leave such questions for resolution in accordance with the lease
and local law.
9. Owner Late Fee
As in the past, the rules do not include any federally-imposed
limitation on owner charges of fees against the tenant for late payment
of rent in accordance with the lease and State and local law. Comments
recommend that the rule should limit owner late fees, should allow a
grace period for late payment of rent, and should prohibit eviction for
non-payment of late fees. The comments are not adopted.
HUD seeks to minimize interference in the relationship between
landlords and assisted tenants in order to encourage owner
participation in the program. In these programs, any regulation of
tenant-paid late fees will be left to local policy, rather than
encumbered by special HUD-imposed requirements that only apply to a
subsidized tenancy. HUD also believes that owner assessment of late
fees can perform a legitimate role as an encouragement for timely
payment of the tenant share of rent.
The owner receives the total rent (``rent to owner'') from two
sources--the housing assistance payment portion from the HA, and the
tenant portion from the family. Comments propose that HUD should
prohibit charging late fees to the tenant for delays in the HA payment
to the owner. The rule is revised to clarify the respective obligations
of the HA and the family to the owner for payment of the HA and tenant
portions of the rent, and for late fees for late payment by the HA or
the tenant. The rule now provides that the tenant is not responsible
for paying the HA share of the rent. This change will eliminate any
basis for a late charge against the tenant for the HA share of the
rent.
The final rule is revised to confirm that the HA must pay the owner
promptly when the housing assistance payment is due in accordance with
the HAP contract. (Sec. 982.451(c)(5)) In addition, the rule provides
that if the HA fails to make timely payment, the HA ``may be
obligated'' to pay a late fee ``in accordance with State or local
law''. However, unless authorized by HUD, the HA may only use
administrative fee income or administrative fee reserve for payment of
any such late fee. The HA may not use other Section 8 program receipts
to pay a late fee to the owner.
10. Termination and Notice by Family
Notice of Termination or Move
The family may terminate a lease after the first year. The lease
may not require the family to give the owner more than 60 days notice
of the termination. (Sec. 982.309(d)(1))
The family must notify the HA before moving from the unit, and must
give the HA a copy of any lease termination notice by the family to the
owner. Failure to notify the HA before the family moves, or to give the
HA a copy of the family's termination notice to the owner, is a breach
of family obligations under the program. (Sec. 982.309(d)(2);
Sec. 982.309(f); Sec. 982.551(g)(2))
Family's Right To Terminate the Lease
Comments express some confusion concerning the family's right to
terminate the lease on notice to the owner (under the existing and the
proposed rule). Some comments state that the family can move on one day
or other short notice to the landlord. Other comments state that such
short notice to landlords is unfair, discourages owner participation,
and is inconsistent with standard leasing practice. Other comments
assume that the tenant is required to give 60 days notice. Comments
recommend that the family should be required to give the owner and the
HA at least 30 days notice of termination. Comments state that the
family should be required to give minimum notice to the owner in
accordance with State and local law. Comments ask HUD to clarify the
relation between termination by tenant notice, and the provisions for
definite or indefinite extension of the initial lease term.
Some Section 8 lease requirements are prescribed by HUD. These
requirements are contained in the required ``lease addendum''. Except
for these program lease requirements, the terms of a Section 8
tenancy--like any private market tenancy--are governed by State law and
the language of the particular lease executed by the tenant and the
owner. The individual lease between a particular tenant and owner
contains both the standard lease addendum and any other lease
provisions agreed by the parties.
A tenant's right to terminate the lease, and the length of any
required termination notice, depend on the terms of the lease. It is
not true, as assumed by some comments, that the rule gives a Section 8
tenant the right to terminate the tenancy during the first year, or
that the tenant may terminate on one day or other short notice. In
fact, there is nothing in the HUD rule or HUD-prescribed lease addendum
permitting the tenant to terminate the lease during the first year of
the lease term.
The Section 8 tenant may terminate the lease at any time after the
first year. (Sec. 982.309(d)(1)) The program rule and lease addendum
only provide that the lease may not require the tenant to give more
than 60 days notice to the owner. In other respects, the particulars of
the tenant's right to terminate the tenancy depend on local law and the
terms of the tenant's lease.
In allowing the tenant to terminate after the first year (on no
more than 60 days notice to the owner), the rule seeks to provide rough
symmetry between the legal positions of the tenant and the owner.
During the first year, an owner may not terminate the tenancy for
``other good cause'' unless the owner is evicting because of some
action or non-action by the family. (Sec. 982.310(d)(2)) After the
first year, the owner may terminate for any ``other good cause''
(including termination for a business or economic reason), not limited
to termination because of action or non-action by the family. After the
first year, the tenant may terminate the lease on notice to the owner.
11. Security Deposit and Owner Claims When Family Moves
Proposed Rule
The owner may collect a security deposit from the family. As in the
past, the proposed rule would have limited the amount of the security
deposit. The proposed rule would have provided that the maximum
security deposit was one month's rent.
The proposed rule would have provided that an owner could claim
reimbursement from the HA for tenant damage and unpaid rent. The owner
could collect a claim for one month's rent minus the maximum security
deposit allowed by the HA. Under the proposed rule, the HA could
therefore have eliminated owner reimbursement claims by permitting the
owner to collect one month's rent as a security deposit.
Comments
Comments make various recommendations concerning the amount of the
maximum security deposit. Some comments claim that a tenant can't
afford to pay a one month deposit. Comments claim that the
authorization to collect one month's rent as a security deposit forces
the
[[Page 34676]]
family to lease a unit where the rent is low. Comments recommend that
the security deposit should be one month's family contribution
(generally 30 percent of family income).
Comments recommend allowing owner damage claims for up to two
months rent. These comments assert that the damage claim protection is
an important tool in persuading owners to rent to program families.
Other comments suggest that it would be better to eliminate owner
claims by increasing the maximum allowable security deposit. Family
payment of the security deposit promotes family responsibility. The
security deposit gives the tenant an incentive to minimize the owner's
claim for damage or unpaid rent.
Comments recommend that HUD should direct HAs to comply with a
federally-mandated timetable for processing of owner claims.
Final Rule
The final rule eliminates the right of the owner to claim
reimbursement from the HA for damages or other amounts owed by the
tenant under the lease. In this respect, the assisted tenancy will
function more like an ordinary tenancy in the private market. The owner
must look to the tenant for payment of any damages.
The final rule also eliminates the HUD-imposed limit on the amount
of owner security deposits. The rule provides that the owner may
collect a security deposit. (Sec. 982.313(a)) The HA is not required to
set any limit on the owner security deposit. However, the HA has
discretion to prohibit security deposits in excess of private market
practice, or in excess of security deposits for the owner's unassisted
units. (Sec. 982.313(b))
HUD believes that these changes tend to produce significant
benefits.
--Elimination of unnecessary distinctions between the tenant-based
program and a private market tenancy encourages broader participation
by owners of units outside of areas of minority and high poverty
concentration.
--The owner can no longer rely on the HA to pay tenant damages or
unpaid rent. This change gives the owner a stronger motivation to
screen assisted families the same as for unassisted private market
tenants, and to check for unit damage during occupancy.
--This change in turn reinforces the incentive for a program family to
take care of its unit before and during assisted occupancy.
--As suggested by comments, the need for the tenant to make a larger
security deposit from its own pocket creates a greater incentive to
avoid damage to the unit, and owner claims against the security
deposit.
--The elimination of owner claims relieves a major administrative
burden. The old owner claim procedure forced HAs to determine whether a
unit was damaged during occupancy, and whether any damage was the fault
of the tenant. Under the old system, it was often hard for the HA to
know who caused unit damage, and to sort out bona fide owner claims.
Elimination of the old claim system eliminates the need to develop and
operate a claims process that is fair to both families and owners.
--Since HAs will not pay owner claims, HAs will not deny or terminate
assistance for failure to pay such claims. The change will tend to
eliminate over time issues concerning denial or termination of a
family's assistance for failure to reimburse amounts paid by the HA in
owner claims on behalf of the families, including the need for
repayment agreements or for hearings to determine whether an owner's
claim was properly paid.
--Elimination of the old claim system saves both the amounts paid out
in claims and the cost of administration.
12. HA Payment After Family Move-Out
The rule provides that if a family moves out, the owner may keep
the housing assistance payment for the month when the family moves out.
The HA may not make any further payments. (Sec. 982.311(d)(1)) Comments
state that HUD should allow vacancy payments for an additional month.
The comments claim that an additional vacancy payment is an incentive
for owner participation, and is needed to attract owners of higher
quality units. Comments state that the elimination of vacancy claims
for the month after move-out is unfair to participating owners.
The final rule provides, as proposed, that payments will not be
made after the month of move-out. In the voucher program, the statute
prohibits assistance payments after the month the unit is vacated. (42
U.S.C. 1437f(o)(4)) The provision of a vacancy payment absorbs funds
that can be used to subsidize actual occupancies. Further, the use of
subsidy payments for vacant units is an unnecessary departure from
normal private market incentives and practice. In the tenant-based
programs as in the private market, owners can charge a rent comparable
to rents for a private unassisted rental. HUD is not persuaded that
this additional incentive is necessary or desirable to give program
families a reasonable access to units in the rental market. The voucher
program has functioned well without this incentive to owner
participation.
13. New Rule: Effect on Existing Tenancy
Comments ask how the changes under this rule affect existing
tenancies, and HAP contracts, that were entered before the new rule.
Comments ask if existing HAP contracts continue until termination, or
if contracts must be amended at the next recertification. Comments
express concern that the mode of implementing new regulatory
requirements may cause administrative burden and expense.
Nothing in the rule overrides or impairs the terms of outstanding
HAP contracts or leases entered into under the old regulations. The
rights of owners and tenants are determined by the provisions of
existing HAP contracts and leases. Owners and tenants are not required
to enter into new HAP contracts and leases. Housing assistance payments
will be made to the owners in accordance with the terms of the existing
HAP contracts.
An HA may encourage owners and tenants to execute new leases and
HAP contracts, in place of the existing contracts. However, the HA is
not required to convert the old contracts, and may not force the owners
and families to execute new contracts in accordance with the new
requirements. Any HAP contract entered into after the effective date of
the new rule must comply with requirements of the rule, and must be
executed on the HUD-prescribed form. Similarly, the HA may not approve
any new lease or revision unless the lease is in accordance with the
new rule.
H. Illegal Discrimination--HA Help for Family
Several provisions of the proposed rule indicate that an HA must
help a family that can't lease a unit because of illegal
discrimination. Comments ask HUD to state what the HA should do to
assist the family. The final rule requires that when a family claims
that illegal discrimination prevents the family from leasing a suitable
unit under the program, the HA must give the family information on how
to fill out and file a housing discrimination complaint. (Sec. 982.304)
I. When Housing Assistance Payments May Be Paid to Owner
The proposed rule would have provided that the HA could only have
made housing assistance payments to
[[Page 34677]]
the owner for a period the dwelling unit was leased to and occupied by
the family. The final rule provides that:
--Housing assistance payments shall be payable to the owner in
accordance with the terms of the HAP contract.
--Housing assistance payments may only be paid to the owner during the
lease term, and while the family is residing in the unit.
(Sec. 982.311(a))
The final rule also specifies that housing assistance payments
terminate if:
--The lease terminates,
--The HAP contract terminates, or
--The HA terminates assistance for the family. (Sec. 982.311(c))
The final rule clarifies the principles governing continuation of
payments to an owner during an eviction. The final rule provides that:
``Housing assistance payments terminate when the lease is
terminated by the owner in accordance with the lease. However, if
the owner has commenced the process to evict the tenant, and if the
family continues to reside in the unit, the HA must continue to make
housing assistance payments to the owner in accordance with the HAP
contract until the owner has obtained a court judgment or other
process allowing the owner to evict the tenant. The HA may continue
such payments until the family moves from or is evicted from the
unit.'' (Sec. 982.311(b))
J. Absence From Unit
Occupancy of Unit by Family
Section 8 is intended to provide subsidy for a unit leased to and
occupied by a low-income family. (See 42 U.S.C. 1437f) The family is
obligated to use the assisted dwelling for residence by members of the
family. (Sec. 982.551(h)(1)) The unit must be the family's only
residence.
The proposed and final rule state that the HA administrative plan
must include provisions governing how long the family may be absent
from the dwelling unit, and under what circumstances. The final rule
includes a more complete statement regarding HA policy on absence of
the assisted family from the unit. (Sec. 982.312)
The proposed rule would not have set any HUD-prescribed limit on
the length of family absence from the assisted unit. In the proposed
rule HUD invited comment on whether the regulation should establish a
specific federally defined outer limit on the time for which subsidy
may be paid for an empty unit, for specific causes or for any cause.
Absence From Unit: Comments
Public comments contain a spectrum of recommendations on the degree
of HA discretion to establish policies on the length of family absence
from an assisted unit:
--The HA should not have any right to terminate subsidy because of
family absence.
--The HA should have total discretion to set policy on family absence.
--The HA should have discretion to set policy within limits established
by HUD.
--HUD should set policy on family absence. The HA should not have
discretion to determine the policy.
Some comments object to granting the HA any power to limit family
absence. The HA should not be permitted to terminate assistance unless
the family abandons the unit. The family should be treated like any
renter. Comments also object to requiring that the family must only use
the assisted unit for residence by the family. Comments state that this
requirement burdens the family's freedom of movement and choice of
occupation.
Comments state that the HA should not establish a fixed cut-off
because of family absence from the units. The HA should consider the
facts of each case, including the length and reason for absence, and
the family's intention to return. The HA should not be allowed to
terminate assistance where the resident is absent:
--Because of employment, such as absence of a migrant worker.
--Because the resident is in drug treatment or prison.
--Because the resident is in a nursing home.
Comments state that an HA's absence policy should distinguish
between voluntary absence, as opposed to absence because the resident
is being treated for a disability. Comments state that the HA should
not terminate assistance unless the family fails to pay for rent or
utilities. Comments claim that termination of assistance because of
family absence discriminates against single person families, and
violates the Constitutional right to travel.
Most comments agree that HAs should have broad discretion to
establish local limits on absence from the unit. Some comments
recommend that HAs should have complete flexibility to determine
policies on absence from the unit, and that HUD should not set any
maximum. Other comments propose that HAs should have discretion within
outer limits set by HUD. Comments state that a HUD-imposed maximum is
appropriate so that practices of different HAs are consistent. Comments
note that consistency is desirable because of portability. Some
comments recommend that HUD should establish uniform rules on family
absence.
Comments also contain a wide range of recommendations on the
maximum length of absence from the unit (from 30 days to one year), and
of factors that should affect the period in which the HA continues
payments for an unoccupied unit. For example, comments propose allowing
a longer maximum absence period for cases where the resident is absent
because of documented illness or employment; or that assistance should
be terminated immediately if the resident is imprisoned. Comments
propose that the maximum absence period should be the same as the
period for automatic termination of assistance where the HA has not
made any assistance payment under the HAP contract (i.e., where the
income-based family share equals the full rent to owner).
Comments note that assistance should terminate right away if the
family has permanently vacated the unit. The HA should have power to
determine whether the family has vacated the unit.
Comments state that the HA must give the family notice and
opportunity for a hearing before terminating assistance because of
family absence.
Absence From Unit: Final Rule
The final rule provides that: ``The family may be absent from the
unit for brief periods. For longer absences, the HA administrative plan
establishes the HA policy on how long the family may be absent from the
assisted unit. However, the family may not be absent from the unit for
a period of more than 180 consecutive calendar days in any
circumstance, or for any reason. At its discretion, the HA may allow
absence for a lesser period in accordance with HA policy.
(Sec. 982.312(a))
``Absence'' is defined to mean that no member of the family is
residing in the unit. (Sec. 982.312(c))
The HA has broad discretion to set local policy on family absence,
but must state these policies in the HA administrative plan.
(Sec. 982.54(d)(10); Sec. 982.312(e)) The policy includes:
--How the HA determines whether or when the family may be absent, and
for how long. For example, the HA may establish policies on absences
because of vacation, hospitalization or imprisonment.
(Sec. 982.312(e)(1))
--Any provision for resumption of assistance after an absence,
including readmission or resumption of assistance to the family.
(Sec. 982.312(e)(2))
The final rule requires termination of housing assistance payments
if the
[[Page 34678]]
family is absent from its assisted unit for longer than the maximum
permitted absence. The term of the HAP contract and assisted lease also
terminate. (Sec. 982.312(b)) Before terminating payments under the HAP
contract, the HA must give the family the opportunity for an informal
hearing. (Sec. 982.555(a)(1)(vi); Sec. 982.555(a)(2)) The owner must
reimburse the HA for any housing assistance payment for the period
after the termination. (Sec. 982.312(b))
Under the final rule, the HA has great flexibility to establish
local policies on tenant absence, including different rules on the
length of allowable absence in different circumstances. The family may
be absent for ``brief'' periods. However, a family may not be away from
the unit for more than 180 consecutive days in any circumstances. The
HA has broad discretion to set policy for absences of less than 180
days.
As suggested by some comments, the 180 maximum absence interval is
the same as the interval for termination of the assistance contract
because no assistance is paid (termination because family contribution
equals the maximum HUD subsidy). (Sec. 982.455(a)) In the case of
family absence, assistance payments are terminated so that the HA does
not waste subsidy by continuing to pay for an empty unit. In the case
where no assistance has been paid for 180 days, the assistance contract
is terminated so that the program slot can be freed-up and used for
another family (even though the unit is occupied and the HA is not
making any payment for the unit).
As suggested by comments, HAs must distinguish between cases of
prolonged absence from a unit, and cases where the family simply moves
out of the unit. If the family moves out, the HA may not continue
assistance after the month when the family moves out. If the family has
not moved out, but is absent from the unit, the HA may elect to
continue assistance payments for a maximum of 180 days, as determined
in accordance with the HA policy.
In practice, of course, HAs will be confronted with difficult
problems in determining whether a family is actually living in, has
moved out, or is otherwise absent from the unit; and in determining the
length or reason for family absences. Under this rule, a family is
obligated to notify the HA before the family moves out.
(Sec. 982.309(f)) However, the family may fail to give this notice. The
HA may be uncertain whether the family moved out or intends to return
after an absence.
The final rule specifies that the family is obligated to give the
HA information on family absence from the unit, and to cooperate with
the HA for this purpose. (Sec. 982.312(d)(1); Sec. 982.551(i)) The HA
may adopt appropriate techniques to verify family occupancy or absence,
including letters to the unit, phone calls, visits, or questions to the
landlord or neighbors. (Sec. 982.312(d)(2))
K. Family Break-up
The proposed and final rule provide that the HA administrative plan
must describe the HA's discretionary policies on how to determine who
remains in the program if an assisted family breaks up. (final rule
Sec. 982.315) Resolution of these issues is left to HA discretion in
accordance with the HA policy. Comments generally agree that HUD should
leave resolution of such issues to the HA, and that the rule should
confirm that the HA's decision is final, and not subject to appeal.
Some comments request more guidance on how the HA should exercise its
discretion.
Other comments assert that HUD should establish a national policy
on who keeps the Section 8 subsidy after a family break-up. These
comments object to granting discretion for local HAs to decide these
issues, and object to the lack of regulatory guidance for exercise of
this discretion. These comments state that the absence of guidance may
lead to arbitrary and inequitable results, or violations of the Fair
Housing laws.
Comments suggest various factors or interests that could be
considered in deciding who receives assistance after a breakup:
--Whether assistance should stay with the family members who remain in
the unit (during or after the initial lease term).
--The interest of children.
--Spousal abuse.
--Medical condition.
--Special needs of a disabled family member for accessibility features.
The final rule confirms that the HA has authority to determine
which family members continue to receive assistance after a family
breaks up. The HA policy must describe how the HA determines what
family members will remain in the program if the family breaks up.
(Sec. 982.315(a): Sec. 982.54(d)(11)) The final rule makes clear that
the HA has broad discretion to decide these issues. The rule does not
require the HA to use any particular procedure for making such
decisions, and does not require the HA to consider any particular
factors. The rule confirms, as suggested by public comments, that the
factors to be considered by the HA in making this decision may include:
--Whether the assistance should remain with family members remaining in
the original assisted unit.
--The interest of minor children or of ill, elderly or disabled family
members.
--Whether family members are forced to leave the unit as a result of
actual or threatened physical violence against family members by a
spouse or other member of the household.
--Other factors specified by the HA. (Sec. 982.315(b))
The HA is not required to devise a complete set of rules for
disposing of the issues posed because of family break-up. The HA is
free to leave room for case by case decision, based on the
circumstances of individual cases. The HA is merely required to adopt a
procedure for handling these issues, and to state the procedure in the
administrative plan. Under this rule, the HA is not required to
routinely submit the administrative plan, including the HA family
break-up policy, for HUD review or approval.
The final rule provides that when a court determines the
disposition of property between members of the assisted family in a
divorce or separation under a settlement or judicial decree, the HA is
bound by the court's determination of which family members continue to
receive assistance in the program. (Sec. 982.315(c))
V. Where Family Can Live and Move
A. Eligible Housing
The rule provides that Section 8 tenant-based subsidy may not be
used for certain types of housing, and may not be combined with certain
other types of housing subsidy. (Sec. 982.352) The final rule revises
several provisions on this subject.
1. HUD-Owned Unit
When the proposed rule was published, the law provided that a
Section 8 ``owner'' must be either a ``private'' person or entity, or a
public housing agency. (42 U.S.C. 1437f(f)(1)) HUD is neither a private
entity nor a public housing agency. For this reason, the proposed rule
would have prohibited assistance for a unit that is owned by HUD.
However, the law was amended in 1994 to provide that an owner may be
``an agency of the Federal Government''. (Pub. L. 103-233, April 11,
1994, section 101(d), 108 Stat. 357, amending the Section 8 ``owner''
definition) This amendment was intended to permit HUD to receive
Section 8 housing assistance payments as a Section 8 owner when HUD
takes title to units covered by a Section 8 HAP
[[Page 34679]]
contract. Because of the statutory change, the final rule deletes the
prohibition against use of HUD-owned units.
2. Prohibition of Other Subsidy
The rule prohibits assistance for a unit that benefits from
``duplicative'' housing subsidy from a federal, State or local source.
(Sec. 982.352(c)(9)) The proposed rule would have added a new provision
that also prohibits assistance for a unit receiving, or which received
in the past 5 years, a local or State mortgage interest subsidy,
construction or rehabilitation subsidy or project-based rent-subsidy.
Public comments object to the proposed prohibition of assistance
for projects that benefit from a State or local interest subsidy, or
construction or rehabilitation subsidy. Comments point out that this
restriction would preclude use of housing developed with the benefit of
State or local subsidy, including housing for the disabled. Comments
note that the development and rehabilitation subsidies play a different
role from the Section 8 rental subsidy. Development subsidy increases
the supply of affordable housing. Although development subsidy reduces
debt service requirements, operators need rent to cover maintenance and
operating expenses. Rental subsidy helps families afford the rent.
After consideration of public comment, HUD has eliminated the
blanket prohibition of Section 8 assistance for housing that has
benefitted from a State or local subsidy for construction or
rehabilitation, or a mortgage interest subsidy. HUD agrees that
subsidies to increase the supply of affordable housing perform a
different role from Section 8 subsidies for rental of available
housing. Section 8 families should not be barred from renting such
housing.
The proposed rule would have prohibited use of units that received
subsidy in the past 5 years. The final rule does not include any
limitation on use of units that received any form of State or local
subsidy before receiving the Section 8 assistance. The final rule
prohibits a family from receiving tenant-based assistance for housing
currently assisted by a State or local ``rent subsidy''.
(Sec. 982.352(c)(8)) This prohibition applies whether the rent subsidy
is project-based or tenant-based.
In addition to the list of specific types of housing subsidies that
may not be combined with the Section 8 tenant-based subsidy, the final
rule continues to prohibit Section 8 assistance for a unit that is
assisted by ``any other'' duplicative governmental subsidy, from a
federal, State, or local government. (Sec. 982.352(c)(9)) This
prohibition is intended to promote maximum coverage from available
public subsidy resources, to avoid waste of scarce Section 8 subsidy,
and to avoid windfall payments to a subsidized family or owner.
The rule provides that HUD has authority to determine whether a
particular housing subsidy source is ``duplicative''. However, the rule
specifies that for this purpose housing subsidy does not include the
housing component of a welfare payment, a social security payment
received by the family, or a rent reduction because of a tax credit.
In the voucher program, a family may choose to lease a unit for a
rent exceeding the HA payment standard, and the excess rent is not
covered by an increase in the Section 8 housing assistance payment. The
family must therefore find funds to pay this additional amount. A
comment recommends that the rule should allow a State or local subsidy
that covers excess rent payment by the family, and thus hold the family
share below 30 percent of adjusted income. This comment is not adopted.
The final rule prohibits any other State or local rent subsidy for a
family assisted with Section 8 tenant-based assistance.
3. HA-Owned Housing
A family may lease housing that is owned by the HA responsible for
administration of the program. (Sec. 982.352(b)) By law, an HA may be a
Section 8 owner, and the HA as contract administrator may enter into a
contract with itself as the Section 8 owner. (42 U.S.C. 1437f(a))
Because of the inherent conflict in the HA's roles as contract
administrator and unit owner, the proposed rule provided that HUD must
have approved the unit rent before execution of the HAP contract.
Comments object to the requirement for HUD approval of unit rents.
Comments suggest that approval is not necessary if the rent is within
program guidelines. Other comments recommend that HUD should establish
initial rent thresholds for the HA program. The HA should only need HUD
approval if the proposed rents are above the pre-established level.
The final rule retains the requirement for HUD approval of the
rents for HA-owned tenant-based units. (Sec. 982.352(b)(iv) and (v))
When a family wants to rent a unit owned by the HA that runs the
program, the HA must inform the family (orally and in writing) that the
family may select any eligible dwelling. The unit must be freely
selected by the family, without HA pressure or steering.
(Sec. 982.352(b)(i))
4. Overlapping Assistance
A participant family may move to a new unit with continued tenant-
based assistance. Comments ask whether the assisted lease for a new
unit can commence before the termination of assistance on the prior
unit, or whether any overlap of assistance is a prohibited double
subsidy.
A new provision is added to make clear that the term of the
assisted lease for a new assisted unit may begin during the month the
family moves out of the first assisted unit. Overlap of the housing
assistance payment for the month when the family moves out and the
first assistance payment for the new unit is not considered to
constitute a duplicative housing subsidy. (Sec. 982.311(d)(2))
B. Portability
1. Area Where Family Can Rent
In the proposed rule, the ``leasing area'' was defined as the area
where a family can lease a unit with tenant-based assistance inside or
outside the HA jurisdiction. In the proposed rule, the ``extended
operation area'' was defined as ``an area which is outside the HA
jurisdiction (as determined by State or local law), but is inside the
same State, the same MSA, or an MSA that is next to the same MSA''. The
final rule does not include either of these terms and definitions.
The statute requires portability within the same State, same MSA
and a contiguous MSA as the HA. (42 U.S.C. 1437f(r)(1)) Many comments
object to expanding portability beyond the same State as the initial
HA. Others recommend national portability, but state that the
Department should allow HAs to limit the number of families moving
under portability, or require the families to show ``good cause''. The
final rule provides that a family may move under portability anywhere
in the United States in the jurisdiction of an HA administering a
Section 8 voucher or certificate program. (Sec. 982.353(b)(4))
2. Portability in First Year After Admission
The final rule revises provisions on portability during the first
year after a family's admission to the program. By law, portability
applies during this period if the family is ``living within'' the HA
jurisdiction ``at the time that such family applies'' for assistance
from the HA. (42 U.S.C. 1437f(r)(1))
The final rule provides that the family may lease a unit under
portability
[[Page 34680]]
during the first year after admission if either the household head or
spouse of an assisted family already had a ``domicile'' (legal
residence) in the jurisdiction of the initial HA at the time when the
family first submitted an application for participation in the program
to the initial HA. (Sec. 982.353(c)(1)) Generally, transient occupancy
does not constitute legal residence in a jurisdiction under State and
local law. The individual must intend to establish a home in the
jurisdiction.
If this test is not met, the family does not have any right to
portability during the first year of assisted occupancy. The proposed
rule would have provided that in this situation, the family ``may only
lease a unit in the (initial) HA jurisdiction''. The final rule
specifies that while the family does not have a right to portability,
the family may lease a unit outside the HA jurisdiction if the initial
and receiving HA voluntarily agree to allow a portability move by the
family to the jurisdiction of the receiving HA. (Sec. 982.353(c)(3))
3. Portability--Family Eligibility
The proposed rule would have provided that since a portable family
had already been determined eligible by the initial HA, the receiving
HA was not required to redetermine family eligibility for participation
in the program. The final rule provides that the initial HA is
responsible for determining whether the family is income eligible in
the area where the family wants to lease a unit. (Sec. 982.355(c)(1))
However, the receiving HA may opt to conduct a reexamination of income
in order to coordinate the anniversary of the HAP contract with the
reexamination date, or for other reasons. If the receiving HA opts to
conduct a new reexamination, the receiving HA may not delay issuing the
family a voucher or certificate or otherwise delay approval of a unit
unless the recertification is necessary to determine income
eligibility. (Sec. 982.355(c)(4))
Further, the final rule reiterates the general program admission
requirements (Sec. 982.201(b)(2)) as applied to portability:
--If the family is not a current participant in the initial HA
certificate or voucher program, the applicable income limit for
admission to the receiving HA certificate program or voucher program is
the receiving HA income limit for the area where the family will be
initially assisted in the program. The family may only use the
certificate or voucher to lease a unit in an area where the family is
income-eligible at admission to the receiving HA program.
(Sec. 982.353(d)(1))
--If a participant in the initial HA certificate or voucher program is
moving between these programs (the family is either moving from the
initial HA certificate program to the receiving HA voucher program, or
from the initial HA voucher program to the receiving HA certificate
program), the family must meet the eligibility criteria for the program
to which the family is being admitted. Since a family moving between
the voucher and certificate programs is continuously assisted, the
applicable income limit is the receiving HA low-income limit (80
percent of median income) for the area to which the family will move.
(Sec. 982.353(d)(2) and (3); see Sec. 982.201(b)(1))
--For continued assistance in the same program, income eligibility is
not redetermined. (Sec. 982.353(d)(3))
4. Portability--Funding
The proposed rule would have provided that if funding was
available, a receiving HA would be required to absorb the incoming
family with funding under its own consolidated ACC. The proposed rule
would have also required that HUD offer funding to the receiving HA to
cover the net annual increase in the HA tenant-based program because of
portability. These provisions are not mandated in the final rule.
While the Department received positive comments concerning the
mandatory absorption requirement, other comments assert that this
approach is flawed. The major concern was the impact the required
absorption of portable families would have on the receiving HA's
waiting list. By requiring HAs to absorb portable families with any
assistance available through new funding or turnover, the wait for
applicants at the receiving HA could be significantly lengthened.
Comments express skepticism that appropriated funds will fully fund the
net annual increase in the number of families absorbed into the
receiving HA program. Comments recommend that HUD require HAs to absorb
a certain number of families based on the amount of new funding or
historical turnover rates, and that HUD reimburse HAs for absorbing
families exceeding those thresholds.
Instead of prescribing a portability funding method that relies on
allocating appropriated funds that may be insufficient to reimburse
receiving HAs for portability moves at the desired level, and instead
of prescribing detailed procedures that may not work well in all
situations, the final rule allows HUD to exercise any of the following
options for portability reimbursements:
--HUD may transfer funds for assistance to portable families to the
receiving HA from funds available under the initial HA ACC.
--HUD may provide additional funding (e.g., funds for new units) to the
initial HA to compensate for funds transferred for portability
purposes.
--HUD may provide additional funding (e.g., funds for new units) to the
receiving HA to reimburse the HA for absorption of portable families.
--HUD may require the receiving HA to absorb portable families.
(Sec. 982.355(f))
It is anticipated that HUD will test all of the portability funding
options authorized by the regulations. In fact, the Notice of Funding
Availability published in the Federal Register on March 3, 1995
provides for use of up to 50 percent of the fair share allocation of
certificate and voucher funding for each allocation area to be
allocated as reimbursement to receiving HAs for the costs to assist
families that have moved under the portability procedures.
5. Portability--Billing and Administrative Procedures
The vast majority of comments agreed that most problems in
administering assistance for portable families are caused by the
billing process and differing HA portability procedures and information
requirements. In response to this concern, the final rule details the
portability procedures (Sec. 982.355(c)).
The final rule specifies that the initial HA must reimburse the
receiving HA ``promptly'', both for housing assistance payments and
administrative fees for a portability family. (Sec. 982.355(e)(2) and
(3)) HUD may reduce the initial HA's administrative fee for late
reimbursement to the receiving HA. (Sec. 982.355(e)(4))
The initial and receiving HA must follow financial procedures
required by HUD. The receiving HA must use a HUD-prescribed portability
billing form to bill the initial HA for housing assistance payments and
administrative fees. (Sec. 982.355(e)(5)) The initial and receiving HA
must comply with billing and payment deadlines under the financial
procedures.
VI. Dwelling Unit: Housing Quality Standards, Subsidy Standards,
Inspection and Maintenance
A. Housing Quality Standards (HQS): General
The rule provides that the housing quality standards or ``HQS'' are
the HUD
[[Page 34681]]
minimum quality standards for housing assisted under the tenant-based
programs. Program housing must comply with HQS, both at initial
occupancy and during the term of the assisted lease.
(Sec. 982.401(a)(1)) The HA inspects the unit before approving the
tenancy (Sec. 982.305(a) and (b)), and must reinspect the unit at least
once every year. (Sec. 982.405(a))
Comments note that HUD did not provide the HA with any latitude to
pass units with minor HQS violations. Comments recommend that HUD allow
HAs to pass units on a conditional basis to enable immediate leasing
for at-risk families in desperate need of housing. An HA would require
the owner of a unit with a conditional HQS approval to fully comply
with HQS within a specified period of time.
HUD has not adopted the recommendation to permit conditional
approvals of units that fail HQS. Conditional HQS approvals were
allowed for the Section 8 certificate program in the 1970's, but were
discontinued because of major enforcement problems. When conditional
approvals were allowed, many owners did not make promised repairs, or
HAs did not reinspect the conditionally approved units. The goal of the
Section 8 tenant-based programs is to assist eligible families to pay
rent for decent, safe, and sanitary housing. (See 42 U.S.C. 1437,
1437f(a) and 1437f(o)(5)) Assistance for units that do not meet the HQS
defeats this goal, and provides no incentive for owners to maintain
quality housing stock for rental by low-income families.
Comments suggest that HUD needs to review the whole question of
appropriate HQS standards. Comments state that HQS standards are
totally inadequate, and that some are too loose and others are
ridiculously tight. Other comment suggests that a Task Force should be
assembled to reexamine the HQS.
Program experience demonstrates that the HQS, when correctly
applied and administered, are an excellent standard for ensuring
minimum livability and safety. Alleged problems of the HQS standards
often result from inaccurate interpretations of the standards. For
example, comments on HQS often claim that requirements concerning
gutters, screens and storm doors are not essential, and should not be
covered by the HQS. In fact, these three items are not HQS
requirements. HUD will continue its efforts to explain the HQS criteria
and highlight common misunderstandings of HQS requirements.
Comments indicate that some HAs have been charging families for
repeat inspections, and object to this practice. HUD agrees that
charging a family for inspection of the unit is inappropriate. The HA
earns an administrative fee that covers the administration of the
tenant-based programs, including HQS inspections. In response to the
comment, the rule is amended to confirm that HA may not charge the
family or the owner for an initial inspection or a reinspection of the
unit. (Sec. 982.405(e))
B. Housing Quality Standards (HQS): Acceptability Criteria
Comments recommend using local codes instead of the regulatory HQS,
or recommend adding local code requirements to the regulatory HQS. The
final rule states, as proposed, that HUD may permit an HA to use
acceptability criteria variations that are based on local codes or
national standards, or may permit variations because of local climatic
or geographic conditions. (Sec. 982.401(a)(4)(iv))
The final rule also provides that HUD will not approve HQS
variations that unduly limit the amount and types of rental housing
stock available at or below the FMR that would otherwise meet the HQS
of the program (e.g., specific square footage requirements for kitchen
counter space). (Sec. 982.401(a)(4)(iv))
C. Housing Quality Standards (HQS): Specific Disposal
1. Food Preparation and Refuse Disposal
Comment requests that the acceptability criteria allow microwave
ovens, because some participants are willing to live in units that
provide them with microwave ovens instead of an oven and/or stove with
top burners. The HQS has been modified to allow microwave ovens as
follows:
--If the oven and stove are tenant-supplied: A microwave oven may be
substituted for an oven and/or stove with top burners.
--If the oven and stove are owner-supplied: A microwave oven may be
substituted for an oven and/or stove with top burners if the tenant
agrees and the owner treats all tenants alike (e.g., microwaves are
provided for both non-subsidized and subsidized tenants).
(Sec. 982.401(c)(2))
12. Space and Security
Space--Bedroom or Living/Sleeping Room
The proposed rule would have deleted the term ``living/sleeping''
room and substituted the term ``living/bedroom''. Comments ask for
clarification on whether or not the use of a different term meant that
HUD was revising current policy permitting other rooms not classified
as bedrooms (e.g., a den, living room or dining room with windows) to
be counted as a ``sleeping room''. HUD did not intend to change the
policy, which permits families to use a room with a window and two
electrical outlets as a living/sleeping room, to meet the HQS space
requirement of one bedroom or living/sleeping room for each two
persons. Editorial changes have been made throughout the rule to
restore the term ``living/sleeping''.
Comments object to the requirement that persons of opposite sex,
other than husband and wife or very young children, may not be required
to occupy the same bedroom or living/sleeping room. An HA comment
indicates that the agency requires unmarried ``live-ins'' who are
``significant others'' to share a bedroom. Comments suggest that HUD
state the requirement as two persons per bedroom with the proviso that
the head of household not be required to share a bedroom with a child,
and let the family make its own sleeping arrangements.
The comments indicate confusion about the relationship between the
HQS space requirements and the HA's occupancy requirements (now called
``subsidy standards''). The HQS space requirements set a standard for
the maximum number of people that can occupy the unit. The HQS space
standard does not dictate who sleeps in each bedroom or living/sleeping
room. Further, the HQS space requirements allow space other than
bedrooms to be considered ``living/sleeping rooms'' to ensure maximum
flexibility in determining whether a unit is overcrowded. In contrast,
the subsidy standards set by the HA determine subsidy levels, and are
generally based on the ages and sex of the family members, and on other
factors considered under the HA policy. (See Sec. 982.402)
Window
Comment asks if a combination storm/screen window is lockable, can
it be assumed that the inside window does not have to be lockable. The
commenter is correct. The rule provides any dwelling unit windows that
are accessible from the outside must be lockable.
(Sec. 982.401(d)(2)(iii))
The proposed rule would have provided that windows that are nailed
shut are acceptable if the windows are not needed as an alternate exit
in case of fire. Comment suggests that the
[[Page 34682]]
regulations should be revised to read as follows, ``Windows which are
nailed shut are acceptable only if these windows are not needed for
ventilation or as an alternate exit in case of fire''. HUD has adopted
this suggestion. (Sec. 982.401(d)(2)(iii))
3. Thermal Environment
Several comments suggest that HAs should be permitted to approve
Oxygen Depletion System (ODS) heaters in all rooms not used for
sleeping if permitted by local code. The Department has not adopted
this suggestion. ODS heaters are unvented space heaters. The HA must
request HUD approval of a variation in the acceptability criteria. (See
Sec. 982.401(e)(2)(ii))
4. Structure and Materials
Comment suggests that ceilings, walls and floors requirements be
changed from ``not have any serious defects such as severe bulging or
leaning, holes, loose surface materials, severe buckling, missing
parts, or other serious damage'' to ``must be in good repair''. The
Department has not adopted this language.
The language in the rule is more specific and less open to
subjective interpretations. The Department is, however, retaining the
word ``large'' to describe holes that will cause a unit to fail the HQS
standard. (Sec. 982.401(g)(2)(i))
5. Lead-Based Paint
This final rule adopts much of the lead-based paint language in the
proposed rule. However the final rule also:
--Adds language from a proposed rule published on May 12, 1994 at 59 FR
24850 concerning evaluation and treatment of lead-based paint.
--Makes changes to conform to new recommendations of the Department of
Health and Human Services, Centers for Disease Control (CDC).
--Responds to a May 1994 GAO briefing report to congressional
committees entitled ``Lead-Based Paint Poisoning--Children in Section 8
Tenant-Based Housing Are Not Adequately Protected''.
Comments note that the proposed rule did not delete the requirement
for repainting an area that has been treated for lead paint, and that
the requirement is no longer applicable under 24 CFR 35.24(b)(2)(ii).
The Department inadvertently neglected to remove this requirement from
the HQS in the proposed rule. Because the repainting requirement was
eliminated in 1987, the final rule does not include the repainting
requirement.
The final rule changes the definition of an elevated blood-lead
level (EBL) to conform to recommendations of the Department of Health
and Human Services, Centers for Disease Control (CDC), with respect to
blood lead levels that require environmental intervention. This new
definition of EBL was also proposed in the May 12, 1994 proposed rule.
The new standard for environmental intervention would be equal to or
exceeding 20 ug/dl for a single test or 15-19 ug/dl in two consecutive
tests several months apart. Many people are under the impression that
the CDC, in its October 1991 Statement, ``Preventing Lead Poisoning in
Young Children'', effectively lowered the definition of an EBL to 10
ug/dl. (See, U.S. Department of Health and Human Services, Public
Health Service, Centers for Disease Control, Preventing Lead Poisoning
in Young Children, A Statement by the Centers for Disease Control,
October 1991, page 2) It is true that the Statement indicates that the
overall goal is to reduce children's blood lead levels below 10 ug/dl.
However, the Statement does not recommend medical or environmental
intervention at levels of 10-14 ug/dl. Pursuant to CDC advice in the
October 1991 Statement, the Department is also changing the childhood
age of concern from less than 7 years of age to less than 6 years.
(Sec. 982.401(j))
The final rule changes proposed requirements for the evaluation and
treatment of lead-based paint in the May 12, 1994 proposed rule. The
final rule describes requirements for testing to determine whether
paint surfaces contain lead-based paint, and for treatment of defective
surfaces.
A defective paint surface must be treated if the total area of
defective paint on a ``component'' is:
--More than 10 square feet on an exterior wall;
--More than 2 square feet on an interior or exterior component with a
large surface area (other than exterior walls). Such components include
ceilings, floors, doors, and interior walls.
--More than 10 percent of the total surface area on an interior or
exterior component with a small surface area. Such components include
window sills, baseboards and trim. (Sec. 982.401(j)(6)(i))
For this purpose, component is defined as:
``an element of a residential structure identified by type and
location, such as a bedroom wall, an exterior window sill, a
baseboard in a living room, a kitchen floor, an interior window sill
in a bathroom, a porch floor, stair treads in a common stairwell, or
an exterior wall.''
(Sec. 982.401(j)(2))
The requirement to test chewable surfaces for lead-based paint is
amended to allow laboratory analysis of paint samples. Accordingly, the
definition of lead-based paint is amended to add 0.5 percent by weight
or 5000 parts per million (PPM). The final rule includes acceptable
treatment methods, prohibited practices, cleanup and tenant protection
provisions.
The final rule also requires that the owner inform the family and
the HA if the owner has any knowledge of the presence of lead-based
paint. In addition, the rule adds a requirement for the HA to match the
names and addresses of Section 8 participants with the names and
addresses of children that local health officials have determined have
an EBL. These changes were made in response to a May 1994 GAO briefing
report to congressional committees. (The report is entitled ``Lead-
Based Paint Poisoning--Children in Section 8 Tenant-Based Housing Are
Not Adequately Protected''.)
Analysis of the need for additional changes to the lead-based paint
housing quality standard requirements is being deferred to publication
of the proposed rule to implement sections 1012 and 1013 of the
Residential Lead-Based Paint Hazard Reduction Act of 1992 and to revise
the lead-based paint requirements for all HUD programs.
6. Access
Comment recommends that HQS access requirements should require
accessible features for persons with disabilities. The Department has
not adopted this suggestion. The accessibility requirements for
federally assisted housing are governed by the regulations implementing
Section 504 of the Rehabilitation Act of 1973. The rule requires
compliance with disabled accessibility requirements under these
regulations, and with other equal opportunity requirements.
(Sec. 982.53(a))
7. Site and Neighborhood
Comments object to the inclusion of ``very high crime rate'' as an
example of a neighborhood condition that would cause a unit to fail
inspection. Comments indicate that such a determination would be a
subjective conclusion by inspectors, and may limit in certain areas the
number of units available to program participants. Other comment
requests that ``danger of fire'' be deleted or clarified.
HUD has deleted ``very high crime rate'' as an example under the
acceptability criteria. Further, ``danger
[[Page 34683]]
of fire'' has been replaced with ``fire hazards'', the original wording
from the current rules and program handbook. (Sec. 982.401(l))
8. Smoke Detectors
The final rule implements the new statutory requirements concerning
fire protection and safety under the Fire Administration Authorization
Act of 1992. (Section 106 of Pub. L. 102-522, adding a new section 31
to the Federal Fire Prevention and Control Act of 1974) The new law
prohibits the use of housing assistance for certain assisted and
insured properties, unless various fire protection and safety standards
are met.
A comment objects to the provision requiring smoke detectors
specifically designed for hearing-impaired persons, because the
proposed rule did not define ``hearing-impaired person'' and ``hearing-
impaired smoke detector''. HUD notes that the requirement for smoke
detectors with an alarm system for hearing-impaired persons is not new,
and has been required by HUD since August 1992. Smoke detectors for the
hearing-impaired must comply with the detailed technical specifications
in National Fire Protection Association Standard (NFPA) 74 (or its
successor standards). For assistance in determining specific
requirements mandated by NFPA 74, HAs should contact State or local
fire safety officials with jurisdiction over the proposed property and
with expertise concerning such requirements.
HUD also declines to define hearing-impaired person in the rule.
Residents who need visual alarms because of hearing impairment should
advise owners and HAs of this need. The family may request any special
equipment from the owner, since the family is the best judge of the
individual needs of family members. (Sec. 982.401(n))
VII. Housing Assistance Payments Contract and Owner Responsibility
A. Family Contribution
Comments recommend that the rule should specify that the family is
not responsible for payment of the portion of the rent to owner covered
by the housing assistance payment under the HAP contract when the HA
stops making payment to the owner. This recommendation is adopted.
The final rule makes clear that the family is not responsible for
payment of the portion of the rent to owner covered by the housing
assistance payment. The HA failure to pay the housing assistance
payment to the owner is not a violation of the lease between the tenant
and the owner. The owner may not terminate the tenancy of the family
for nonpayment of this amount. (Sec. 982.451(c)(4)(iii);
Sec. 982.310(b)) (The same provision is stated at two points.)
B. Fraud and Other Program Violation
The proposed rule would have provided that an owner breached the
HAP contract if the owner committed fraud or made any false statement
in connection with any federal housing assistance program or with a
federally insured mortgage or HUD loan. The final rule provides that
owner breach includes fraud, bribery or any other corrupt or criminal
act in connection with any federal housing program.
(Sec. 982.453(a)(4))
The proposed and final rule provide that violation of ``any other''
Section 8 assistance contract is a breach of the particular tenant-
based HAP contract. (Sec. 982.453(a)(2)) The HA may terminate a tenant-
based HAP contract because the owner has breached a tenant-based or
project-based Section 8 HAP contract (between the owner and the same or
another HA, or between the owner and HUD).
Comments assert that it is unfair to terminate a tenant-based HAP
contract with an owner because the owner has breached another Section 8
assistance contract, and recommend that this provision be deleted. This
recommendation is not adopted. The provision strengthens the HA's
authority and leverage to induce owners to comply with Section 8
program requirements. The regulatory list of provisions which
constitute a breach of the HAP contract is substantially based on
language of the assistance contract forms currently used in the voucher
and certificate programs. (Sec. 982.453)
C. HA Remedies for Owner Breach
The proposed rule provided that HA remedies for owner breach of the
HAP contract included reduction of housing assistance payments.
Comments recommend adding a provision confirming that payments may be
``abated''. The final rule provides that HA remedies include an
``abatement or other reduction'' of housing assistance payments.
(Sec. 982.453(b))
D. Automatic HAP Contract Termination: No HA Payment for 6 Months
The proposed rule provided that the HAP contract terminated
automatically three months after the last housing assistance payment.
Comments object to this provision. Comments indicate that the time
frame was too short, considering fluctuations in the job market.
Comments recommend a six month time frame. The final rule provides that
the HAP contract terminates automatically six months (180 calendar
days) after the last housing assistance payment to the owner.
(Sec. 982.455(a)).
E. Late Payment by HA to Owner: Late Fee
Each month, the HA pays the housing assistance payment to the owner
to subsidize occupancy by the family under the lease. The rule
specifies that the HA is obligated to pay the owner promptly when
payment is due to the owner in accordance with the HAP contract.
(Sec. 982.451(c)(5))
Sometimes an HA may fail to pay the owner on time. In response to
public questions, the final rule clarifies that the HA may be obligated
to pay a late payment fee in accordance with State or local law.
However, unless authorized by HUD, the HA may not use program receipts
other than the following for payment of any such late payment fee:
(1) The HA administrative fee or
(2) The administrative fee reserve.
The federal rule does not itself grant an owner any right to a late
fee for HA delay in payment to the owner. The rule is only intended to
make clear that the federal regulatory scheme does not override State
or local law that may give the owner a right to recover late fees from
the HA for delinquent payments under the HAP contract.
F. 90 day Owner Termination Notice
By law, an owner must give notice to the family and HUD, 90 days
before a ``termination'' of the HAP contract. (42 U.S.C. 1437f(c)(9))
For purpose of the termination notice requirement, ``termination''
means either:
--The owner's ``refusal to renew'', called an ``opt-out'', or
--The ``expiration'' of the HAP contract.
In the tenant-based programs, ``opt-out'' refers to an owner's
decision to terminate tenancy of an assisted family after the initial
year for a business or economic reason (such as desire to rent the unit
for a higher rental, or to convert the property to another use).
(Sec. 982.455(b)(2)(ii))
In the tenant-based programs, the HAP contract and the assisted
lease do not have a pre-defined end of term. The term of the HAP
contract is the same as the term of the lease. The contract and lease
generally extend indefinitely until terminated by the owner for lease
violation or other good cause. In this context, the rule provides that
``expiration'' means the occurrence of either of the following events:
[[Page 34684]]
--Automatic termination of the HAP contract when six months (180
calendar days) have passed since the last housing assistance payment.
--An HA determination (in accordance with HUD requirements) that the
HAP contract must be terminated because there is insufficient funding
under the consolidated ACC to support continued assistance for families
in the program. (Sec. 982.455(b)(2)(iii))
Comments recommend that the rule specify that an owner may not
terminate any HAP contract, or evict a tenant, if HUD determines the
termination is not lawful. The law provides that HUD must review the
reasons for terminations as stated in the owner's termination notice.
Upon such review, HUD must:
``issue a written finding of the legality of the termination and the
reasons for the termination, including the actions considered or
taken to avoid the termination''.
The rule requires that on receiving the owner termination notice
(in case of an ``expiration'' or ``opt-out'') the HUD field office must
review the notice and consider whether there are additional actions
which should be taken to avoid the termination. (Sec. 982.455(b)(4))
After HUD review of the owner notice, the HUD field office will issue a
written finding, as provided by law, on the legality of the HAP
contract termination, and the reasons for termination as stated in the
owner's notice, including any actions taken to avoid the termination.
(Sec. 982.455(b)(4)(iii)) Within 30 calendar days of HUD's finding, the
owner must provide written notice of HUD's decision to the tenant.
The law does not require HUD approval of the termination. The final
rule adds a new provision clarifying that the owner may proceed with
eviction whether HUD approves or disapproves, or fails to complete the
required review of the owner notice before expiration of the 90 day
review period. (Sec. 982.455(b)(4)(iv))
VIII. Family Obligations
A. Statement of Family Obligations
The rule lists the grounds for which the HA is authorized to deny
assistance to an applicant or terminate assistance to a participant
because of the family's action or failure to act. (Sec. 982.552(b))
The HA may deny or terminate assistance for violation of family
obligations. (Sec. 982.552(b)(1)) The final rule modifies the statement
of family obligations under the program. (Sec. 982.551)
Some comments support HUD's proposed statement of family
obligations, and other provisions on denial or termination of
assistance. Comments agree that the HA should have the power to
terminate assistance for violation of the family's program obligations.
Other comments recommend some changes in these provisions.
Comments note that family violation of program obligations may be
unintentional, minor or beyond the family's control. The comments state
that the HA should only be authorized to terminate assistance because
of serious or repeated violation of the family's program obligations.
This recommendation is not adopted. All family obligations are
important. The family is responsible for compliance with all family
obligations, and the HA may terminate assistance for any violation. To
terminate assistance, the HA must show that the family has committed
the violation charged. In general, the HA should not be required to
show also that the violation of family obligations is ``serious or
repeated''. To add this requirement would complicate and discourage the
enforcement of program requirements. (However, an HA may only terminate
assistance for a ``serious or repeated'' violation of the assisted
lease. In this case, the regulatory standard for HA termination of
assistance parallels the statutory authorization for eviction by the
owner for ``serious or repeated'' violation of the lease.)
If the family has violated a program obligation, the HA has
discretion to terminate assistance based on the facts of the particular
case. (Sec. 982.552(c))
B. Duty To Supply Required Information
The final rule restates provisions describing the family duty to
supply information requested by the HA or HUD. (Sec. 982.551(b)) The
family must supply any information that the HA or HUD determines is
necessary in the administration of the program. Information includes
any certification, release or other documentation requested by the HA
or HUD. (Sec. 982.551(b)(1)) The final rule adds a new provision
explicitly confirming that any information or documentation supplied by
the family must be ``true and complete''. (Sec. 981.551(b)(4))
C. Family Behavior and Violation of Lease
In this rulemaking, HUD has reexamined the appropriate role of
program sanctions by the HA for family behavior in occupancy of an
assisted unit, and for family violation of an assisted lease. Under
current program rules, breach of the assisted lease with the landlord
was not a violation of the family's program obligations, and was not
grounds for termination of assistance by the HA. Even after eviction, a
family could move to a new unit with continued assistance in the
tenant-based program.
The proposed rule expanded the obligations of a participant by
providing that the family was responsible for certain types of HQS
violation caused by the family. In addition, HUD specifically invited
comment on whether lease violation by an assisted family should be
designated as a distinct regulatory ground for termination of
assistance.
Comments
Some comments contend that the family's lease violation or behavior
in occupancy should not be a ground for termination of assistance.
According to these comments, the remedy lies with the family's
landlord, who may evict the family for good cause. The HA should not
displace the family if a landlord has not elected to evict, and should
not usurp the decision of another landlord whether to rent to a family
because of actions in a prior unit.
Comments state that Section 8 tenants should be treated like
private tenants. The decision whether to accept or reject a tenant
should be the landlord's private decision. The HA is not a party to the
lease. HUD should not inject the HA into the relation between tenants
and landlords. Comments recommend that the HA should not be permitted
to condition program assistance on the family's suitability for
tenancy. Comments also note that the HA is not equipped to investigate
a landlord's claim of tenant misbehavior in occupancy. Comments claim
that authorizing the HA to terminate assistance for breach of the lease
``forces'' the HA to assume the landlord's responsibility of enforcing
the lease. This new role opens a pandora's box for the HA.
Other comments urge that the HA should be permitted to terminate
assistance for family violation of an assisted lease. The family should
be held responsible for conduct during assisted occupancy. The HA
should not allow a move by a family that fails to pay the rent or
commits other violations of the lease. Allowing the HA to terminate
assistance for family lease violation encourages improvement in family
behavior. If a family violates the lease, denial of continued
assistance saves scarce program resources for other, more deserving,
families.
By statute, a Section 8 owner may evict for serious or repeated
violation of the lease, as well as for other good cause. Comments state
that the HA
[[Page 34685]]
should not be compelled to issue a new certificate or voucher after the
family is evicted. Termination of assistance because of a lease
violation would be an effective tool in administration of the program.
Action by the HA complements eviction by the landlord. Under the
current system, families are evicted from one unit after another.
Comments suggest that this practice discourages participation by
landlords.
Comments state that the HA should be authorized to terminate
assistance because of serious or repeated lease violation by the
family, or other good cause. Termination should only be permitted
because of serious lease violations, but not for other lease
violations. Termination should only be permitted for causes in the
family's control. Comments also state that the HA should be permitted
to terminate assistance to a family for chronic disorder, or for
behavior that constitutes a nuisance (and the owner should be permitted
to evict for these grounds). The HA should be permitted to terminate
assistance if the tenant moves during the first year in violation of
the lease.
Comments state that assistance should only be terminated if a
family has been evicted by a court action. The existence of good cause
should be determined in court.
Final Rule
The final rule adds provisions on family program obligations
concerning tenancy under an assisted lease.
The description of family obligations now states that the family
may not commit any serious or repeated violation of the lease.
(Sec. 982.551(e)) As in the past, such behavior is grounds for eviction
by the owner. In addition, such behavior is now grounds for termination
of assistance by the HA. For example, the HA may terminate assistance
payments, or deny permission to move with continued assistance, if the
family has committed any serious or repeated violation of the assisted
lease.
The rule provides that the family must notify the HA and the owner
before the family moves out. (Sec. 982.314(d)(2);Sec. 982.551(f)) The
final rule would also provide that
--The family must promptly give the HA a copy of any owner eviction
notice. (Sec. 982.551(g))
--If the family terminates the lease on notice to the owner, the family
must give the HA a copy of the notice at the same time.
(Sec. 982.314(d)(1); Sec. 982.551(f))
D. HQS Breach Caused by Family
HUD proposed to allow termination of assistance for breaches of HQS
that are caused by the family. Public comments on this proposal largely
mirror the division of views on termination because of a family's lease
violation or other behavior in occupancy.
Some comments object to termination of assistance because of
family-caused HQS violation. The comments indicate that compliance with
the tenant's obligation is a condition of occupancy under the lease.
The owner has the responsibility to enforce these obligations. The rule
should minimize HA interference with the relationship of the tenant and
the owner.
Comments recommend that the tenant should only be responsible for
HQS violations that substantially interfere with quiet enjoyment of the
unit, or that make the unit unsafe and unsanitary. Family damage may be
accidental or minor. Comments suggest that the HA should only be
permitted to terminate assistance for HQS violation caused by reckless
or malicious action by the family. The HA should not terminate
assistance if HQS violation is beyond the tenant's control, or if there
is other ``good cause'' for the tenant-caused HQS violation.
Comments object to terminating assistance payments to a landlord
because the family's housekeeping results in HQS violation. Termination
for this reason punishes the landlord for the family's behavior, and
will be hard to enforce. The comments contend that an HA will be forced
to go to court to defend termination of assistance in this
circumstance.
Other comments welcome HUD's proposal to permit termination of
program assistance for a family that violates the HQS. This change
gives the HA control over program abusers, and will rid the program of
chronic apartment destroyers.
Comments note that under the old rule the family has been allowed
to trash a unit, and move on to the next assisted unit. This policy has
created bad feelings among landlords, and makes the program harder to
sell. Landlords can't understand why HAs continue subsidy for negligent
tenants.
The final rule provides, as proposed, that the family is
responsible for HQS violations caused by the family:
--By failing to pay for tenant-supplied utilities.
--By failing to supply appliances (that the owner is not required to
supply under the lease).
--By damaging the unit (other than damage from ordinary wear and tear).
(Sec. 982.404(b); Sec. 982.551(c).)
The proposed rule would also have made the family responsible for
vermin and rodent infestation caused by trash accumulation from poor
family housekeeping. This provision is not included in the final rule.
Generally, owner leases provide that a tenant must keep the unit in
a clean and safe condition, dispose of waste properly, and avoid damage
to the unit. An owner may evict if family housekeeping creates a
serious or repeated violation of the lease. (Sec. 982.310(a)) Under the
new rule, the HA may terminate assistance for such violation of the
lease. (Sec. 982.551(e).) There is no need for a separate provision on
termination of assistance because of family housekeeping.
E. Use and Occupancy of Unit
The rule states family obligations concerning use and occupancy of
the assisted unit:
--The family must reside in the unit. The unit must be the family's
only residence.
--The HA must approve composition of the resident family.
--The family must promptly inform the HA of the birth, adoption or
court-awarded custody of a child. The family must request HA approval
to add any other family member as an occupant of the unit.
--The family must promptly notify the HA if any family member no longer
resides in the unit.
--With HA approval, a foster child or a live-in-aide may reside in the
dwelling unit. The HA may adopt policies concerning residence by a
foster child or a live-in-aide, and define when HA consent may be given
or denied. (Sec. 982.551(h))
Approval of New Family Members
The Section 8 program provides rental assistance for a dwelling
unit leased to a low-income ``family''. (42 U.S.C. 1437f) The
``family'' may be a single person or a group of persons.
(Sec. 982.201(c)(])) The HA determines if a group of persons qualifies
as a ``family''. (Sec. 982.201(c)(3)) The HA determines composition of
the assisted family at admission to the program, and must also approve
later changes in family composition. (Sec. 982.201;
Sec. 982.551(h)(2))] Except for birth, adoption or court-awarded
custody of a child, the family must get HA approval to add any new
family member.
Some comments approve the proposed rules on family composition,
[[Page 34686]]
including the family obligation to obtain HA approval to add a new
family member. Comments state that this requirement will prevent the
practice of ``borrowing'' children or ``cousins'' to keep the same unit
size. Comments ask HUD to make clear whether the resident must get HA
approval for residence by a girlfriend or boyfriend. Comments recommend
that the owner should have the right to approve new unit occupants.
Some comments suggest that HUD should limit HA authority to approve
or disapprove adding new family members. The HA should be required to
adopt ``reasonable policies''. Comments recommend that HUD should
eliminate the requirement for HA approval of new family members. The HA
should adopt a ``hands off'' policy. The only program interest is to
insure that a unit meets the subsidy standards, and subsidy is adjusted
to reflect additional income of new unit occupants. Families are afraid
to report new family members. A hands off policy may result in more
accurate reporting of new family members and family income. Comments
ask if the HA may deny approval of a child not living with the family
when admitted to the program, and question whether such denial may
constitute familial discrimination. Comments note that HA policy may
not discriminate on the basis of familial status.
The final rule retains the requirement for HA approval to add new
family members. The rule provides that composition of the assisted
family residing in the dwelling unit must be approved by the HA. The
family must promptly inform the HA of the birth, adoption or court-
awarded custody of a child. The family must request HA approval to add
any other family member as an occupant of the unit.
(Sec. 982.551(h)(2))
HUD has not adopted the recommendations to restrict HA discretion,
or to eliminate HA approval of new family members. Unrestricted
admission of family members distorts the system for fair and orderly
allocation of Section 8 assistance through the HA waiting list.
Addition of new family members may also overcrowd the unit, or result
in need for a larger unit size and a larger subsidy. In addition,
assistance may only be provided to a ``family'', not to any self-
selected group of individuals. The HA has the authority and
responsibility to determine that the group of assisted individuals,
including new residents, constitutes a family (under the definition
utilized by the particular HA). In exercising its discretion to admit
or deny new family members, the HA is subject to equal opportunity
requirements, including the prohibition of familial status
discrimination.
The final rule does not add, as a family program obligation, a
requirement to obtain the owner's approval for any new unit occupants.
Of course, the owner has a legitimate proprietary interest in
controlling occupancy of the owner's unit. The lease may, and typically
will, include provisions that specify who can live in the unit, and
require owner approval of additional unit occupants.
Occupancy by Live-in-Aide or Foster Child
The rule provides that a foster child or live-in-aide may only
reside in the assisted unit with the consent of the HA. The HA may
adopt policies defining when the HA may give or deny approval for
occupancy by a foster child or live-in-aide. (Sec. 982.551(h)(4))
A live-in-aide resides in the unit to care for a person who is
elderly, near-elderly (50 to 61) or disabled. (42 U.S.C.
1437a(b)(3)(B); ``live-in-aide'' definition at Sec. 813.102; see
Sec. 982.201(c)(3)) The live-in-aide is not a member of the assisted
family. Income of the live-in-aide is not included in family income
(used to calculate family eligibility and contribution to rent).
Comments object to granting the HA ``veto-power'' over occupancy by
a foster child or live-in-aide, and recommend that the requirement for
HA approval should be eliminated. The HA is not qualified to determine
whether the family can live independently without assistance of a live-
in-aide. Comments claim that HAs do not have requisite procedural
safeguards for such decisions. Denying approval for a live-in-aide
could subject the HA to liability under the Fair Housing Act.
Other comments state that the rule should allow the HA to specify
whether live-in-aides may reside in the unit, how many, and in what
circumstances.
The final rule retains the requirement, as proposed, that the
family must obtain HA approval for occupancy by a live-in-aide or
foster child. In both cases there are important program interests in
retaining the HA authority over such occupancy. In both cases, however,
the HA must exercise its discretion in accordance with the Fair Housing
Act. The HA must not discriminate on the basis of disability or
familial status.
Reduction in Size of Family
The final rule adds a new provision stating that the family must
promptly notify the HA if any family member no longer resides in the
dwelling unit. (Sec. 982.551(h)(3))
F. Business in Unit
The rule provides that members of the family may engage in legal
``profitmaking'' activities in the assisted unit. Any use of the unit
for business activities by family members must be incidental to primary
use of the unit for residence by members of the family, and must be in
accordance with local law. (Sec. 982.551(h)(5)) These provisions are
intended to encourage work and earning by assisted families.
Most comments agree that the rule should allow legal profitmaking
activity by the assisted family. Other comments suggest that the
authorization for legal profitmaking activity may encourage illegal
activities.
Comments argue that business activity should only be allowed with
approval of the owner, and in accordance with the lease. Comments point
out that an owner has a legitimate interest in controlling business
activities in the owner's unit (for example a laundry business where
owner supplies water; or engine repairs in the living room).
HUD agrees that the landlord's interest is affected by the tenant's
conduct of business activity in the apartment. Tenant business could
damage the unit or disturb other residents. However, an owner may exert
control over occupant activities in the same fashion as for any
tenancy--by including lease provisions on business use of the unit, and
by enforcing such lease provisions. The lease (or owner's house rules
under the lease) may require the tenant to get the owner's permission
for any business use of the property, and may otherwise regulate use of
the unit for business purposes. Provisions concerning business use of a
unit are commonly included in boilerplate of residential leases, and
are not inconsistent with HUD regulatory requirements or HUD-required
lease addendum governing the assisted tenancy.
HUD has not added provisions requiring a tenant to secure landlord
consent for any business use of the unit. The rule provisions allowing
business activity by the assisted resident are intended to define the
family's program obligation, and therefore the grounds for termination
of assistance by the HA. Conversely, the statement of family
obligations is not intended or required to establish the family's
obligations to the owner under the lease.
Under this rule, an HA may terminate assistance for serious or
repeated violation of the assisted lease. Where the lease prohibits or
regulates business activity in the unit, a serious or repeated
violation of this lease requirement is a
[[Page 34687]]
breach of family obligation. In this circumstance, the HA may deny or
terminate assistance for business activity that violates the assisted
lease.
Comments recommend that the family should only be allowed to engage
in business activity with approval of the HA, and that the family
should be required to give the HA information concerning the nature of
activities in the unit. HUD is not persuaded that HAs should be given
the power to approve or disapprove business activity in the unit (so
long as business activity meets the standards expressed in the rule,
i.e., that the activity is legal, and is incidental to residential use
of the premises). Assisted families should be treated as private market
tenants, who can engage in business activities with the consent of the
owner.
The HA has an interest in assuring that the unit is used as the
family residence, that the business activity does not result in a
violation of the HQS, and that business income is reported in
calculation of the family contribution. A family is required to supply
the HA with information that is necessary for administration of the
program. The HA may therefore require the family to supply program-
related information concerning business activity in the assisted unit.
IX. Denial or Termination of Assistance: Grounds and Procedure
A. Grounds
1. General
The rule lists the grounds on which an HA may deny or terminate
assistance for a family because of the family's action or failure to
act.
Comments endorse the proposed rules on denial or termination of
assistance. Comments note that the rules encourage family
responsibility, and allow HAs to target assistance to families who
cooperate with program rules.
Comments state that the HA should be required to take all feasible
steps to avoid termination of assistance and displacement of the
family. The comments state that the rule should prohibit termination
unless the family has been relocated.
The comments are not adopted. The decision to proceed with
termination in each case must be left to the administrative judgment of
the HA, in keeping with the statutory policy that HAs should be vested
with the ``maximum amount of responsibility'' in the administration of
their housing programs. (42 U.S.C. 1437) The procedures recommended by
the comments would severely impair HA action to enforce local and
national program policies. Rehousing of families is not a practical
prerequisite for termination of housing assistance.
The rule defines when the HA may deny or terminate assistance
because of an action or failure by a member of the family. However, the
HA decides whether and how to exercise this authority and discretion in
the circumstances of a particular case. The final rule specifies that
the HA may consider all of the circumstances of the individual case,
including seriousness of an offense, the extent of participation or
culpability of individual family members, and the effects of program
sanctions on family members not involved in a proscribed activity.
(Sec. 982.552(c)(1)) Previously, the rule explicitly confirmed the HA's
discretion in exercising the authority to deny or terminate assistance
for criminal activity by a family member. There was no parallel
provision on denial or termination for other reasons. The final rule
makes clear that the HA has the same discretion in deciding whether to
deny or terminate assistance for any allowable grounds, not only for
criminal action by a member of the family.
The rule also confirms that the HA has the authority to devise an
appropriate remedy. The HA may permit continued assistance for certain
members of the family, but terminate assistance for other family
members who bear a greater responsibility for violation of family
obligations. (Sec. 982.552(c)(2))
2. Information for Family
Comments state that the HA should be required to give the family a
written list of the grounds for termination, and should be prohibited
from terminating unless the family has been given this information.
HUD agrees that HAs should help program families know their
obligations, and the grounds for termination of assistance. This
knowledge reinforces the family's sense of responsibility for its own
actions. A participant family should also know that it can ask for a
hearing if the HA wants to terminate assistance because of family
actions.
The rule is amended to provide that the HA must give the family a
written description of:
--Family obligations under the program.
--The grounds on which the HA may deny or terminate assistance because
of family action or failure to act.
--HA informal hearing procedures. (Sec. 982.552(f))
For a new program family, information on these subjects is included
in the family information packet that is given to the family at
selection for the program. (Sec. 982.301(b)(15), (16) and (17)) The
revision makes clear that this basic program information must be given
to families who are already in the program, and have not received this
information at selection for the program. The rule does not require two
notices to any family.
HUD has not adopted the recommendation to prohibit termination
unless the family has been furnished a list of the allowable grounds of
termination under the program. Such a requirement might force HAs to
maintain records that the information has been served on program
participants, to show that this termination prerequisite has been met.
If the HA needs to terminate assistance for a family, such a
requirement could block termination of assistance for good and
substantial grounds (for example, fraud by the family) on the grounds
that the HA did not give the family general program information listing
the grounds for termination of assistance. If the HA moves to terminate
assistance in a particular case, the family receives specific notice of
the reasons for the proposed termination and opportunity for hearing.
(Sec. 982.555(c)(2))
3. Distinction Between Denial or Termination
Comments ask HUD to clarify the distinction between ``denial or
termination'' of assistance. HUD's prior rules refer to ``denial'' of
assistance both for an applicant and a participant. In general, the
term ``denial'' in the old rule refers to HA withholding or refusing to
take any HA action or approval leading to a commitment or commencement
of assistance for the family, including refusing to issue a certificate
or voucher, approve a lease or execute a HAP contract.
In the case of a participant, the old rule distinguished between:
--The grounds for which the HA could ``deny'' a new commitment of
assistance to a program participant who wants to move to a new unit (by
refusing to issue a new certificate or voucher, approve a new lease or
execute a new HAP contract).
--The grounds for which the HA could ``terminate'' housing assistance
payments under an outstanding HAP contract.
The new rule eliminates this distinction. The rule no longer
distinguishes between grounds for ``denial'' or ``termination'' of
assistance for a program participant. (This distinction was the source
of the so-
[[Page 34688]]
called ``ABC'' problem under the old rule.)
The final rule states the grounds for which an HA may ``deny''
assistance for an applicant or ``terminate'' assistance for a
participant. (Sec. 982.552(a)(2) and (3)) The rule also clarifies that
``Termination of assistance for a participant may include any or
all of the following: refusing to enter into a HAP contract or
approve a lease, terminating housing assistance payments under an
outstanding HAP contract, and refusing to process or provide
assistance under portability procedures.'' (Sec. 982.552(a)(3))
If there are grounds for termination of assistance to a participant,
the HA may terminate assistance ``at any time'', and can therefore at
any time exercise any of the remedies comprised in the concept of
termination. (Sec. 982.552(b))
4. Crime by Family Member
The final rule provides that the HA may deny or terminate
assistance at any time if members of the family have engaged in drug-
related criminal activity or violent criminal activity.
(Sec. 982.553(a)) ``Drug-related criminal activity'' includes both
drug-trafficking and illegal use or possession of drugs. ``Violent
criminal activity'' refers to criminal use of physical force against a
person or property. (Sec. 982.4) The HA may deny or terminate
assistance if the preponderance of evidence indicates that a family
member has committed the crime, regardless of whether the family member
has been arrested or convicted. (Sec. 982.553(c))
The rule provides that an HA may only deny or terminate assistance
for drug use or possession by a family member if the criminal act
occurred in the last year before the HA gave notice of proposed denial
or termination of assistance for this reason. The HA may not terminate
assistance for past use of drugs by a rehabilitated user who has not
used drugs in the last year. Comments propose that the HA should only
deny assistance for drug use or possession after HA notice. As HUD
understands this proposal, assistance could be terminated for future
drug use or possession, but could not be terminated for drug use or
possession in the year preceding the HA notice. The recommendation is
not adopted.
The HA may deny assistance for an addict who currently uses or
possesses drugs. The proposed rule would have provided that the HA may
not deny assistance for past drug use by an addict who ``has
recovered'' from drug addiction. The final rule provides that the HA
may not deny assistance for an addict who ``is recovering, or has
recovered from'' an addiction. (Sec. 982.553(b)(2)) The HA may require
a family member who has engaged in the illegal use of drugs to submit
evidence of participation in, or successful completion of, a treatment
program as a condition to being allowed to reside in the unit.
Some comments approve the provisions allowing the HA to deny or
terminate assistance for criminal activity by members of the family.
Other comments object to these provisions.
Comments state that HAs do not have capability to investigate
criminal activity. Termination because of criminal activity by a family
member harms other members of the household, and may cause
homelessness. Family members may be victims of domestic violence, and
may need counseling, assistance and advocacy. HUD should prohibit the
HA from terminating assistance for other family members where the
family is unable to control a teenage youth. Termination could force a
mother to give up her children to stay in the unit.
Comments recommend that the HA should be directed to provide
continuing program assistance to remaining family members. Comments
claim that HUD does not have statutory authority to allow termination
of assistance because of crime by family members (although the law
deals with the effect of drug related criminal activity in preferences
for admission, and in evictions by an owner).
The program statutes do not contain a comprehensive or exclusive
statement of grounds for denial or termination of assistance. HUD has
discretion to issue program regulations consistent with statutory
requirements (see 42 U.S.C. 3535(d)), including regulations on denial
or termination of assistance by the HA for criminal activity by members
of an applicant or participant family. These rules are a reasonable
exercise of HUD's rulemaking authority. The rules promote significant
national and program objectives, including the critical struggle
against violent or drug-related crime.
By law and this rule, Section 8 owners may terminate tenancy for
certain drug-related or other criminal activity by members of the
assisted household and its guests. (42 U.S.C. 1437f(d)(1)(B)(iii);
Sec. 982.310(c)) Under this rule, the statutory grounds for eviction by
the owner under the lease because of criminal activity substantially
overlap the regulatory grounds for termination of program assistance by
the HA because of such activity.
In addition, an owner may evict for serious or repeated violation
of the assisted lease. Under this rule, the HA may terminate program
assistance for such violation. (Sec. 982.551(e); Sec. 982.552(b)) Thus,
in addition to the provisions which specifically and separately allow
the HA to terminate for criminal activity (Sec. 982.553), the HA may
terminate assistance for criminal activity that is a serious or
repeated violation of the assisted lease.
The final rule provisions on criminal activity are largely the same
as provisions of the prior program regulations, with a few technical
revisions and editorial changes. The prior regulations concerning
termination of certificate or voucher assistance because of criminal
activity were published on July 11, 1990 (at 55 FR 28538). The issues
considered by HUD in adoption of the prior rule are discussed at length
in the Preamble to that publication. In particular, the Preamble
discusses a number of the issues again raised by comments on the
present rule. Points discussed in that Preamble need not be repeated
here.
The rule gives the HA discretion to terminate assistance for
criminal activity. However, the rule does not direct the HA to
terminate assistance in any particular case. The HA has therefore the
power to adopt and implement local policies, and to decide the
application of local policies to particular cases.
The rule confirms that the HA has discretion to consider all the
circumstances of each case. (Sec. 982.552(c)(1)) In exercise of its
discretion, the HA may consider the character of the crime. The HA may
also consider whether family members have participated in, colluded in,
or benefited from criminal activity, and the impact of any termination
on other family members, including children. The HA may also properly
consider the broader effects of HA action or non-action on the program
and community, including:
--How termination of assistance for criminal activity by assisted
families may affect or discourage criminal activity in the community.
--The effect of HA termination policy on the Section 8 program, and the
ability of program families to find good housing.
Comments suggest that HUD should not merely allow the HA to
consider ``all'' circumstances of each case, but should require that
the HA consider all the circumstances. This comment is not adopted. In
this rule, HUD does not enumerate or prescribe all the factors that can
or should be considered by the HA. Rather, the rule confirms that the
HA has ample discretion to consider the
[[Page 34689]]
factors of a particular case. Given this discretion, the HA should have
flexibility to make a practical determination and consideration in
particular cases. The HA exercise of discretion should not be
paralyzed, and opened to challenge by mandating consideration of
``all'' circumstances in ``all'' cases.
As under HUD's prior rule, this rule provides that a PHA may deny
or terminate assistance for drug-related or violent criminal activity:
``if the preponderance of evidence indicates that a family member
has engaged in such activity, regardless of whether the family
member has been arrested or convicted''. (Sec. 982.553(c))
Comments endorse the use of this standard for termination or denial of
program assistance. The Department has previously noted that:
``the (HA) is not being asked to adjudicate guilt, but rather
whether, under a civil standard of preponderance of the evidence, a
family member, in fact, is engaging in certain activities. It is the
fact of the activity rather than assessment of criminal liability
that is at issue.'' (55 FR 28540, third column)
The HA may deny or terminate assistance in the program because of
criminal activity by any member of the ``family''. (Sec. 982.553(a)) By
contrast, an owner may evict the assisted tenant for criminal activity
by any member of the ``household'', a guest or another person under the
tenant's control. (Sec. 982.310(c)) In addition to the family (i.e.,
the subject of program assistance), the ``household'' may include a
live-in-aide.
Comments recommend that the rule should also allow the HA to
terminate assistance because of drug-trafficking (manufacture, sale, or
distribution) by a live-in-aide (who resides in the unit for care of a
disabled or elderly person). This recommendation is not adopted. The HA
may, however, terminate assistance to the family if drug-trafficking by
the live-in-aide (a member of the ``household'') is a serious or
repeated violation of the assisted lease. Moreover, the HA may withdraw
or deny approval for continued residence by the live-in-aide in the
assisted unit.
Under the prior and proposed rule, the HA may deny or terminate
assistance if a crime by a family member is classed as a ``felony''
under federal or State law (but not for a crime classed as a
misdemeanor or other non-felony category). This limitation was intended
to reach types of criminal activity treated as very serious
objectionable behavior, as identified by Congress or State legislators.
(See discussion at 55 FR 28542) Comments suggest some uncertainty as to
the meaning or applicability of this limitation.
After reconsideration, HUD has revised the rule to cover violent or
drug-related crime by family members, without regard to whether a crime
is technically classed as a felony. HUD believes that there may be more
confusion than benefit in distinguishing between felony and misdemeanor
crimes as grounds for HA denial or termination of assistance.
The felony-misdemeanor distinction creates a technical discrepancy
between drug crimes that may be cause for eviction, as opposed to drug
crimes that are grounds for termination of assistance. The statute
provides that ``drug-related criminal activity'' is grounds for
eviction of the assisted tenant by the owner (or for denial of federal
preference to an applicant). In the law, this term is defined to cover
``illegal'' drug dealing or drug-use, without regard to whether the
illegal activity is formally classed as a felony. (42 U.S.C.
1437f(f)(5)) Under the final rule, the HA may also terminate assistance
for ``illegal'' drug-related activity. The same definition of ``drug-
related criminal activity'' is now used for both purposes (eviction by
an owner or termination of assistance by the HA).
5. Fraud or Other Program Violation
The proposed rule would have provided that the HA could deny or
terminate assistance if the family had committed any ``fraud'' in
connection with a federal housing program. The final rule provides that
the HA may deny or terminate assistance at any time if any member of
the family commits ``fraud, bribery or any other corrupt or criminal
act''. (Sec. 982.552(b)(5)) The HA may deny or terminate assistance
whether or not such criminal act occurred while the family was
participating in the tenant-based program. The rule provides that such
criminal act is a breach of family obligations under the program.
(Sec. 982.551(k))
6. Debt or Reimbursement
The HA may ``at any time'' deny or terminate assistance:
--If a family currently ``owes'' money to the HA (in connection with
Section 8 or public housing), or has not reimbursed amounts the HA paid
a Section 8 owner for family rent or damage.
--If the family breaches an agreement to pay such amounts to the HA.
(Sec. 982.552(b)(6) to (8))
Comments state that HUD should not allow an HA to deny assistance
because of family debt to the HA. Comments claim that the rule will
allow arbitrary terminations, and that the HA could terminate
assistance without regard to the statute of limitations.
In HUD's view, the family is and should be held responsible for its
own program debts to the HA, or for claims the HA paid to a Section 8
owner. Denying Section 8 assistance because of monies owed or Section 8
claims paid in connection with the Section 8 or public housing programs
under the U.S. Housing Act of 1937 is not arbitrary, but bears a
legitimate and logical connection to the HA responsibility for
administration of the Section 8 program. Furthermore, the denial is
based on a specific determination of law and fact. Contrary to the
comment, the rule does not allow the HA to deny assistance for a debt
to an HA that is barred by the statute of limitations. By definition,
an amount the family ``currently owes'' is not barred by the statute of
limitations.
7. Family Self-Sufficiency
The proposed rule would have provided that the HA may deny or
terminate assistance if a family participating in the FSS program fails
to comply with the FSS contract of participation. Comments suggest that
the rule should specify that the HA may only terminate assistance if
the family violates the FSS contract ``without good cause'', in
accordance with the 1992 FSS law. (42 U.S.C. 1437u(c)(1), as amended by
Sec. 106(d)((2) of Pub. L. 102-550, 10/28/92 at 106 Stat. 3685) In
accordance with this recommendation, the rule is amended to explicitly
reflect this statutory requirement. (Sec. 982.552(b)(9)) With this
change, the provision conforms to the existing FSS rule, which provide
that the HA may terminate the FSS contract if the FSS family fails to
comply ``without good cause'' with the FSS contract of participation.
(Sec. 984.303(b)(5))
Comments claim that termination of family participation because of
FSS violation may cause homelessness, and that the family may drop out
of FSS because of the lack of FSS services. Families in the FSS program
must comply with Section 8 and FSS obligations. However, HUD does not
expect that many families will be terminated from the Section 8 program
for breach of FSS obligations. However, if the HA terminates assistance
for a family, another family can enter the program, and benefit from
housing assistance and FSS services.
[[Page 34690]]
8. Abuse or Violence Against HA Personnel
The final rule provides that the HA may deny or terminate
assistance if the family has engaged in or threatened abuse or violent
behavior toward HA personnel. (Sec. 982.552(b)(10))
B. Procedures for Informal Review or Hearing
1. Applicants
In the proposed rule, HUD proposed to remove the existing
regulatory distinction between ``hearing'' procedures for participants,
and ``review'' procedures for applicants.
Some comments endorse this change. These comments note that the
appeal process has serious consequences for the family, and assert that
the greater protection of a ``hearing'' process is warranted. The
change avoids confusion on the appropriate procedure for review of the
HA decision.
Other comments strongly object to the proposed change extending
``hearing'' requirements to HA decisions concerning program applicants.
These comments recommend that HUD should retain informal review for
applicants. ``Hearings'' are unwieldy and time consuming. The change
proposed by HUD would create bottlenecks and increase HA administrative
costs. HAs would need additional professional, stenographic and
clerical staff to conduct applicant hearings.
From the comments, it appears that some HAs voluntarily operate
hearing procedures that exceed HUD requirements, and are more
burdensome and expensive than needed to comply with minimum hearing
requirements prescribed by HUD. The HAs appear to assume that
``hearings'' for applicants would be conducted under the more elaborate
processes used for program participants, even if those processes exceed
HUD requirements.
In the final rule, HUD has decided to retain the existing
regulatory distinction between informal review procedures for
applicants and hearing procedures for program participants. The HA must
give the opportunity for informal review of a decision denying
assistance to an applicant. The review procedures under the final rule
are essentially unchanged from the procedures under the old rules for
the tenant-based programs. The HA informal review procedures must
comply with the following elements:
--The review may be conducted by any person or persons designated by
the HA. However, the HA reviewer may not be a person who made or
approved the decision under review or a subordinate of this person.
--The applicant may present written or oral objections.
--The HA must notify the applicant of the HA final decision after
informal review. The notice must include a brief statement of the
reasons for the decision. (Sec. 982.554(b))
On consideration of the comments, HUD finds that there is
insufficient reason to change the existing procedures by extending
hearing processes to applicants. The nature and justification for the
existing review and hearing requirements is discussed at length in the
preamble of the 1984 rule that originally promulgated these procedures.
(49 FR 12215, 12224-12230)
Under the HUD rules, there is a separate procedure for review of an
HA decision that a family does not qualify for a preference claimed by
the family. (Sec. 982.210(d)(1); 59 FR 36688, July 18, 1994) Under this
procedure, the applicant has the right to meet with an HA
representative to review the HA determination. The meeting may be
conducted by a person designated by the HA. The designated HA
representative may be an officer or employee of the HA, including the
person who made or reviewed the determination or a subordinate
employee. The HA preference decision is not subject to the informal
review process for an HA decision denying assistance to an applicant.
(Now at Sec. 982.555)
Comments recommend that the HA should be required to use the same
procedure on review of denial of preference as for a denial of
assistance. The comments assert that preference is the most important
factor in determining whether an applicant gets subsidy, and should
have the same procedural protection as other HA decisions on applicant
eligibility.
In the final rule, HUD has retained the existing procedures
granting a family the opportunity to meet with an HA representative to
review an HA preference determination. This procedure has been used
since 1988 to review denial of a federal preference. (See revision of
Sec. 882.216(k) at 53 FR 1122, 1155, column 3, January 15, 1988) In
1994, this procedure was extended to review of an HA decision denying a
federal preference, ranking preference or local preference. (See
Sec. 982.210(d)(1) at 59 FR 36688)
Since the beginning, HA decisions to grant or deny preference have
been subject to a separate review process, not to the informal review
procedure used to review denial of assistance to the applicant. In
adopting this process, the Department noted that the notice and
opportunity for meeting:
``strikes an appropriate balance among the competing interests
involved in the denial of a preference. On the one hand, this
approach recognizes the importance of qualification for a preference
in securing housing assistance at the earliest time, by establishing
a mandatory mechanism for the prompt resolution of factual issues
and concerns. On the other hand, use of this degree of informal
procedure reflects the Department's belief that the denial of a
preference--which has the effect of prolonging an applicant's wait
for housing assistance--is not of such magnitude as to justify
imposition of the administrative burden on (HAs) * * * that are
inherent in a more formal process''. (53 FR 1122, 1140. For full
discussion, see section X of preamble (``Informal Review of Federal
Preference Denials'' at Id.).)
The rule provides that the HA administrative plan must state the HA
procedures for conducting an informal review for applicants or an
informal hearing for participants. (Sec. 982.54(d)(12) and 13;
Sec. 982.554(b); Sec. 982.555(e)(1))
2. Participant--Informal Hearing
Hearing--When Required
The HA must offer a hearing for certain HA determinations
``relating to the individual circumstances of a participant family''.
The hearing is held to consider whether HA decisions related to the
family circumstances ``are in accordance with the law, HUD regulations
and HA policies''. The rule lists the cases when the HA must offer a
hearing, and cases when a hearing is not required.
The HA must provide the opportunity for a hearing on:
--An HA determination of the family's income.
--An HA determination of the family unit size for the family under the
HA subsidy standards.
--An HA determination of the appropriate utility allowance for the
family from the HA utility allowance schedule.
--An HA determination to deny or terminate assistance because of family
actions.
--An HA determination to terminate assistance because the family has
been absent from the unit for longer than the maximum period permitted
under HA policy and HUD rules.
--In the certificate program, an HA determination that the family's
unit is too big. (Sec. 982.555(a)(1)).
The HA is not required to grant a hearing for HA discretionary
administrative determinations or for general policy issues or class
grievances. (Sec. 982.555(b) (1) and (2)) The final rule provides that
a hearing is not required
[[Page 34691]]
for an HA determination not to approve an extension or suspension of
the certificate or voucher term. The HA has discretion whether to grant
an extension or suspension. (Sec. 982.303 (b) and (c))
Comments object to the regulatory definition of when hearings are
required, and the purpose of the HA hearing. The comment objects to the
provision specifying that hearing procedures apply to HA decisions
regarding individual family circumstances challenged as not in
accordance with law, regulation or rules. The comment states that there
should be a uniform set of procedures and appeal rules, and recommends
that HUD should eliminate the distinction between types of decision for
which there is or is not an appeal right.
HUD believes that the rule appropriately defines the proper role of
the administrative hearing process. The terms of this definition
largely follow requirements under existing program regulations
concerning the purpose and subject matter of participant hearings. (See
49 FR 12215, 12226; March 29, 1984) The Department has noted that:
``The hearing process * * * is designed to assure that decisions
by the (HA) with respect to a participant family comply with
applicable rules. The hearing process does not displace the regular
(HA) administrative process for matters committed to [HA] discretion
and management judgment''. (49 FR 12226)
Comments state that the HA should not be required to grant a
hearing for determination of the utility allowance. An HA establishes a
utility allowance schedule for use in its program. To determine the
assistance payment for a particular family, the HA uses the utility
allowance (from the established schedule) for the dwelling unit
actually leased by the family.
The rule is revised to clarify, as intended, that the HA is not
required to grant a hearing on establishment of the HA schedule of
utility allowances for families in the program. (Sec. 982.555(b)(3))
The rule provides (as proposed) that the HA must grant a hearing on the
HA determination, based on the individual family circumstances, of the
appropriate utility allowance for the particular family from the HA
utility allowance schedule. (Sec. 982.555(a)(1)(ii))
The proposed rule would have carried forward a prior rule provision
that required the HA to grant a family opportunity for an informal
hearing before terminating assistance under an outstanding HAP
contract. Comments ask HUD to clarify that the HA is not required to
grant an advance hearing to redetermine the family's share of the rent
at a reexamination (including a reduction of subsidy to zero by
operation of the Section 8 subsidy formulas). In response, the rule is
revised to specify (Sec. 982.555(a)(2)) that the HA must grant an
advance hearing before terminating payments under an outstanding HAP
contract in these three cases:
--A determination that a certificate program family is residing in a
unit with a larger number of bedrooms than appropriate for the family
unit size under the HA subsidy standards, or the HA determination to
deny the family's request for an exception from the standards.
--A determination to terminate assistance because of the family's
action or failure to act.
--A determination to terminate housing assistance payments because the
participant family has been absent from the assisted unit for longer
than the maximum period permitted under HA policy and HUD rules.
Notice to Participant
Comments recommend that the HA should be required to notify the
family of the reasons for termination of assistance. The rule provides
that the HA must notify the family of its right to request a hearing on
a decision to deny or terminate assistance. The notice must include a
brief statement of reasons for the HA decision. (Sec. 982.555(c)(2))
Other comments object to the administrative burden and cost to
notify the family of the right to a hearing because of changes in
family income or family size. When the HA determines family income or
``family unit size'' (the appropriate number of bedrooms for the
family), the HA must give notice that the family may ask the HA to
explain the basis of the HA determination, and that if the family does
not agree with the determination, the family may request an informal
hearing on the decision. (Sec. 982.555(c)(1)) Notice of the family
right to a hearing can be included in the HA reexamination notice
(requesting information for a reexamination), or in the HA notice of
the determination after reexamination. The HA does not have to serve or
mail any separate notice. For this reason, the process of giving the
notice to the family does not require any substantial additional cost
or administrative burden.
Time To Request Hearing
Comments recommend that HUD should specify the minimum period to
appeal HA decisions. The comments state that HUD should allow HAs to
establish a short minimum appeal time where assistance continues during
the appeal, but should require that HAs allow one year to request a
hearing if the participant is seeking assistance during the appeal.
The HA gives the family notice of the right to a hearing.
(Sec. 982.555(c) (1) and (2)) The HA is required to adopt hearing
procedures in its administrative plan. (Sec. 982.54(d)) In its hearing
procedures, the HA can establish HA requirements for requesting a
hearing, including any deadlines. If the HA decides to terminate
assistance for a family, the HA notice must state the deadline for the
family to request an informal hearing. (Sec. 982.555(c)(2)(iii))
In this rule, HUD does not set minimum or maximum periods for
requesting a hearing. Such details are best left to determination by
the HA. The HA may decide to establish different deadlines for
different circumstances. The HA is in a better position to judge the
practicality and effect of its hearing policies, and to modify its
procedures in the light of local experience.
Hearing: Family Right to Examine HA Documents
The new rule adds one element to hearing procedures under the old
rule. The rule now grants the family a right to pre-hearing discovery
of HA documents, including records and regulations, that are directly
relevant to the hearing. The family must be allowed to copy any such
document at the family's expense. (Sec. 982.555(e)(2)(i))
These new discovery requirements are essentially the same as the
public housing discovery requirements promulgated by HUD under Section
6(k) of the 1937 Housing Act. (42 U.S.C. 1437d(k))
Some comments approve allowing the family to examine and copy HA
documents. Other comments object to allowing the family to preview HA
evidence, and claim that this gives the family an unfair advantage.
Comments recommend that the HA should have the right to see family
documents.
The final rule retains without change the proposed provisions
permitting family examination of HA documents prior to hearing.
(Sec. 982.555(e)(2)(i)) This process helps the family present its case
and respond to HA documents and argument. The discovery process can
support the basic purpose of the hearing--to produce an accurate
determination of the points at issue.
As suggested by comment, the final rule adds a new provision that
grants the HA a parallel right to pre-hearing examination of relevant
family documents. The family would be required to produce the documents
at the HA offices. (Sec. 982.555(e)(2)(ii))
[[Page 34692]]
The rule provides that the HA may not rely on a document not
produced in response to the family's request. Comments agree with this
provision. Advance disclosure helps the family prepare for the hearing.
Other comments indicate that the rule should provide a stronger
sanction for the HA failure to disclose a document, by prohibiting the
HA from raising any issue, fact or claim concerning the document.
In the final rule, the sanctions provision is retained as proposed.
The HA may not rely on a document withheld from disclosure. Similarly,
the rule provides that the family may not rely on a document not
produced at request of the HA. Any additional sanctions for non-
disclosure are left to the authority and judgment of the hearing
officer, and should not be prescribed in the rule. The hearing officer
may tailor the character and severity of the sanction to the facts of
the immediate case.
At request of the other party, the HA or family must produce
documents that are ``directly relevant'' to the hearing. Comments
recommend that the rule designate what documents must be released in
discovery with more specificity. HUD believes that the proposed
standard is an adequate guide. As under any such standard, there can be
disputes at the margin whether particular documents are directly
relevant to the issues at the hearing. HUD is unable to devise a better
standard, and no such standard is suggested in the comments.
Comments express concern that the family may lose documents. Under
the rule, the HA can devise appropriate procedures for inspection of
documents, including provision for supervised inspection. The HA is not
required to allow the family to remove documents or files from the HA
offices. The HA could, if desired, provide document copies to minimize
the risk of losing originals or corruption of HA files.
The rule provides that the family may copy HA documents ``at the
family's expense''. (Sec. 982.555(e)(2)(i)) Comments suggest that the
HA should not be permitted to charge the family for copying documents.
The comment is not adopted. The HA may work out appropriate local
policies on copying charges (for example, policies that allow free
copying of a limited number of pages).
Hearing Officer
As in the past, the rule provides that a hearing may be conducted
by any person or persons designated by the HA, other than a person who
made or approved the decision under review or a subordinate of this
person. (Sec. 982.555(e)(4)(i))
Comments recommend that the hearing officer should not be a person
connected to the HA. The comments state that a hearing officer who is
an HA employee will tend to support a colleague's decision, and may be
familiar with the issues and complaint.
The recommendation is not adopted. The designated hearing officer
is responsible for exercising an independent and good faith judgment on
the issues presented. Factual determinations concerning the individual
family must be based on evidence presented at hearing. An HA employee
or officer can render a fair and objective judgment. Conversely,
precluding use of HA employees or officers will generally increase the
expense of the hearing process. (For full discussion of the basis of
the current provisions, see 49 FR 12229-12230)
X. Section 8 Certificate Program: Project-Based Assistance (PBC)
PBC: Moving the Rule
The regulations for the Project-based Certificate (PBC) Program
have been moved to a separate subpart, 24 CFR part 983, since the
tenant-based and project-based programs are very different.
PBC: Reducing Program Complexity and HUD Involvement; Initial HAP
Contract Term
Comments state that the PBC program is difficult for HAs and HUD to
administer, and operationally complex for all parties. The extent and
timeliness of HUD review is criticized. Comments state that the PBC
regulations inappropriately require HUD PBC reviews similar to the HUD
reviews for applications for long term subsidy contracts under the
Section 202 and Section 8 new construction programs. Comments note that
the level of HUD activity for the PBC program is not justified by a
five-year subsidy commitment.
HUD agrees that the HUD oversight is excessive for a five-year
subsidy commitment, especially considering the limited HUD field office
staff capacity to perform PBC reviews. The final rule significantly
decreases HUD review responsibilities for the PBC program, and
simplifies program administration. The requirements for a HUD cost
containment review and intergovernmental review have been deleted.
Initial contract rents for non-HUD insured, non-HA owned PBC projects
will be set by the HA, based on appraisals conducted by a State
certified general appraiser. The costs of the PBC appraisal will come
from the administrative fees already paid to HAs. The HUD 2530 previous
participation requirement has also been eliminated, and responsibility
for PBC historic preservation and environmental review responsibilities
have been assumed by States and units of local government pursuant to
section 305(b) of the Multifamily Housing Property Disposition Reform
Act of 1994. In addition, the rule eliminates the requirement for a
HUD-approved HA schedule of leasing. The final rule also limits the
initial PBC HAP contract term to five years, the typical funding term
for new units.
Other changes have been made throughout the rule to delete
requirements on matters which do not need to be regulated.
PBC: Maximum Number of PBC Units; Application to Implement a PBC
Program
Comments suggested that HUD should allow project-basing in the
voucher program, and should increase the percentage of certificate
units which may be project-based. These suggestions have not been
adopted. The statute does not permit project-basing of voucher units.
The statute does not require that HUD permit project basing for more
than 15 percent of assistance under the certificates (or 30 percent for
rehabilitation of certain State-assisted units).
In order to further simplify program administration and in
recognition that the ACC no longer lists the number of units by bedroom
size, the references to the 15 and 30 percent limits in Sec. 983.702
and Sec. 983.703 have been revised to delete reference to ``units under
ACC''. The 15 and 30 percent limits apply to the number of budgeted
certificate units, not the number of units under ACC.
Section 983.3 has also been revised to delete the requirement that
HAs indicate the bedroom sizes of the PBC units and identify a funding
source for purposes of determining the maximum PBC HAP contract term.
When approving the HAP contract term for PBC units, the HA must ensure
that the contract authority for the funding source exceeds the
estimated annual housing assistance payments for all tenant-based and
project-based HAP contracts funded from the funding source.
PBC: Funding
Several comments recommend that HUD provide special funding for the
PBC program. If HUD specifically allocated funds for PBC, HAs would be
[[Page 34693]]
coerced to implement a PBC program in order to receive funds. Fearing
that HUD might in fact be considering setting aside funds for the PBC
program, Congressional members instructed HUD in March 1988 that fair
share allocations of certificate funding should be distributed as done
in the past without regard to the PBC program, and ``whether or not HAs
decide to attach Section 8 existing contracts to specific buildings
should not affect HUD's regular selection procedure''.
PBC: Ineligible Housing; Use of State, Local, and Federal Subsidies
Many comments object to the proposed prohibition against selecting
housing for the PBC program which in the past five years received (or
will receive) local or State government below-market mortgage interest
subsidy, construction or rehabilitation subsidy, or project-based rent
subsidy. Comments state that subsidies from many sources are often
necessary to construct or rehabilitate low-income housing. Local and
State subsidies may result in lower rents and shallower federal
subsidies. One comment recommended that any subsidy restrictions should
be limited to programs that prohibit rents in excess of fixed
percentages of income equal to or less than the limits used for the
public housing and Section 8 programs. In response to these public
comments, HUD is deleting the proposed subsidy prohibition against
providing PBC for a project that has received subsidy in the last 5
years.
Comments objected to the proposed provision disqualifying housing
for the PBC program if the rehabilitation or construction is begun
before execution of the Agreement to Enter Into a HAP Contract
(Agreement). Comments pointed out that developers often begin
construction or rehabilitation work prior to Agreement in order to
secure tax credits and other funding commitments. HUD has limited
flexibility in this area. The statute requires that the owner ``agree''
to construct or perform the qualifying rehabilitation. Thus, an
Agreement must be executed prior to any construction or the qualifying
rehabilitation. The final rule continues to restrict all pre-Agreement
construction or rehabilitation. Although HUD has latitude under the
statute to allow commencement of rehabilitation in excess of the $1000
per unit qualifying rehabilitation threshold, HUD has decided not to
exercise this authority since owners may begin rehabilitation early to
circumvent compliance with the PBC relocation requirements and other
federal requirements such as Davis-Bacon wage rates.
The final rule also deletes the prohibition against selecting HUD-
owned properties for the PBC program.
PBC: Disabled Issues
Comment suggested language changes to use phrase ``disabled''
instead of ``handicapped''. This comment is accommodated throughout
Part 983. In addition, the rule has been clarified to state that
accessibility improvements which are counted towards the $1000 per unit
rehabilitation eligibility threshold are limited to accessibility
improvements to the property required by Section 504 of the
Rehabilitation Act of 1973 and the Fair Housing Amendments Act of 1988.
(Sec. 983.8)
PBC: Relocation
There was one comment on the revised PBC relocation requirements.
This comment was addressed in the final PBC relocation rule published
in the Federal Register on June 6, 1994. The final rule relocation text
is incorporated into this rulemaking and is located in Sec. 983.10.
PBC: Owner Selection Policies
Comment questioned the need for HUD to approve owner PBC tenant
selection policies and notify families of the reasons why they were not
selected. Comment states that HUD has implemented the statute verbatim
and requests that HUD provide mandatory standards concerning tenant
suitability identical to those contained in the public housing rule at
24 CFR 960.205. Comment erroneously states that standards are necessary
since families rejected for a PBC unit cannot seek other housing
assisted in the tenant-based certificate program. The comment is wrong.
A family rejected by a PBC owner does not lose eligibility for, or
position on, the waiting list for tenant-based assistance.
HUD agrees that a requirement for HUD approval of owner PBC tenant
selection policies is not necessary. Since HUD approval of the owner's
policies in this area is not mandated by the statute, the final rule
does not include the requirement that the owner's tenant selection
policy be submitted to the HUD field office for review and approval.
HUD declines to impose additional regulatory requirements in this area.
PBC: Contract Rents
The comments concerning initial contract rents and contract rent
adjustments will be addressed in a later rulemaking. Today's rulemaking
does not modify current program requirements in these areas.
PBC: Organization of the Rule
The section numbers have been revised since the PBC rule is now
part 983 instead of a subpart under part 882. In addition, the housing
quality standards for rehabilitation and new construction units were
combined under one section instead of being contained in separate
sections. Likewise, the site and neighborhood standards for
rehabilitation and new construction units which were formally contained
in separate sections were combined under one section.
XI. Findings and Certifications
A. Impact on the Economy
This rule does not constitute a ``major rule'' as that term is
defined in Section 1(b) of Executive Order 12291, Regulatory Planning
Process. Analysis of the rule indicates that it does not: (1) Have an
annual effect on the economy of $100 million or more; (2) cause a major
increase in costs or prices for consumers, individual industries,
federal, State or local government agencies or geographic regions; or
(3) have a significant adverse effect on competition, employment,
investment, productivity, innovation or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic or export markets.
B. Impact on the Environment
A Finding of No Significant Impact (FONSI) with respect to the
environment was made in connection with the proposed rule in accordance
with HUD regulations at 24 CFR part 50 that implement section 102(2)(C)
of the National Environmental Policy Act of 1969, 42 U.S.C. 4332. Since
the provisions of this final rule with respect to the effect on the
environment are not changed from the proposed rule, the original FONSI
is still valid. The FONSI is available for public inspection and
copying during regular business hours (7:30 a.m. to 5:30 p.m.) in the
Office of the Rules Docket Clerk, room 10276, 451 Seventh Street, SW.,
Washington, DC 20410-0500.
C. Federalism Impact
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule have impact on States or their political
subdivisions only to the extent required by the statute being
implemented. Since the rule merely carries out a statutory mandate and
does
[[Page 34694]]
not create any new significant requirements, it is not subject to
review under the Executive Order.
D. Impact on the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus is not subject to review under the Order.
E. Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule will not have a significant
impact on a substantial number of small entities, because it does not
place major burdens on housing authorities or housing owners.
F. Regulatory Agenda
This rule was listed as sequence number 1531 under the Office of
the Assistant Secretary for Public and Indian Housing in the
Department's Semiannual Regulatory Agenda published on May 8, 1995 (60
FR 23368, 23403) in accordance with Executive Order 12866 and the
Regulatory Flexibility Act.
Regulatory Review
This rule was reviewed by the Office of Management and Budget under
Executive Order 12866, Regulatory Planning and Review. Any changes made
to the 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 Rules Docket Clerk, room 10276, 451 Seventh St. SW.,
Washington, DC 20410.
List of Subjects
24 CFR Part 882
Grant programs--housing and community development, Homeless, Lead
poisoning, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 887
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 982
Grant programs--housing and community development, Housing, Rent
subsidies, Reporting and recordkeeping requirements.
24 CFR Part 983
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
Accordingly, Parts 882 and 887 of chapter VIII and Parts 982 and
893 of Chapter IX of title 24 of the Code of Federal Regulations are
amended as follows:
1. The heading for part 882 is revised to read as follows:
PART 882--SECTION 8 CERTIFICATE AND MODERATE REHABILITATION
PROGRAMS
2. The authority citation for part 882 is revised to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
3. Section 882.101 is amended by revising paragraph (b), and by
adding new paragraphs (c) and (d), to read as follows:
Sec. 882.101 Applicability and scope.
* * * * *
(b) Existing Housing means housing that is in Decent, Safe, and
Sanitary condition. Existing Housing does not include public housing.
(c) Certificate program. (1) Program regulations for the Section 8
tenant-based certificate and voucher programs are located at 24 CFR
part 982. Program regulations for the Section 8 project-based
certificate program are located at 24 CFR part 983.
(2) The following provisions of subpart A of this part are
applicable to the Section 8 certificate program: Secs. 882.101,
882.106, 882.108, 882.110, and paragraphs (m), (n), (o), (p) and (q) of
Sec. 882.109.
(3) In applying provisions of subpart A of this part, the
definitions in Sec. 882.102 are applicable to the Section 8 certificate
program.
(4) Subparts C and F of this part are applicable to the Section 8
certificate program.
(5) Subpart G of this part is applicable to the Section 8 project-
based certificate program.
(d) Moderate rehabilitation programs. (1) Subparts D and E of this
part are applicable to the Section 8 Moderate Rehabilitation Program.
For applicability of other part 882 provisions to this program, see
Sec. 882.401(d).
(2) Subpart H of this part is applicable to the Section 8 Moderate
Rehabilitation Single Room Occupancy Program for Homeless Individuals.
For applicability of other part 882 provisions to this program, see
references in subpart H of this part.
Secs. 882.103, 882.104, 882.105, 882.107, 882.116, 882.117, 882.119 and
882.121 [Removed and Reserved]
4. In subpart A of this part 882, the following sections are
removed and reserved: Secs. 882.103, 882.104, 882.105, 882.107,
882.116, 882.117, 882.119 and 882.121.
Sec. 882.123 [Amended]
5. In Sec. 882.123, paragraphs (a) through (d), and paragraph (f),
are removed and reserved, and paragraph (i) is removed.
Secs. 882.201-882.211, 882.213, 882.215, 882.216, and Appendix I of
Subpart B [Amended]
6. In subpart B of this part 882, Secs. 882.201 through 882.211,
882.213, 882.215, and 882.216 are removed and reserved, and Appendix I
is removed.
7. Subpart G of this part 882 is amended by revising Sec. 882.701,
to read as follows:
Sec. 882.701 Purpose and applicability.
Subpart G of this part states requirements concerning initial and
adjusted Contract Rents in the Section 8 project-based certificate
program. Other program regulations for the Section 8 project-based
certificate program are located at 24 CFR part 983.
Secs. 882.702 through 882.713 [Removed and Reserved]
8. Sections 882.702 through 882.713 are removed and reserved.
Secs. 882.716 through 882.759 [Removed]
9. Sections 882.716 through 882.759 are removed.
PART 887--HOUSING VOUCHERS
10. The authority citation for part 887 is revised to read as
follows:
Authority: 42 U.S.C. 1437f(o) and 3535(d).
11. In subpart A of this part 887, Sec. 887.3 is revised, to read
as follows:
Sec. 887.3 Scope and applicability.
(a) The provisions of this part apply to the Section 8 voucher
program authorized by section 8(o) of the 1937 Act. This part states
voucher program requirements concerning the payment standard and
housing assistance payment, and concerning special housing types. Other
program regulations for the Section 8 tenant-based certificate and
voucher programs are located at 24 CFR part 982.
(b) The definitions in Sec. 887.7 are applicable in applying the
provision of this part.
Sec. 887.5 [Removed]
12. Section 887.5 is removed.
[[Page 34695]]
Subparts B through G and Subpart I [Removed and Reserved]
13. Subparts B through G and Subpart I of this part 887 are removed
and reserved.
Subpart L [Removed]
13a. Subpart L of this part 887 is removed.
PART 982--SECTION 8 TENANT-BASED ASSISTANCE: UNIFIED RULE FOR
TENANT-BASED ASSISTANCE UNDER THE SECTION 8 RENTAL CERTIFICATE
PROGRAM AND THE SECTION 8 RENTAL VOUCHER PROGRAM
14. The authority citation for part 982 is revised, to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
15. In part 982, Subpart A is revised; subparts B, C, D, G, H, I,
J, and L are added; and subparts F, K, and M are reserved, to read as
follows:
Subpart A--General Information
Sec.
982.1 Tenant-based programs: Purpose and structure.
982.2 Applicability.
982.3 HUD.
982.4 Definitions.
982.5 Notices required by this part.
Subpart B--HUD Requirements and HA Plan for Administration of Program
982.51 HA authority to administer program.
982.52 HUD requirements.
982.53 Equal opportunity requirements.
982.54 Administrative plan.
Subpart C--Funding and HA Application for Funding
982.101 Allocation of funding.
982.102 HA application for funding.
982.103 HUD review of application.
Subpart D--Annual Contributions Contract and HA Administration of
Program
982.151 Annual contributions contract.
982.152 Administrative fee.
982.153 HA responsibilities.
982.154 ACC reserve account.
982.155 Administrative fee reserve.
982.156 Depositary for program funds.
982.157 Budget and expenditure.
982.158 Program accounts and records.
982.159 Audit requirements.
982.160 HUD determination to administer a local program.
982.161 Conflict of interest.
982.162 Use of HUD-required contracts and other forms.
982.163 Fraud recoveries.
* * * * *
Subpart F--[Reserved]
Subpart G--Leasing a Unit
982.301 Information when family is selected.
982.302 Issuance of certificate or voucher; Requesting HA approval
to lease a unit.
982.303 Term of certificate or voucher.
982.304 Illegal discrimination: HA assistance to family.
982.305 HA approval to lease a unit.
982.306 HA disapproval of owner.
982.307 Owner responsibility for screening tenants.
982.308 Lease.
982.309 Term of assisted tenancy.
982.310 Owner termination of tenancy.
982.311 When assistance is paid.
982.312 Absence from unit.
982.313 Security deposit; Amounts owed by tenant.
982.314 Move with continued tenant-based assistance.
982.315 Family break-up.
Subpart H--Where Family Can Live and Move
982.351 Overview.
982.352 Eligible housing.
982.353 Where family can lease a unit with tenant-based assistance.
982.354 Portability: Administration by initial HA outside the
initial HA jurisdiction.
982.355 Portability: Administration by receiving HA.
Subpart I--Dwelling Unit: Housing Quality Standards, Subsidy Standards,
Inspection and Maintenance
982.401 Housing quality standards (HQS).
982.402 Subsidy standards.
982.403 Terminating HAP contract: When unit is too big or too
small.
982.404 Maintenance: Owner and family responsibility; HA remedies.
982.405 HA periodic unit inspection.
982.406 Enforcement of HQS.
Subpart J--Housing Assistance Payments Contract and Owner
Responsibility
982.451 Housing assistance payments contract.
982.452 Owner responsibilities.
982.453 Owner breach of contract.
982.454 Termination of HAP contract: Insufficient funding.
982.455 Termination of HAP contract: Expiration and opt-out.
982.456 Third parties.
982.457 Owner refusal to lease.
Subpart K--Rent and Housing Assistance Payment--[Reserved]
Subpart L--Family Obligations; Denial and Termination of Assistance
982.551 Obligations of participant.
982.552 HA denial or termination of assistance for family.
982.553 Crime by family members.
982.554 Informal review for applicant.
982.555 Informal hearing for participant.
Subpart M--Special Housing Types--[Reserved]
Subpart A--General Information
Sec. 982.1 Tenant-based programs: Purpose and structure.
(a) General description. (1) The HUD rental voucher program and the
HUD rental certificate program provide rent subsidies so eligible
families can afford rent for decent, safe, and sanitary housing. Both
programs are administered by State, local governmental or tribal bodies
called housing agencies (HAs). HUD provides funds to an HA for rent
subsidy on behalf of eligible families. HUD also provides funds for HA
administration of the programs.
(2) Families select and rent units that meet program housing
quality standards. If the HA approves a family's unit and lease, the HA
contracts with the owner to make rent subsidy payments on behalf of the
family. An HA may not approve a lease unless the rent is reasonable.
(3) In the certificate program, the rental subsidy is generally
based on the actual rent of a unit leased by the assisted family. In
the voucher program, the rental subsidy is determined by a formula, and
is not based on the actual rent of the leased unit.
(4) In the certificate program, the unit rent generally may not
exceed a HUD-published fair market rent for rental units in the local
housing market. For most families, the subsidy is the difference
between the unit rent and 30 percent of adjusted monthly income. In the
voucher program, the subsidy for most families is the difference
between 30 percent of adjusted monthly income and a ``payment
standard'' that is based on the HUD-published fair market rent. If the
unit rent is less than the voucher payment standard, the family pays a
smaller share of the rent. If the unit rent is more than the payment
standard, the family pays a larger share of the rent.
(b) Tenant-based and project-based assistance. (1) Section 8
assistance may be ``tenant-based'' or ``project-based''. In project-
based programs, rental assistance is paid for families who live in
specific housing developments or units. With tenant-based assistance,
the assisted unit is selected by the family. The family may rent a unit
anywhere in the United States in the jurisdiction of an HA that runs a
certificate or voucher program.
(2) Except for project-based assistance under the certificate
program (covered in 24 CFR part 983), all assistance under the
certificate and voucher programs is ``tenant-based''. After the family
selects
[[Page 34696]]
a suitable unit, the HA enters into a contract with the owner to make
rent subsidy payments to the owner to subsidize occupancy by the
family. The contract only covers a single unit and the specific
assisted family. If the family moves out of the leased unit, the
contract with the owner terminates. In the tenant-based programs, the
family may move to another unit with continued assistance so long as
the family is complying with program requirements.
Sec. 982.2 Applicability.
(a) Part 982 is a unified statement of program requirements for the
tenant-based housing assistance programs under Section 8 of the United
States Housing Act of 1937 (42 U.S.C. 1437f). The tenant-based programs
are the Section 8 tenant-based rental certificate program and the
Section 8 rental voucher program.
(b) Unless specifically stated in this part, requirements for both
tenant-based programs are the same.
Sec. 982.3 HUD.
The HUD field offices have been delegated responsibility for day-
to-day administration of the program by HUD. In exercising these
functions, the field offices are subject to HUD regulations and other
HUD requirements issued by HUD headquarters. Some functions are
specifically reserved to HUD headquarters.
Sec. 982.4 Definitions.
Absorption. In portability, the point at which a receiving HA stops
billing the initial HA for assistance on behalf of a portability
family. The receiving HA uses funds available under the receiving HA
consolidated ACC.
ACC. Annual contributions contract.
ACC reserve account (formerly ``project reserve''). Account
established by HUD from amounts by which the maximum payment to the HA
under the consolidated ACC (during an HA fiscal year) exceeds the
amount actually approved and paid. This account is used as the source
of additional payments for the program.
Adjusted income. Defined in 24 CFR 813.102.
Administrative fee. Fee paid by HUD to the HA for administration of
the program.
Administrative fee reserve (formerly ``operating reserve'').
Account established by HA from excess administrative fee income. The
administrative fee reserve must be used for housing purposes. See
Sec. 982.155.
Administrative plan. The administrative plan describes HA policies
for administration of the tenant-based programs. See Part B of part
982. Section 982.54 describes subjects that must be covered in the
administrative plan.
Admission. The effective date of the first HAP contract for a
family (first day of initial lease term) in a tenant-based program.
This is the point when the family becomes a participant in the program.
Annual contributions contract (ACC). A written contract between HUD
and an HA. Under the contract HUD agrees to provide funding for
operation of the program, and the HA agrees to comply with HUD
requirements for the program.
Annual income. Defined in 24 CFR 813.106.
Applicant (applicant family). A family that has applied for
admission to a program, but is not yet a participant in the program.
Budget authority. An amount authorized and appropriated by the
Congress for payment to HAs under the program. For each funding
increment in an HA program, budget authority is the maximum amount that
may be paid by HUD to the HA over the ACC term of the funding
increment.
Certificate. A document issued by an HA to a family selected for
admission to the rental certificate program. The certificate describes
the program, and the procedures for HA approval of a unit selected by
the family. The certificate also states the obligations of the family
under the program.
Certificate or voucher holder. A family holding a voucher or
certificate with unexpired search time.
Certificate program. Rental certificate program.
Consolidated annual contributions contract (consolidated ACC). See
Sec. 982.151.
Contiguous MSA. In portability, an MSA that shares a common
boundary with the MSA in which the jurisdiction of the initial HA is
located.
Continuously assisted. An applicant is continuously assisted under
the 1937 Housing Act if the family is already receiving assistance
under any 1937 Housing Act program when the family is admitted to the
certificate or voucher program.
Contract authority. The maximum annual payment by HUD to an HA for
a funding increment.
Disabled person. See the definition of Person with disabilities.
Displaced person. Defined in 24 CFR 812.2.
Domicile. The legal residence of the household head or spouse as
determined in accordance with State and local law.
Drug-related criminal activity. Term means:
(1) Drug-trafficking; or
(2) Illegal use, or possession for personal use, of a controlled
substance (as defined in section 102 of the Controlled Substances Act
(21 U.S.C. 802).
Drug-trafficking. The illegal manufacture, sale or distribution, or
the possession with intent to manufacture, sell or distribute, of a
controlled substance (as defined in section 102 of the Controlled
Substances Act (21 U.S.C. 802)).
Elderly person. A person who is at least 62 years of age.
Eligibility. See Sec. 982.201.
Exception rent. In the certificate program, an initial rent
(contract rent plus any utility allowance) in excess of the published
FMR. In the certificate program, the exception rent is approved by HUD,
and is used in determining the initial contract rent. In the voucher
program, the HA may adopt a payment standard up to the exception rent
limit approved by HUD for the HA certificate program.
Fair market rent (FMR). The rent, including the cost of utilities
(except telephone), that would be required to be paid in the housing
market area to obtain privately owned, existing, decent, safe and
sanitary rental housing of modest (non-luxury) nature with suitable
amenities. Fair market rents for existing housing are established by
HUD for housing units of varying sizes (number of bedrooms), and are
published in the Federal Register in accordance with 24 CFR part 888.
Family. See 24 CFR 812.2. Family composition is discussed at
Sec. 982.201(c).
Family self-sufficiency program (FSS program). The program
established by an HA to promote self-sufficiency of assisted families,
including the provision of supportive services (42 U.S.C. 1437u). See
24 CFR part 984.
Family unit size. The appropriate number of bedrooms for a family.
Family unit size is determined by the HA under the HA subsidy
standards.
Federal preference. A preference under federal law for admission of
applicant families that are any of the following:
(1) Involuntarily displaced.
(2) Living in substandard housing (including families that are
homeless or living in a shelter for the homeless).
(3) Paying more than 50 percent of family income for rent.
Federal preference holder. An applicant that qualifies for a
federal preference.
FMR. Fair market rent.
[[Page 34697]]
FMR/exception rent limit. The Section 8 existing housing fair
market rent published by HUD headquarters, or any exception rent. In
the certificate program, the initial contract rent for a dwelling unit
plus any utility allowance may not exceed the FMR/exception rent limit
(for the dwelling unit or for the family unit size). In the voucher
program, the HA may adopt a payment standard up to the FMR/exception
rent limit.
FSS program. Family self-sufficiency program.
Funding increment. Each commitment of budget authority by HUD to an
HA under the consolidated annual contributions contract for the HA
program.
HA. Housing Agency.
HAP contract. Housing assistance payments contract.
Housing agency (HA). A State, county, municipality or other
governmental entity or public body (or agency or instrumentality
thereof) authorized to engage in or assist in the development or
operation of low-income housing, including an Indian housing authority
(IHA). (``PHA'' and ``HA'' mean the same thing.)
Housing assistance payment. The monthly assistance payment by an
HA. The total assistance payment consists of:
(1) A payment to the owner for rent to owner under the family's
lease.
(2) An additional payment to the family if the total assistance
payment exceeds the rent to owner. In the certificate program, the
additional payment is called a ``utility reimbursement''.
Housing assistance payments contract (HAP contract). A written
contract between an HA and an owner, in the form prescribed by HUD
headquarters, in which the HA agrees to make housing assistance
payments to the owner on behalf of an eligible family.
Housing quality standards (HQS). The HUD minimum quality standards
for housing assisted under the tenant-based programs. See Sec. 982.401.
HQS. Housing quality standards.
HUD. The U.S. Department of Housing and Urban Development.
HUD requirements. HUD requirements for the Section 8 programs. HUD
requirements are issued by HUD headquarters, as regulations, Federal
Register notices or other binding program directives.
IHA. Indian housing authority.
Indian. Any person recognized as an Indian or Alaska Native by an
Indian Tribe, the federal government, or any State.
Indian housing authority (IHA). A housing agency established
either:
(1) By exercise of the power of self-government of an Indian Tribe,
independent of State law; or
(2) By operation of State law providing specifically for housing
authorities for Indians.
Initial contract rent. In the certificate program, the contract
rent at the beginning of the initial lease term.
Initial HA. In portability, the term refers to both:
(1) An HA that originally selected a family that subsequently
decides to move out of the jurisdiction of the selecting HA.
(2) An HA that absorbed a family that subsequently decides to move
out of the jurisdiction of the absorbing HA.
Initial lease term. The initial term of the assisted lease. The
initial lease term must be for at least one year.
Initial rent to owner. The rent to owner at the beginning of the
initial lease term.
Jurisdiction. The area in which the HA has authority under State
and local law to administer the program.
Lease. (1) A written agreement between an owner and a tenant for
the leasing of a dwelling unit to the tenant. The lease establishes the
conditions for occupancy of the dwelling unit by a family with housing
assistance payments under a HAP Contract between the owner and the HA.
(2) In cooperative housing, a written agreement between a
cooperative and a member of the cooperative. The agreement establishes
the conditions for occupancy of the member's cooperative dwelling unit
by the member's family with housing assistance payments to the
cooperative under a HAP contract between the cooperative and the HA.
For purposes of part 982, the cooperative is the Section 8 ``owner'' of
the unit, and the cooperative member is the section 8 ``tenant''.
Lease addendum. In the lease between the tenant and the owner, the
lease language required by HUD.
Live-in aide. Defined in 24 CFR 813.102.
Local preference. A preference used by the HA to select among
applicant families without regard to their federal preference status.
Local preference limit. Ten percent of total annual waiting list
admissions to the HA's tenant-based certificate and voucher programs.
The local preference limit is used to select among applicants without
regard to their federal preference status.
Low-income family. Defined in 24 CFR 813.102. (Section 982.201(b)
describes when a low-income family is income-eligible for admission to
the certificate or voucher program.)
MSA. Metropolitan statistical area.
1937 Housing Act. The United States Housing Act of 1937 (42 U.S.C.
1437 and following sections). The HUD tenant-based program is
authorized by Section 8 of the 1937 Housing Act (42 U.S.C. 1437f).
1937 Housing Act program. Any of the following programs:
(1) The public housing program or Indian housing program.
(2) Any program assisted under Section 8 of the 1937 Act (42 U.S.C.
1437f) (including assistance under a Section 8 tenant-based or project-
based program).
(3) The Section 23 leased housing program.
(4) The Section 23 housing assistance payments program. (``Section
23'' means Section 23 of the United States Housing Act of 1937 before
enactment of the Housing and Community Development Act of 1974.)
NOFA. Notice of funding availability.
Notice of funding availability (NOFA). For funding (contract or
budget authority) that HUD distributes by competitive process, HUD
headquarters invites HA applications by publishing a NOFA in the
Federal Register. The NOFA explains how to apply for assistance, and
the criteria for awarding the funding.
Operating reserve. Administrative fee reserve.
Owner. Any person or entity with the legal right to lease or
sublease a unit to a participant.
Participant (participant family). A family that has been admitted
to the HA program, and is currently assisted in the program. The family
becomes a participant on the effective date of the first HAP contract
executed by the HA for the family (first day of initial lease term).
Payment standard. In the voucher program, an amount used by the HA
to calculate the housing assistance payment for a family. Each payment
standard amount is based on the fair market rent. The HA adopts a
payment standard for each bedroom size and for each fair market rent
area in the HA jurisdiction. The payment standard for a family is the
maximum monthly subsidy payment.
PBC. Project-based certificate program. See 24 CFR part 983.
Person with disabilities (disabled person). Defined in 24 CFR
813.102.
PHA. Public housing agency. See definition of ``housing agency''.
(``Public housing agency'' and ``housing agency'' mean the same thing.)
Portability. Renting a dwelling unit with Section 8 tenant-based
assistance outside the jurisdiction of the initial HA.
[[Page 34698]]
Premises. The building or complex in which the dwelling unit is
located, including common areas and grounds.
Program. The tenant-based certificate program or voucher program.
Project-based. Rental assistance that is attached to the structure.
Project-based certificate program (PBC). Project-based assistance
under 24 CFR part 983, using funding under the consolidated ACC for the
HA certificate program.
Project reserve. ACC reserve account. See Sec. 982.154.
Public housing agency (PHA). A Housing Agency (HA).
Ranking preference. A preference used by the HA to select among
applicant families that qualify for federal preference.
Reasonable rent. A rent to owner that is not more than either:
(1) Rent charged for comparable units in the private unassisted
market; or
(2) Rent charged by the owner for a comparable assisted or
unassisted unit in the building or premises.
Receiving HA. In portability, an HA that receives a family selected
for participation in the tenant-based program of another HA. The
receiving HA issues a certificate or voucher, and provides program
assistance to the family.
Rental certificate. Certificate.
Rental certificate program. Certificate program.
Rental voucher. Voucher.
Rental voucher program. Voucher program.
Rent to owner. The monthly rent payable to the owner under the
lease. Rent to owner includes payment for any services, maintenance and
utilities to be provided by the owner in accordance with the lease.
Residency preference. An HA preference for admission of families
that reside anywhere in a specified area, including families with a
member who works or has been hired to work in the area (``residency
preference area'').
Residency preference area. The specified area where families must
reside to qualify for a residency preference.
Special admission. Admission of an applicant that is not on the HA
waiting list, or without considering the applicant's waiting list
position.
Subsidy standards. Standards established by an HA to determine the
appropriate number of bedrooms and amount of subsidy for families of
different sizes and compositions. See definition of ``family unit
size''.
Suspension. Stopping the clock on the term of a family's
certificate or voucher, for such period as determined by the HA, from
the time when the family submits a request for HA approval to lease a
unit, until the time when the HA approves or denies the request.
Tenant. The person or persons (other than a live-in aide) who
executes the lease as lessee of the dwelling unit.
Tenant-based. Rental assistance that is not attached to the
structure.
Tenant rent. In the certificate program, total tenant payment minus
any utility allowance.
Total tenant payment. In the certificate program, defined in 24 CFR
813.102 and 24 CFR 813.107.
Unit. Dwelling unit.
United States Housing Act of 1937 (1937 Housing Act). The basic law
that authorizes the public and Indian housing programs, and the Section
8 programs. (42 U.S.C. 1437 and following sections.)
Utility allowance. Defined in 24 CFR 813.102.
Utility reimbursement. In the certificate program, the amount, if
any, by which any utility allowance for family-paid utilities or other
housing services exceeds the total tenant payment.
Very low-income family. Defined in 24 CFR 813.102.
Violent criminal activity. Any illegal criminal activity that has
as one of its elements the use, attempted use, or threatened use of
physical force against the person or property of another.
Voucher (rental voucher). A document issued by an HA to a family
selected for admission to the voucher program. The voucher describes
the program, and the procedures for HA approval of a unit selected by
the family. The voucher also states the obligations of the family under
the program.
Voucher program. Rental voucher program.
Waiting list admission. An admission from the HA waiting list.
Sec. 982.5 Notices required by this part.
Where part 982 requires any notice to be given by the HA, the
family or the owner, the notice must be in writing.
Subpart B--HUD Requirements and HA Plan for Administration of
Program
Sec. 982.51 HA authority to administer program.
(a) The HA must be a governmental entity or public body with
authority to administer the tenant-based program. The HA must provide
HUD evidence, satisfactory to HUD, of such authority, and of the HA
jurisdiction.
(b) The evidence submitted by the HA to HUD must include enabling
legislation and a supporting legal opinion satisfactory to HUD. The HA
must submit additional evidence when there is a change that affects its
status as an HA, authority to administer the program, or the HA
jurisdiction.
Sec. 982.52 HUD requirements.
(a) The HA must comply with HUD regulations and other HUD
requirements for the program. HUD requirements are issued by HUD
headquarters, as regulations, Federal Register notices or other binding
program directives.
(b) The HA must comply with the consolidated ACC and the HA's HUD-
approved applications for program funding.
Sec. 982.53 Equal opportunity requirements.
(a) Participation in the tenant-based program requires compliance
with all equal opportunity requirements imposed by contract or federal
law, including applicable requirements under:
(1) The Fair Housing Act, 42 U.S.C. 3610-3619 (implementing
regulations at 24 CFR parts 100, et seq.);
(2) Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d
(implementing regulations at 24 CFR part 1);
(3) The Age Discrimination Act of 1975, 42 U.S.C. 6101-6107
(implementing regulations at 24 CFR part 146);
(4) Executive Order 11063, Equal Opportunity in Housing (1962), as
amended, Executive Order 12259, 46 FR 1253 (1980), as amended,
Executive Order 12892, 59 FR 2939 (1994) (implementing regulations at
24 CFR part 107);
(5) Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794
(implementing regulations at 24 CFR part 8); and
(6) Title II of the Americans with Disabilities Act, 42 U.S.C.
12101, et seq.
(b) For the application of equal opportunity requirements to an
Indian Housing Authority, see 24 CFR 950.115.
(c) The HA must submit a signed certification to HUD of the HA's
intention to comply with the Fair Housing Act, Title VI of the Civil
Rights Act of 1964, the Age Discrimination Act of 1975, Executive Order
11063, Section 504 of the Rehabilitation Act of 1973 and Title II of
the Americans with Disabilities Act.
Sec. 982.54 Administrative plan.
(a) The HA must adopt a written administrative plan that
establishes local policies for administration of the program in
accordance with HUD requirements. The administrative plan and any
revisions of the plan must be
[[Page 34699]]
formally adopted by the HA Board of Commissioners or other authorized
HA officials. The administrative plan states HA policy on matters for
which the HA has discretion to establish local policies.
(b) The administrative plan must be in accordance with HUD
regulations and other requirements. The HA must revise the
administrative plan if needed to comply with HUD requirements. The HA
must give HUD a copy of the administrative plan.
(c) The HA must administer the program in accordance with the HA
administrative plan.
(d) The HA administrative plan must cover HA policies on these
subjects:
(1) How the HA selects applicants from the HA waiting list,
including applicants with federal and other preferences, and procedures
for closing and reopening the HA waiting list;
(2) Issuing or denying vouchers or certificates, including HA
policy governing the voucher or certificate term and any extensions or
suspension of the term. ``Suspension'' means stopping the clock on the
term of a family's certificate or voucher after the family submits a
request for lease approval. If the HA decides to allow extensions or
suspensions of the certificate or voucher term, the HA administrative
plan must describe how the HA determines whether to grant extensions or
suspensions, and how the HA determines the length of any extension or
suspension;
(3) Any special rules for use of available funds when HUD provides
funding to the HA for a special purpose (e.g., desegregation),
including funding for specified families or a specified category of
families;
(4) Occupancy policies, including:
(i) Definition of what group of persons may qualify as a
``family'';
(ii) Definition of when a family is considered to be ``continuously
assisted'';
(5) Encouraging participation by owners of suitable units located
outside areas of low income or minority concentration;
(6) Assisting a family that claims that illegal discrimination has
prevented the family from leasing a suitable unit;
(7) A statement of the HA policy on providing information about a
family to prospective owners;
(8) Disapproval of owners;
(9) Subsidy standards;
(10) Family absence from the dwelling unit;
(11) How to determine who remains in the program if a family breaks
up;
(12) Informal review procedures for applicants;
(13) Informal hearing procedures for participants;
(14) For the voucher program: the process for establishing and
revising payment standards, including affordability adjustments;
(15) Special policies concerning special housing types in the
program (e.g., use of shared housing); and
(16) Policies concerning payment by a family to the HA of amounts
the family owes the HA.
Subpart C--Funding and HA Application for Funding
Sec. 982.101 Allocation of funding.
(a) Allocation to HUD offices. The Department allocates budget
authority for the tenant-based programs to HUD field offices.
(b) Section 213(d) allocation. (1) Section 213(d) of the HCD Act of
1974 (42 U.S.C. 1439) establishes requirements for allocation of
assisted housing budget authority. Some budget authority is exempt by
law from allocation under section 213(d). Unless exempted by law,
budget authority for the tenant-based programs must be allocated in
accordance with section 213(d).
(2) Budget authority subject to allocation under section 213(d) is
allocated in accordance with 24 CFR part 791, subpart D. There are
three categories of section 213(d) funding allocations under part 791
of this title:
(i) funding retained in a headquarters reserve for purposes
specified by law (e.g., settlement of litigation);
(ii) funding incapable of geographic formula allocation (e.g., for
renewal of expiring funding increments); or
(iii) funding allocated by an objective fair share formula. Funding
allocated by fair share formula is distributed by a competitive
process.
(c) Competitive process. For budget authority that is distributed
by competitive process, the Department solicits applications from HAs
by publishing one or more notices of funding availability (NOFA) in the
Federal Register. See 24 CFR part 12, subpart B; and 24 CFR 791.406.
The NOFA explains how to apply for assistance, and specifies the
criteria for awarding the assistance. The NOFA may identify any special
program requirements for use of the funding.
Sec. 982.102 HA application for funding.
(a) An HA must submit an application for program funding to HUD at
the time and place and in the form required by HUD.
(b) For competitive funding under a NOFA, the application must be
submitted by an HA in accordance with the requirements of the NOFA.
(c) The application must include all information required by HUD.
HUD requirements may be stated in the HUD-required form of application,
the NOFA, or other HUD instructions.
(d) The application must meet requirements of:
(1) HUD's drug-free workplace regulations at 24 CFR part 24,
subpart F; and
(2) HUD's anti-lobbying regulations at 24 CFR part 87.
Sec. 982.103 HUD review of application.
(a) Processing applications. (1) HUD will provide opportunity for
the chief executive officer of the unit of general local government to
review and comment on an application for funding for more than 12
units. The local comment requirements are stated in 24 CFR part 791,
subpart C.
(2) For competitive funding under a NOFA, HUD must evaluate an
application on the basis of the selection criteria stated in the NOFA,
and must consider the HA capability to administer the program.
(3) HUD must consider any comments received from the unit of
general local government.
(b) Approval or disapproval of HA funding application. (1) HUD must
notify the HA of its approval or disapproval of the HA funding
application.
(2) When HUD approves an application, HUD must notify the HA of the
amount of approved funding.
(3) For budget authority that is distributed to HAs by competitive
process, documentation of the basis for provision or denial of
assistance is available for public inspection in accordance with 24 CFR
12.14(b).
Subpart D--Annual Contributions Contract and HA Administration of
Program
Sec. 982.151 Annual contributions contract.
(a) Nature of ACC. (1) An annual contributions contract (ACC) is a
written contract between HUD and an HA. Under the ACC, HUD agrees to
make payments to the HA, over a specified term, for housing assistance
payments to owners and for the HA administrative fee. The ACC specifies
the maximum annual payment by HUD, and the maximum payment over the ACC
term. The HA agrees to administer the program in accordance with HUD
regulations and requirements.
(2) HUD's commitment to make payments for each funding increment in
the HA program constitutes a separate ACC. However, commitments for all
the funding increments in an HA program
[[Page 34700]]
are listed in one consolidated contractual document called the
consolidated annual contributions contract (consolidated ACC). A single
consolidated ACC covers funding for the HA certificate program and
voucher program.
(b) Budget authority and contract authority. (1) Budget authority
is the maximum amount that may be paid by HUD to an HA over the ACC
term of a funding increment. Contract authority is the maximum annual
payment for the funding increment. Budget authority for a funding
increment is equal to contract authority times the number of years in
the increment term. Before adding a funding increment to the
consolidated ACC for an HA program, HUD reserves budget authority from
amounts authorized and appropriated by the Congress for the program.
(2) For each funding increment, the ACC specifies the initial term
over which HUD will make payments for the HA program, and the contract
authority and budget authority for the funding increment. For a given
HA fiscal year, the amount of HUD's maximum annual payment for the HA
program equals the sum of the contract authority for all of the funding
increments under the consolidated ACC. However, this maximum amount
does not include contract authority for an expired funding increment.
If the term of a funding increment expires during the HA fiscal year,
this maximum amount only includes the pro-rata portion of contract
authority for the portion of the HA fiscal year prior to expiration.
(Additional payments may be made from the ACC reserve account described
in Sec. 982.154.) However, the amount to be paid must be approved by
HUD, and may be less than the maximum payment.
Sec. 982.152 Administrative fee.
(a) Purposes of administrative fee. (1) HUD may approve
administrative fees to the HA for any of the following purposes:
(i) Ongoing administrative fee;
(ii) Preliminary fee;
(iii) Cost to help families who experience difficulty renting
appropriate housing;
(iv) Cost to coordinate supportive services for elderly and
disabled families;
(v) Cost to coordinate supportive services for families
participating in the family self-sufficiency (FSS) program;
(vi) Cost of audit by an independent public accountant; and
(vii) Other extraordinary costs determined necessary by HUD
Headquarters.
(2) For each HA fiscal year, administrative fees are specified in
the HA budget. The budget is submitted for HUD approval. Fees are paid
in the amounts approved by HUD. Administrative fees may only be
approved or paid from amounts appropriated by the Congress.
(b) Ongoing administrative fee. (1) The HA ongoing administrative
fee is paid for each program unit under HAP contract on the first day
of the month. The amount of the ongoing fee is established by HUD.
(2) If appropriations are available, HUD may pay a higher ongoing
administrative fee for a small program or a program operating over a
large geographic area. This higher fee level will not be approved
unless the HA demonstrates that it is efficiently administering its
tenant-based program, and that the higher ongoing administrative fee is
reasonable and necessary for administration of the program in
accordance with HUD requirements.
(3) HUD may pay a lower ongoing administrative fee for HA-owned
units.
(c) Preliminary fee. (1) A preliminary fee is paid by HUD for each
new unit added to the HA program. The preliminary fee is a one time fee
for each new unit supported by a new funding increment. HUD establishes
the maximum preliminary fee.
(2) The preliminary fee is used to cover expenses that the HA
documents it has incurred to help families who inquire about or apply
for the program, to lease up new units, or to pay for family self-
sufficiency program activities.
(d) Reducing HA administrative fee. HUD may reduce or offset any
administrative fee to the HA, in the amount determined by HUD, if the
HA fails to perform HA administrative responsibilities correctly or
adequately under the program (for example, HA failure to enforce HQS
requirements; or to reimburse a receiving HA promptly under portability
procedures).
Sec. 982.153 HA responsibilities.
(a) The HA must comply with the consolidated ACC, the application,
HUD regulations and other requirements, and the HA administrative plan.
(b) In administering the program, the HA must:
(1) Publish and disseminate information about the availability and
nature of housing assistance under the program;
(2) Explain the program to owners and families;
(3) Seek expanded opportunities for assisted families to locate
housing outside areas of poverty or racial concentration;
(4) Encourage owners to make units available for leasing in the
program, including owners of suitable units located outside areas of
poverty or racial concentration;
(5) Affirmatively further fair housing goals and comply with equal
opportunity requirements;
(6) Make efforts to help disabled persons find satisfactory
housing;
(7) Receive applications from families, determine eligibility,
maintain the waiting list, select applicants, issue a voucher or
certificate to each selected family, provide housing information to
families selected;
(8) Determine who can live in the assisted unit, at admission and
during the family's participation in the program;
(9) Obtain and verify evidence of citizenship and eligible
immigration status in accordance with 24 CFR part 812;
(10) Review the family's request for approval of the unit and
lease;
(11) Inspect the unit before assisted occupancy and at least
annually during the assisted tenancy;
(12) Determine the amount of the housing assistance payment for a
family;
(13) Determine the maximum rent to the owner, and whether the rent
is reasonable;
(14) Make timely housing assistance payments to an owner in
accordance with the HAP contract;
(15) Examine family income, size and composition, at admission and
during the family's participation in the program. The examination
includes verification of income and other family information;
(16) Establish and adjust HA utility allowance;
(17) Administer and enforce the housing assistance payments
contract with an owner, including taking appropriate action, as
determined by the HA, if the owner defaults (e.g., HQS violation);
(18) Determine whether to terminate assistance to a participant
family for violation of family obligations;
(19) Conduct informal reviews of certain HA decisions concerning
applicants for participation in the program;
(20) Conduct informal hearings on certain HA decisions concerning
participant families;
(21) Provide sound financial management of the program, including
engaging an independent public accountant to conduct audits; and
(22) Administer an FSS program (if applicable).
[[Page 34701]]
Sec. 982.154 ACC reserve account.
(a)(1) HUD establishes an unfunded reserve account, called the ACC
reserve account (formerly ``project reserve''), for the HA's program.
There are separate ACC reserve accounts for the HA's certificate and
voucher programs. The ACC reserve account is established and maintained
in the amount determined by HUD.
(2) At the end of each HA fiscal year, HUD credits the ACC reserve
account from the amount by which the sum of contract authority for all
funding increments under the consolidated ACC (maximum annual payment)
exceeds the amount actually approved and paid for the HA fiscal year.
However, the maximum annual payment does not include contract authority
for an expired funding increment. If the term of a funding increment
expires during the HA fiscal year, this maximum amount only includes
the pro-rata portion of contract authority for the funding increment
covering the portion of the HA fiscal year prior to expiration.
(b) HUD may approve additional payments for the HA program from
available amounts in the ACC reserve account.
Sec. 982.155 Administrative fee reserve.
(a) The HA must maintain an administrative fee reserve (formerly
``operating reserve'') for the program. There are separate
administrative fee reserve accounts for the HA's certificate and
voucher programs. The HA must credit to the administrative fee reserve
the total of:
(1) The amount by which program administrative fees paid by HUD for
an HA fiscal year exceed the HA program administrative expenses for the
fiscal year; plus
(2) Interest earned on the administrative fee reserve.
(b)(1) The HA must use funds in the administrative fee reserve to
pay program administrative expenses in excess of administrative fees
paid by HUD for an HA fiscal year. If funds in the administrative fee
reserve are not needed to cover HA administrative expenses (to the end
of the last expiring funding increment under the consolidated ACC), the
HA may use these funds for other housing purposes permitted by State
and local law. However, HUD may prohibit use of the funds for certain
purposes.
(2) The HA Board of Commissioners or other authorized officials
must establish the maximum amount that may be charged against the
administrative fee reserve without specific approval.
(3) If the HA has not adequately administered any Section 8
program, HUD may prohibit use of funds in the administrative fee
reserve, and may direct the HA to use funds in the reserve to improve
administration of the program or to reimburse ineligible expenses.
Sec. 982.156 Depositary for program funds.
(a) Unless otherwise required or permitted by HUD, all program
receipts must be promptly deposited with a financial institution
selected as depositary by the HA in accordance with HUD requirements.
(b) The HA may only withdraw deposited program receipts for use in
connection with the program in accordance with HUD requirements.
(c) The HA must enter into an agreement with the depositary in the
form required by HUD.
(d)(1) If required under a written freeze notice from HUD to the
depositary:
(i) The depositary may not permit any withdrawal by the HA of funds
held under the depositary agreement unless expressly authorized by
written notice from HUD to the depositary; and
(ii) The depositary must permit withdrawals of such funds by HUD.
(2) HUD must send the HA a copy of the freeze notice from HUD to
the depositary.
Sec. 982.157 Budget and expenditure.
(a) Budget submission. Each HA fiscal year, the HA must submit its
proposed budget for the program to HUD for approval at such time and in
such form as required by HUD.
(b) HA use of program receipts. (1) HUD payments under the
consolidated ACC, and any other amounts received by the HA in
connection with the program, must be used in accordance with the HA
HUD-approved budget. Such HUD payments and other receipts may only be
used for:
(i) Housing assistance payments; and
(ii) HA administrative fees.
(2) The HA must maintain a system to ensure that the HA will be
able to make housing assistance payments for all participants within
the amounts contracted under the consolidated ACC.
Sec. 982.158 Program accounts and records.
(a) The HA must maintain complete and accurate accounts and other
records for the program in accordance with HUD requirements, in a
manner that permits a speedy and effective audit. The records must be
in the form required by HUD, including requirements governing
computerized or electronic forms of record-keeping.
(b) The HA must furnish to HUD accounts and other records, reports,
documents and information, as required by HUD. For provisions on
electronic transmission of required family data, see 24 CFR part 908.
(c) HUD and the Comptroller General of the United States shall have
full and free access to all HA offices and facilities, and to all
accounts and other records of the HA that are pertinent to
administration of the program, including the right to examine or audit
the records, and to make copies. The HA must grant such access to
computerized or other electronic records, and to any computers,
equipment or facilities containing such records, and shall provide any
information or assistance needed to access the records.
(d) The HA must prepare a report of every unit inspection required
under this rule. Each report must specify:
(1) Any defects or deficiencies in the unit that must be corrected
to meet the HQS; and
(2) Other defects or deficiencies observed by the HA inspector (for
use if the owner later claims that the defects or deficiencies were
caused by the family).
(e) During the term of each assisted lease, and for at least three
years thereafter, the HA must keep:
(1) A copy of the executed lease;
(2) The HAP contract; and
(3) The application from the family.
(f) The HA must keep the following records for at least three
years:
(1) Records that provide income, racial, ethnic, gender, and
disability status data on program applicants and participants;
(2) An application from each ineligible family and notice that the
applicant is not eligible;
(3) HUD-required reports.;
(4) Unit inspection reports;
(5) Lead-based paint inspection records (as required by
Sec. 982.401(j));
(6) Accounts and other records supporting HA budget and financial
statements for the program; and
(7) Other records specified by HUD.
Sec. 982.159 Audit requirements.
(a) The HA must engage and pay an independent public accountant to
conduct audits in accordance with HUD requirements.
(b) The HA is subject to the audit requirements in 24 CFR part 44.
Sec. 982.160 HUD determination to administer a local program.
If the Assistant Secretary for Public and Indian Housing determines
that there is no HA organized, or that there is no HA able and willing
to implement
[[Page 34702]]
the provisions of this part for an area, HUD (or an entity acting on
behalf of HUD) may enter into HAP contracts with owners and perform the
functions otherwise assigned to HAs under this part with respect to the
area.
Sec. 982.161 Conflict of interest.
(a) Neither the HA nor any of its contractors or subcontractors may
enter into any contract or arrangement in connection with the tenant-
based programs in which any of the following classes of persons has any
interest, direct or indirect, during tenure or for one year thereafter:
(1) Any present or former member or officer of the HA (except a
participant commissioner);
(2) Any employee of the HA, or any contractor, subcontractor or
agent of the HA, who formulates policy or who influences decisions with
respect to the programs;
(3) Any public official, member of a governing body, or State or
local legislator, who exercises functions or responsibilities with
respect to the programs; or
(4) Any member of the Congress of the United States.
(b) Any member of the classes described in paragraph (a) of this
section must disclose their interest or prospective interest to the HA
and HUD.
(c) The conflict of interest prohibition under this section may be
waived by the HUD field office for good cause.
Sec. 982.162 Use of HUD-required contracts and other forms.
(a) The HA must use program contracts and other forms required by
HUD headquarters, including:
(1) The consolidated ACC between HUD and the HA;
(2) The HAP contract between the HA and the owner; and
(3) The lease language required by HUD (in the lease between the
owner and the tenant).
(b) Required program contracts and other forms must be word-for-
word in the form required by HUD headquarters. Any additions to or
modifications of required program contracts or other forms must be
approved by HUD headquarters.
Sec. 982 Fraud recoveries.
Under 24 CFR part 792, the HA may retain a portion of program fraud
losses that the HA recovers from a family or owner by litigation,
court-order or a repayment agreement.
* * * * *
Subpart F--[Reserved]
Subpart G--Leasing a Unit
Sec. 982.301 Information when family is selected.
(a) HA briefing of family. (1) When the HA selects a family to
participate in a tenant-based program, the HA must give the family an
oral briefing. The briefing must include information on the following
subjects:
(i) A description of how the program works;
(ii) Family and owner responsibilities; and
(iii) Where the family may lease a unit, including renting a
dwelling unit inside or outside the HA jurisdiction.
(2) For a family that qualifies to lease a unit outside the HA
jurisdiction under portability procedures, the briefing must include an
explanation of how portability works. The HA may not discourage the
family from choosing to live anywhere in the HA jurisdiction, or
outside the HA jurisdiction under portability procedures.
(3) If the family is currently living in a high poverty census
tract in the HA's jurisdiction, the briefing must also explain the
advantages of moving to an area that does not have a high concentration
of poor families.
(4) In briefing a family that includes any disabled person, the HA
must take appropriate steps to ensure effective communication in
accordance with 24 CFR 8.6.
(b) Information packet. When a family is selected to participate in
the program, the HA must give the family a packet that includes
information on the following subjects:
(1) The term of the certificate or voucher, and HA policy on any
extensions or suspensions of the term. If the HA allows extensions, the
packet must explain how the family can request an extension;
(2)(i) How the HA determines the housing assistance payment for a
family;
(ii) For the certificate program, information on fair market rents
and the HA utility allowance schedule;
(iii) For the voucher program, information on the payment standard
and the HA utility allowance schedule;
(3) How the HA determines the maximum rent for an assisted unit;
(4) What the family should consider in deciding whether to lease a
unit, including:
(i) The condition of a unit;
(ii) Whether the rent is reasonable;
(iii) The cost of any tenant-paid utilities and whether the unit is
energy-efficient; and
(iv) The location of the unit, including proximity to public
transportation, centers of employment, schools and shopping;
(5) Where the family may lease a unit. For a family that qualifies
to lease a unit outside the HA jurisdiction under portability
procedures, the information packet must include an explanation of how
portability works;
(6) The HUD-required ``lease addendum''. The lease addendum is the
language that must be included in the lease;
(7) The form of request for lease approval, and an explanation of
how to request HA approval to lease a unit;
(8) A statement of the HA policy on providing information about a
family to prospective owners;
(9) HA subsidy standards, including when the HA will consider
granting exceptions to the standards;
(10) The HUD brochure on how to select a unit;
(11) The HUD lead-based paint (LBP) brochure;
(12) Information on federal, State and local equal opportunity
laws, and a copy of the housing discrimination complaint form;
(13) A list of landlords or other parties known to the HA who may
be willing to lease a unit to the family, or help the family find a
unit;
(14) Notice that if the family includes a disabled person, the
family may request a current listing of accessible units known to the
HA that may be available;
(15) Family obligations under the program;
(16) The grounds on which the HA may terminate assistance for a
participant family because of family action or failure to act; and
(17) HA informal hearing procedures. This information must describe
when the HA is required to give a participant family the opportunity
for an informal hearing, and how to request a hearing.
Sec. 982.302 Issuance of certificate or voucher; Requesting HA
approval to lease a unit.
(a) When a family is selected, the HA issues a certificate or
voucher to the family. The family may search for a unit.
(b) If the family finds a unit, and the owner is willing to lease
the unit under the program, the family may request HA approval to lease
the unit. The HA has the discretion to permit a family to submit more
than one request at a time.
(c) The family must submit to the HA a request for lease approval
and a copy of the proposed lease. Both documents must be submitted
during the term of the certificate or voucher.
(d) The HA specifies the procedure for requesting approval to lease
a unit. The
[[Page 34703]]
family must submit the request for lease approval in the form and
manner required by the HA.
Sec. 982.303 Term of certificate or voucher.
(a) Initial term. The initial term of a certificate or voucher must
be at least 60 calendar days. The initial term must be stated on the
certificate or voucher.
(b) Extensions of term. (1) At its discretion the HA may grant a
family one or more extensions of the initial term in accordance with HA
policy as described in the HA administrative plan. The initial term
plus any extensions may not exceed a total period of 120 calendar days
from the beginning of the initial term. Any extension of the term is
granted by HA notice to the family.
(2) If a member of the family is a disabled person, and the family
needs an extension because of the disability, the HA must consider
whether to grant a request to extend the term of the certificate or
voucher (up to the maximum extension allowed under paragraph (b)(1) of
this section) as a reasonable accommodation.
(c) Suspension of term. The HA policy may or may not provide for
suspension of the initial or any extended term of the certificate or
voucher. At its discretion, and in accordance with HA policy as
described in the HA administrative plan, the HA may grant a family a
suspension of the certificate or voucher term if the family has
submitted a request for lease approval during the term of the
certificate or voucher. (Sec. 982.4 (definition of ``suspension'');
Sec. 982.54(d)(2)) The HA may grant a suspension for any part of the
period after the family has submitted a request for lease approval up
to the time when the HA approves or denies the request.
(d) Progress report by family to the HA. During the initial or any
extended term of a certificate or voucher, the HA may require the
family to report progress in leasing a unit. Such reports may be
required at such intervals or times as determined by the HA.
Sec. 982.304 Illegal discrimination: HA assistance to family.
A family may claim that illegal discrimination because of race,
color, religion, sex, national origin, age, familial status or
disability prevents the family from finding or leasing a suitable unit
with assistance under the program. The HA must give the family
information on how to fill out and file a housing discrimination
complaint.
Sec. 982.305 HA approval to lease a unit.
(a) Program requirements. The HA may not give approval for the
family to lease a dwelling unit, or execute a HAP contract, until the
HA has determined that all the following meet program requirements:
(1) The unit is eligible;
(2) The unit has been inspected by the HA and passes HQS;
(3) The lease is approvable and includes the lease addendum;
(4) The rent to owner is reasonable; and
(5) For a unit leased under the certificate program, the total of
contract rent plus any utility allowance does not exceed the FMR/
exception rent limit.
(b) Actions before lease term. All of the following must always be
completed before the beginning of the lease term:
(1) The HA has inspected the unit, and has determined that the unit
satisfies the HQS;
(2) The landlord and the tenant have executed the lease; and
(3) The HA has approved leasing of the unit in accordance with
program requirements.
(c) When HAP contract is executed. (1) The HA must use best efforts
to execute the HAP contract before the beginning of the lease term. The
HAP contract must be executed no later than 60 calendar days from the
beginning of the lease term.
(2) The HA may not pay any housing assistance payment to the owner
until the HAP contract has been executed.
(3) If the HAP contract is executed during the period of 60
calendar days from the beginning of the lease term, the HA will pay
housing assistance payments after execution of the HAP contract (in
accordance with the terms of the HAP contract), to cover the portion of
the lease term before execution of the HAP contract (a maximum of 60
days).
(4) Any HAP contract executed after the 60 day period is void, and
the HA may not pay any housing assistance payment to the owner.
(d) Notice to family and owner. After receiving the family's
request for approval to lease a unit, the HA must promptly notify the
family and owner whether the assisted tenancy is approved.
(e) Procedure after HA approval. If the HA has given approval for
the family to lease the unit, the owner and the HA execute the HAP
contract.
Sec. 982.306 HA disapproval of owner.
(a) The HA must not approve a unit if the HA has been informed (by
HUD or otherwise) that the owner is debarred, suspended, or subject to
a limited denial of participation under 24 CFR part 24.
(b) When directed by HUD, the HA must not approve a unit if:
(1) The federal government has instituted an administrative or
judicial action against the owner for violation of the Fair Housing Act
or other federal equal opportunity requirements, and such action is
pending; or
(2) A court or administrative agency has determined that the owner
violated the Fair Housing Act or other federal equal opportunity
requirements.
(c) In its administrative discretion, the HA may deny approval to
lease a unit from an owner for any of the following reasons:
(1) The owner has violated obligations under a housing assistance
payments contract under Section 8 of the 1937 Act (42 U.S.C. 1437f);
(2) The owner has committed fraud, bribery or any other corrupt or
criminal act in connection with any federal housing program;
(3) The owner has engaged in drug-trafficking;
(4) The owner has a history or practice of non-compliance with the
HQS for units leased under the tenant-based programs, or with
applicable housing standards for units leased with project-based
Section 8 assistance or leased under any other federal housing program;
(5) The owner has a history or practice of renting units that fail
to meet State or local housing codes; or
(6) The owner has not paid State or local real estate taxes, fines
or assessments.
(d) Nothing in this rule is intended to give any owner any right to
participate in the program.
(e) For purposes of this section, ``owner'' includes a principal or
other interested party.
Sec. 982.307 Owner responsibility for screening tenants.
(a) Owner screening. (1) Listing a family on the HA waiting list,
or selecting a family for participation in the program, is not a
representation by the HA to the owner about the family's expected
behavior, or the family's suitability for tenancy. At or before HA
approval to lease a unit, the HA must inform the owner that the HA has
not screened the family's behavior or suitability for tenancy and that
such screening is the owner's own responsibility.
(2) Owners are permitted and encouraged to screen families on the
basis of their tenancy histories. An owner may consider a family's
background with respect to such factors as:
(i) Payment of rent and utility bills;
(ii) Caring for a unit and premises;
(iii) Respecting the rights of others to the peaceful enjoyment of
their housing;
[[Page 34704]]
(iv) Drug-related criminal activity or other criminal activity that
is a threat to the life, safety or property of others; and
(v) Compliance with other essential conditions of tenancy.
(b) HA information about tenant. (1) The HA must give the owner:
(i) The family's current address (as shown in the HA records); and
(ii) The name and address (if known to the HA) of the landlord at
the family's current and prior address.
(2) When a family wants to lease a dwelling unit, the HA may offer
the owner other information in the HA possession, about the family,
including information about the tenancy history of family members, or
about drug-trafficking by family members.
(3) The HA must give the family a statement of the HA policy on
providing information to owners. The statement must be included in the
information packet that is given to a family selected to participate in
the program. The HA policy must provide that the HA will give the same
types of information to all families and to all owners.
Sec. 982.308 Lease.
(a) Tenant's legal capacity to enter lease. The tenant must have
legal capacity to enter into a lease under State or local law.
(b) HA approval of lease. The assisted lease between the tenant and
owner (including any new lease or lease revision) must be approved by
the HA. Before approving the lease or revision, the HA must determine
that the lease meets the requirements of this section.
(c) Required lease provisions. (1) ``Lease addendum'' means the
lease language required by HUD.
(2) The lease must include word-for-word all provisions of the
lease addendum (e.g., by adding the lease addendum to the form of lease
used by the owner for unassisted tenants). However, the HA may not
require families and owners to use a model program lease.
(3) If there is any conflict between the lease addendum and any
other provisions of the lease, the provisions required by HUD shall
control.
(d) Prohibited lease provisions. The lease addendum must state that
the following types of lease provisions are prohibited:
(1) Agreement to be sued. Agreement by the tenant to be sued, to
admit guilt, or to a judgment in favor of the owner, in a lawsuit
brought in connection with the lease.
(2) Treatment of personal property. Agreement by the tenant that
the owner may take, hold, or sell personal property of household
members without notice to the tenant, and a court decision on the
rights of the parties. This prohibition, however, does not apply to an
agreement by the tenant concerning disposition of personal property
left in the dwelling unit after the tenant has moved out. The owner may
dispose of this personal property in accordance with State and local
law.
(3) Excusing owner from responsibility. Agreement by the tenant not
to hold the owner or the owner's agent legally responsible for any
action or failure to act, whether intentional or negligent.
(4) Waiver of notice. Agreement by the tenant that the owner may
bring a lawsuit against the tenant without notice to the tenant.
(5) Waiver of legal proceedings. Agreement by the tenant that the
owner may evict the tenant or household members without instituting a
civil court proceeding in which the tenant has the opportunity to
present a defense, or before a court decision on the rights of the
parties.
(6) Waiver of a jury trial. Agreement by the tenant to waive any
right to a trial by jury.
(7) Waiver of right to appeal court decision. Agreement by the
tenant to waive any right to appeal, or to otherwise challenge in
court, a court decision in connection with the lease.
(8) Tenant chargeable with cost of legal actions regardless of
outcome. Agreement by the tenant to pay the owner's attorney's fees or
other legal costs even if the tenant wins in a court proceeding by the
owner against the tenant. However, the tenant may be obligated to pay
costs if the tenant loses.
(e) Utilities and appliances. The lease must specify what utilities
and appliances are to be supplied by the owner, and what utilities and
appliances are to be supplied by the family.
(f) State or local law. The HA may review the lease to determine if
the lease complies with State or local law. The HA may decline to
approve the lease if the HA determines that the lease does not comply
with State or local law.
Sec. 982.309 Term of assisted tenancy.
(a) Term of HAP contract. (1) The term of the HAP contract begins
on the first day of the term of the lease and ends on the last day of
the term of the lease.
(2) The HAP contract terminates if the lease terminates.
(b) Term of lease. (1) The initial term of the lease must be for at
least one year.
(2) The lease must provide for automatic renewal after the initial
term of the lease. The lease may provide either:
(i) For automatic renewal for successive definite terms (e.g.,
month-to-month or year-to-year); or
(ii) For automatic indefinite extension of the lease term.
(3) The term of the lease terminates if any of the following
occurs:
(i) The owner terminates the lease;
(ii) The tenant terminates the lease;
(iii) The owner and the tenant agree to terminate the lease;
(iv) The HA terminates the HAP contract; or
(v) The HA terminates assistance for the family.
(c) Relation of lease to ACC. The HA may approve the lease, and
execute the HAP contract, even if there is less than one year remaining
from the beginning of the lease term to the end of the last expiring
funding increment under the consolidated ACC.
(d) Lease termination by the family. (1) The family may terminate
the lease at any time after the first year. The lease may not require
the family to give more than 60 calendar days notice of such
termination to the owner.
(2) If the family terminates the lease on notice to the owner, the
family must give the HA a copy of the notice of termination at the same
time. Failure to do this is a breach of family obligations under the
program.
(e) New lease or revision. (1) Any new lease or lease revision must
be approved in advance by the HA. The new lease or revision must meet
the requirements of this section. The HA and owner must enter a new HAP
contract for the tenancy under the new or revised lease.
(2) The owner may offer the family a new lease, for a term
beginning at any time after the initial term. The owner must give the
tenant written notice of the offer, with a copy to the HA, at least 60
calendar days before the proposed beginning date of the new lease term.
The offer must specify a reasonable time limit for acceptance by the
family.
(f) Move from unit. The family must notify the HA and the owner
before the family moves out of the unit. Failure to do this is a breach
of family obligations under the program.
Sec. 982.310 Owner termination of tenancy.
(a) Grounds. During the term of the lease, the owner may not
terminate the tenancy except on the following grounds:
(1) Serious or repeated violation of the terms and conditions of
the lease;
(2) Violation of federal, State, or local law that imposes
obligations on the tenant in connection with the occupancy or use of
the premises; or
[[Page 34705]]
(3) Other good cause.
(b) Nonpayment by HA: Not grounds for termination of tenancy. (1)
The family is not responsible for payment of the portion of the rent to
owner covered by the housing assistance payment under the HAP contract
between the owner and the HA.
(2) The HA failure to pay the housing assistance payment to the
owner is not a violation of the lease between the tenant and the owner.
During the term of the lease the owner may not terminate the tenancy of
the family for nonpayment of the HA housing assistance payment.
(c) Criminal activity. Any of the following types of criminal
activity by the tenant, any member of the household, a guest or another
person under the tenant's control shall be cause for termination of
tenancy:
(1) Any criminal activity that threatens the health, safety or
right to peaceful enjoyment of the premises by other residents;
(2) Any criminal activity that threatens the health, safety or
right to peaceful enjoyment of their residences by persons residing in
the immediate vicinity of the premises; or
(3) Any drug-related criminal activity on or near the premises.
(d) Other good cause. (1) ``Other good cause'' for termination of
tenancy by the owner may include, but is not limited to, any of the
following examples:
(i) Failure by the family to accept the offer of a new lease or
revision;
(ii) A family history of disturbance of neighbors or destruction of
property, or of living or housekeeping habits resulting in damage to
the unit or premises;
(iii) The owner's desire to use the unit for personal or family
use, or for a purpose other than as a residential rental unit; or
(iv) A business or economic reason for termination of the tenancy
(such as sale of the property, renovation of the unit, desire to lease
the unit at a higher rental). (For statutory 90 day notice requirement
if the owner is terminating the tenancy for a business or economic
reason, see Sec. 982.455.)
(2) During the first year of the lease term, the owner may not
terminate the tenancy for ``other good cause'', unless the owner is
terminating the tenancy because of something the family did or failed
to do. For example, during this period, the owner may not terminate the
tenancy for ``other good cause'' based on any of the following grounds:
failure by the family to accept the offer of a new lease or revision;
the owner's desire to use the unit for personal or family use, or for a
purpose other than as a residential rental unit; or a business or
economic reason for termination of the tenancy (see paragraph
(d)(1)(iv) of this section).
(e) Owner notice.--(1) Notice of grounds. (i) The owner must give
the tenant a written notice that specifies the grounds for termination
of tenancy. The notice of grounds must be given at or before
commencement of the eviction action.
(ii) The notice of grounds may be included in, or may be combined
with, any owner eviction notice to the tenant.
(2) Eviction notice. (i) Owner eviction notice means a notice to
vacate, or a complaint or other initial pleading used under State or
local law to commence an eviction action.
(ii) The owner must give the HA a copy of any owner eviction notice
to the tenant.
(3) 90 day notice: HAP contract termination. The owner must give 90
calendar days notice of HAP contract termination (to HUD, the HA and
the family) in accordance with Sec. 982.455 in the following cases:
(i) If the owner terminates the tenancy for other good cause that
is a business or economic reason; or
(ii) At ``expiration'' of the HAP contract. (``Expiration'' for
this purpose is defined at Sec. 982.455(b)(2)(iii).)
(f) Eviction by court action. The owner may only evict the tenant
from the unit by instituting a court action.
(g) Regulations not applicable. 24 CFR part 247 (concerning
evictions from certain subsidized and HUD-owned projects) does not
apply to a tenancy assisted under this part 982.
Sec. 982.311 When assistance is paid.
(a) Payments under HAP contract. Housing assistance payments are
paid to the owner in accordance with the terms of the HAP contract.
Housing assistance payments may only be paid to the owner during the
lease term, and while the family is residing in the unit.
(b) Termination of payment: When owner terminates the lease.
Housing assistance payments terminate when the lease is terminated by
the owner in accordance with the lease. However, if the owner has
commenced the process to evict the tenant, and if the family continues
to reside in the unit, the HA must continue to make housing assistance
payments to the owner in accordance with the HAP contract until the
owner has obtained a court judgment or other process allowing the owner
to evict the tenant. The HA may continue such payments until the family
moves from or is evicted from the unit.
(c) Termination of payment: Other reasons for termination. Housing
assistance payments terminate if:
(1) The lease terminates;
(2) The HAP contract terminates; or
(3) The HA terminates assistance for the family.
(d) Family move-out. (1) If the family moves out of the unit, the
HA may not make any housing assistance payment to the owner for any
month after the month when the family moves out. The owner may keep the
housing assistance payment for the month when the family moves out of
the unit.
(2) If a participant family moves from an assisted unit with
continued tenant-based assistance, the term of the assisted lease for
the new assisted unit may begin during the month the family moves out
of the first assisted unit. Overlap of the last housing assistance
payment (for the month when the family moves out of the old unit) and
the first assistance payment for the new unit, is not considered to
constitute a duplicative housing subsidy.
Sec. 982.312 Absence from unit.
(a) The family may be absent from the unit for brief periods. For
longer absences, the HA administrative plan establishes the HA policy
on how long the family may be absent from the assisted unit. However,
the family may not be absent from the unit for a period of more than
180 consecutive calendar days in any circumstance, or for any reason.
At its discretion, the HA may allow absence for a lesser period in
accordance with HA policy.
(b) Housing assistance payments terminate if the family is absent
for longer than the maximum period permitted. The term of the HAP
contract and assisted lease also terminate.
(The owner must reimburse the HA for any housing assistance payment
for the period after the termination.)
(c) Absence means that no member of the family is residing in the
unit.
(d)(1) The family must supply any information or certification
requested by the HA to verify that the family is residing in the unit,
or relating to family absence from the unit. The family must cooperate
with the HA for this purpose. The family must promptly notify the HA of
absence from the unit, including any information requested on the
purposes of family absences.
(2) The HA may adopt appropriate techniques to verify family
occupancy or absence, including letters to the family at the unit,
phone calls, visits or questions to the landlord or neighbors.
(e) The HA administrative plan must state the HA policies on family
absence
[[Page 34706]]
from the dwelling unit. The HA absence policy includes:
(1) How the HA determines whether or when the family may be absent,
and for how long. For example, the HA may establish policies on
absences because of vacation, hospitalization or imprisonment; and
(2) Any provision for resumption of assistance after an absence,
including readmission or resumption of assistance to the family.
Sec. 982.313 Security deposit: Amounts owed by tenant.
(a) The owner may collect a security deposit from the tenant.
(b) The HA may prohibit security deposits in excess of private
market practice, or in excess of amounts charged by the owner to
unassisted tenants.
(c) When the tenant moves out of the dwelling unit, the owner,
subject to State or local law, may use the security deposit, including
any interest on the deposit, in accordance with the lease, as
reimbursement for any unpaid rent payable by the tenant, damages to the
unit or for other amounts the tenant owes under the lease.
(d) The owner must give the tenant a written list of all items
charged against the security deposit, and the amount of each item.
After deducting the amount, if any, used to reimburse the owner, the
owner must refund promptly the full amount of the unused balance to the
tenant.
(e) If the security deposit is not sufficient to cover amounts the
tenant owes under the lease, the owner may seek to collect the balance
from the tenant.
Sec. 982.314 Move with continued tenant-based assistance.
(a) Applicability. This section states when a participant family
may move to a new unit with continued tenant-based assistance:
(b) When family may move. A family may move to a new unit if:
(1) The assisted lease for the old unit has terminated. This
includes a termination because:
(i) The HA has terminated the HAP contract for the owner's breach;
or
(ii) The lease has terminated by mutual agreement of the owner and
the tenant.
(2) The owner has given the tenant a notice to vacate, or has
commenced an action to evict the tenant, or has obtained a court
judgment or other process allowing the owner to evict the tenant.
(3) The tenant has given notice of lease termination (if the tenant
has a right to terminate the lease on notice to the owner, for owner
breach or otherwise).
(c) How many moves. (1) A participant family may move one or more
times with continued assistance under the program, either inside the HA
jurisdiction, or under the portability procedures. (See Sec. 982.353)
(2) The HA may establish:
(i) Policies that prohibit any move by the family during the
initial year of assisted occupancy; and
(ii) Policies that prohibit more than one move by the family during
any one year period.
(3) The HA policies may apply to moves within the HA jurisdiction
by a participant family, and to moves by a participant family outside
the HA jurisdiction under portability procedures.
(d) Notice that family wants to move. (1) If the family terminates
the lease on notice to the owner, the family must give the HA a copy of
the notice at the same time.
(2) If the family wants to move to a new unit, the family must
notify the HA and the owner before moving from the old unit. If the
family wants to move to a new unit that is located outside the initial
HA jurisdiction, the notice to the initial HA must specify the area
where the family wants to move. See portability procedures in subpart H
of this part.
(e) When HA may deny permission to move. (1) The HA may deny
permission to move if the HA does not have sufficient funding for
continued assistance.
(2) At any time, the HA may deny permission to move in accordance
with Sec. 982.552 (grounds for denial or termination of assistance).
Sec. 982.315 Family break-up.
(a) The HA has discretion to determine which members of an assisted
family continue to receive assistance in the program if the family
breaks up. The HA administrative plan must state HA policies on how to
decide who remains in the program if the family breaks up.
(b) The factors to be considered in making this decision under the
HA policy may include:
(1) Whether the assistance should remain with family members
remaining in the original assisted unit.
(2) The interest of minor children or of ill, elderly or disabled
family members.
(3) Whether family members are forced to leave the unit as a result
or actual or threatened physical violence against family members by a
spouse or other member of the household.
(4) Other factors specified by the HA.
(c) If a court determines the disposition of property between
members of the assisted family in a divorce or separation under a
settlement or judicial decree, the HA is bound by the court's
determination of which family members continue to receive assistance in
the program.
Subpart H--Where Family Can Live and Move
Sec. 982.351 Overview.
This subpart describes what kind of housing is eligible for
leasing, and the areas where a family can live with tenant-based
assistance. The subpart covers:
(a) Assistance for a family that rents a dwelling unit in the
jurisdiction of the HA that originally selected the family for tenant-
based assistance.
(b) ``Portability'' assistance for a family that rents a unit
outside the jurisdiction of the initial HA.
Sec. 982.352 Eligible housing.
(a) Ineligible housing. The following types of housing may not be
assisted by an HA in the tenant-based programs:
(1) A public housing or Indian housing unit;
(2) A unit receiving project-based assistance under section 8 of
the 1937 Act (42 U.S.C. 1437f);
(3) Nursing homes, board and care homes, or facilities providing
continual psychiatric, medical, or nursing services;
(4) College or other school dormitories;
(5) Units on the grounds of penal, reformatory, medical, mental,
and similar public or private institutions;
(6) A unit occupied by its owner or by a person with any interest
in the dwelling unit. (However, assistance may be provided for a family
residing in a cooperative. In the certificate program, assistance may
be provided to the owner of a manufactured home leasing a manufactured
home space. In the case of shared housing, an owner unrelated to the
assisted family may reside in the unit, but assistance may not be paid
on behalf of the resident owner.); and
(7) For provisions on HA disapproval of an owner, see Sec. 982.306.
(b) HA-owned housing. (1) A unit that is owned by the HA that
administers the assistance under the consolidated ACC (including a unit
owned by an entity substantially controlled by the HA) may only be
assisted under the tenant-based program if:
(i) The family has been informed by the HA, both orally and in
writing, that the family has the right to select any
[[Page 34707]]
eligible dwelling unit, and an HA-owned unit is freely selected by the
family, without HA pressure or steering;
(ii) The unit is not ineligible housing;
(iii) During assisted occupancy, the family does not benefit from
any form of housing subsidy prohibited under paragraph (c) of this
section;
(iv) The initial contract rent (for a certificate program unit) and
the initial rent to owner (for a voucher program unit) has been
approved by HUD before execution of the HAP contract and commencement
of the assisted lease term; and
(v) Any adjustment of the contract rent (for a certificate program
unit) and any changes in the rent to owner (for a voucher program unit)
is approved in advance by HUD.
(2) The HA as owner is subject to the same program requirements
that apply to other owners in the program.
(c) Prohibition against other housing subsidy. A family may not
receive the benefit of tenant-based assistance while receiving the
benefit of any of the following forms of other housing subsidy, for the
same unit or for a different unit:
(1) Public or Indian housing assistance;
(2) Other Section 8 assistance (including other tenant-based
assistance);
(3) Assistance under former Section 23 of the United States Housing
Act of 1937 (before amendment by the Housing and Community Development
Act of 1974);
(4) Section 101 rent supplements;
(5) Section 236 rental assistance payments;
(6) Tenant-based assistance under the HOME Program;
(7) Rental assistance payments under Section 521 of the Housing Act
of 1949 (a Farmers Home Administration program);
(8) Any local or State rent subsidy; or
(9) Any other duplicative federal, State, or local housing subsidy,
as determined by HUD. For this purpose, ``housing subsidy'' does not
include the housing component of a welfare payment, a social security
payment received by the family, or a rent reduction because of a tax
credit.
Sec. 982.353 Where family can lease a unit with tenant-based
assistance.
(a) Assistance in the initial HA jurisdiction. The family may
receive tenant-based assistance to lease a unit located anywhere in the
jurisdiction (as determined by State and local law) of the initial HA.
(b) Portability: Assistance outside the initial HA jurisdiction.
Except as provided in paragraph (c) of this section, the family may
receive tenant-based assistance to lease a unit outside the initial HA
jurisdiction:
(1) In the same State as the initial HA;
(2) In the same metropolitan statistical area (MSA) as the initial
HA, but in a different State;
(3) In an MSA that is next to the same MSA as the initial HA, but
in a different State; or
(4) In the jurisdiction of an HA anywhere in the United States that
is administering a tenant-based program.
(c) Nonresident applicants. (1) This paragraph (c) applies if
neither the household head or spouse of an assisted family already had
a ``domicile'' (legal residence) in the jurisdiction of the initial HA
at the time when the family first submitted an application for
participation in the program to the initial HA.
(2) During the 12 month period from the time when the family is
admitted to the program, the family does not have any right to lease a
unit outside the initial HA jurisdiction. During this period, the
family may lease a unit located anywhere in the jurisdiction of the
initial HA.
(3) If both the initial HA and a receiving HA agree, the family may
lease a unit outside the HA jurisdiction under portability procedures.
(d) Income eligibility. (1) For admission to the certificate or
voucher program, a family must be income eligible in the area where the
family initially leases a unit with assistance in the certificate or
voucher program.
(2) A portable family transferring between the certificate and
voucher programs must be income-eligible for the new program in the
area where the family leases an assisted unit. This requirement applies
if the family is either:
(i) Transferring from the initial HA certificate program to the
receiving HA voucher program; or
(ii) Transferring from the initial HA voucher program to the
receiving HA certificate program.
(3) If a portable family was already a participant in the initial
HA certificate or voucher program, income eligibility is not
redetermined unless the family transfers between the programs.
(e) Leasing in-place. If the dwelling unit is approvable, a family
may select the dwelling unit occupied by the family before selection
for participation in the program.
(f) Freedom of choice. Except as provided in part 982 (e.g.,
prohibition on use of ineligible housing, housing not meeting HQS, or
housing for which the contract rent (certificate program) or rent to
owner (voucher program) exceeds a reasonable rent, the HA may not
directly or indirectly reduce the family's opportunity to select among
available units.
Sec. 982.354 Portability: Administration by initial HA outside the
initial HA jurisdiction.
(a) When a family moves under portability (in accordance with
Sec. 982.353(b)) to an area outside the initial HA jurisdiction, the
initial HA must administer assistance for the family if:
(1) The unit is located within the same State as the initial HA, in
the same metropolitan statistical area (MSA) as the initial HA (but in
a different State), or in an MSA that is next to the same MSA as the
initial HA (but in a different State); and
(2) No other HA with a tenant-based program has jurisdiction in the
area where the unit is located.
(b) In these conditions, the family remains in the program of the
initial HA. The initial HA has the same responsibilities for
administration of assistance for the family living outside the HA
jurisdiction as for other families assisted by the HA, within the HA
jurisdiction. For the purpose of permitting HA administration of
program assistance for the family in the area outside of the HA
jurisdiction as defined by State and local law (and thereby to satisfy
the family's right to portability under federal law), the federal law
and this regulation preempt limits on the HA jurisdiction under State
and local law.
(c) The initial HA may choose to use another HA, a private
management entity or other contractor or agent to help the initial HA
administer assistance outside the HA jurisdiction as defined by State
and local law.
Sec. 982.355 Portability: Administration by receiving HA.
(a) When a family moves under portability (in accordance with
Sec. 982.353(b)) to an area outside the initial HA jurisdiction,
another HA (the ``receiving HA'') must administer assistance for the
family if an HA with a tenant-based program has jurisdiction in the
area where the unit is located.
(b)(1) In these conditions, an HA with jurisdiction in the area
where the family wants to lease a unit must issue the family a
certificate or voucher. If there is more than one such HA, the initial
HA may choose the receiving HA.
(2) The receiving HA has the choice of assisting the family under
either the certificate program or the voucher program. If the family
was receiving assistance under the initial HA
[[Page 34708]]
certificate program, but is ineligible for admission to the voucher
program, a receiving HA that administers a certificate program must
provide continued assistance under the certificate program. If the
family was receiving assistance under the initial HA voucher program,
but is ineligible for admission to the certificate program, a receiving
HA that administers a voucher program must provide continued assistance
under the voucher program.
(c) Portability procedures. (1) The initial HA must determine
whether the family is income-eligible in the area where the family
wants to lease a unit.
(2) The initial HA must advise the family how to contact and
request assistance from the receiving HA. The initial HA must promptly
notify the receiving HA to expect the family.
(3) The family must promptly contact the receiving HA, and comply
with receiving HA procedures for incoming portable families.
(4) The initial HA must give the receiving HA the most recent HUD
Form 50058 (Family Report) for the family, and related verification
information. If the receiving HA opts to conduct a new reexamination,
the receiving HA may not delay issuing the family a voucher or
certificate or otherwise delay approval of a unit unless the
recertification is necessary to determine income eligibility.
(5) When the portable family requests assistance from the receiving
HA, the receiving HA must promptly inform the initial HA whether the
receiving HA will bill the initial HA for assistance on behalf of the
portable family, or will absorb the family into its own program.
(6) The receiving HA must issue a certificate or voucher to the
family. The term of the receiving HA certificate or voucher may not
expire before the expiration date of any initial HA certificate or
voucher. The receiving HA must determine whether to extend the
certificate or voucher term. The family must submit a request for lease
approval to the receiving HA during the term of the receiving HA
certificate or voucher.
(7) The receiving HA must determine the family unit size for the
portable family. The family unit size is determined in accordance with
the subsidy standards of the receiving HA.
(8) The receiving HA must promptly notify the initial HA if the
family has leased an eligible unit under the program, or if the family
fails to submit a request for lease approval for an eligible unit
within the term of the certificate or voucher.
(9) To provide tenant-based assistance for portable families, the
receiving HA must perform all HA program functions, such as
reexaminations of family income and composition. At any time, either
the initial HA or the receiving HA may make a determination to deny or
terminate assistance to the family in accordance with Sec. 982.552.
(d) Absorption by the receiving HA. (1) If funding is available
under the consolidated ACC for the receiving HA certificate or voucher
program when the portable family is received, the receiving HA may
absorb the family into the receiving HA certificate or voucher program.
After absorption, the family is assisted with funds available under the
consolidated ACC for the receiving HA tenant-based program.
(2) HUD may require that the receiving HA absorb all or a portion
of the portable families.
(e) Portability Billing. (1) To cover assistance for a portable
family, the receiving HA may bill the initial HA for housing assistance
payments and administrative fees. This paragraph (e) describes the
billing procedure.
(2) The initial HA must promptly reimburse the receiving HA for the
full amount of the housing assistance payments made by the receiving HA
for the portable family. The amount of the housing assistance payment
for a portable family in the receiving HA program is determined in the
same manner as for other families in the receiving HA program.
(3) The initial HA must promptly reimburse the receiving HA for 80
percent of the initial HA on-going administrative fee for each unit
month that the family receives assistance under the tenant-based
programs from the receiving HA.
(4) HUD may reduce the administrative fee to an initial HA, if the
HA does not promptly reimburse the receiving HA for housing assistance
payments or fees on behalf of portable families.
(5) In administration of portability, the initial HA and the
receiving HA must comply with financial procedures required by HUD,
including the use of HUD-required billing forms. The initial and
receiving HA must comply with billing and payment deadlines under the
financial procedures. HUD may assess penalties against an initial or
receiving HA for violation, as determined by HUD, of HUD portability
requirements.
(6) An HA must manage the HA tenant-based programs in a manner that
ensures that the HA has the financial ability to provide assistance for
families that move out of the HA program under the portability
procedures that have not been absorbed by the receiving HA, as well as
for families that remain in the HA program.
(7) When a portable family moves out of the tenant-based program of
a receiving HA that has not absorbed the family, the HA in the new
jurisdiction to which the family moves becomes the receiving HA, and
the first receiving HA is no longer required to provide assistance for
the family.
(f) Portability funding. (1) HUD may transfer funds for assistance
to portable families to the receiving HA from funds available under the
initial HA ACC.
(2) HUD may provide additional funding (e.g., funds for incremental
units) to the initial HA for funds transferred to a receiving HA for
portability purposes.
(3) HUD may provide additional funding (e.g., funds for incremental
units) to the receiving HA for absorption of portable families.
(4) HUD may require the receiving HA to absorb portable families.
Subpart I--Dwelling Unit: Housing Quality Standards, Subsidy
Standards, Inspection and Maintenance
Sec. 982.401 Housing quality standards (HQS).
(a) Performance and acceptability requirements. (1) This section
states the housing quality standards (HQS) for housing assisted in the
programs. Program housing must comply with the HQS, both at initial
occupancy of the dwelling unit, and during the term of the assisted
lease.
(2)(i) The HQS consist of:
(A) Performance requirements; and
(B) Acceptability criteria or HUD approved variations in the
acceptability criteria.
(ii) This section states performance and acceptability criteria for
these key aspects of housing quality:
(A) Sanitary facilities;
(B) Food preparation and refuse disposal;
(C) Space and security;
(D) Thermal environment;
(E) Illumination and electricity;
(F) Structure and materials;
(G) Interior air quality;
(H) Water supply;
(I) Lead-based paint;
(J) Access;
(K) Site and neighborhood;
(L) Sanitary condition; and
(M) Smoke detectors.
(3) All program housing must meet the HQS performance requirements
both at commencement of assisted occupancy, and throughout the assisted
tenancy.
(4)(i) In addition to meeting HQS performance requirements, the
housing
[[Page 34709]]
must meet the acceptability criteria stated in this section, unless
variations are approved by HUD.
(ii) HUD may grant approval for the HA to use acceptability
criteria variations that are based on local codes or national standards
that satisfy the purposes of the HQS.
(iii) HUD may approve acceptability criteria variations because of
local climatic or geographic conditions.
(iv) HUD will not approve acceptability criteria variations that
will unduly limit the amount and types of available rental housing
stock.
(b) Sanitary facilities.--(1) Performance requirements. The
dwelling unit must include sanitary facilities located in the unit. The
sanitary facilities must be in proper operating condition, and adequate
for personal cleanliness and the disposal of human waste. The sanitary
facilities must be usable in privacy.
(2) Acceptability criteria. (i) The bathroom must be located in a
separate private room and have a flush toilet in proper operating
condition.
(ii) The dwelling unit must have a fixed basin in proper operating
condition, with a sink trap and hot and cold running water.
(iii) The dwelling unit must have a shower or a tub in proper
operating condition with hot and cold running water.
(iv) The facilities must utilize an approvable public or private
disposal system (including a locally approvable septic system).
(c) Food preparation and refuse disposal.--(1) Performance
requirement. (i) The dwelling unit must have suitable space and
equipment to store, prepare, and serve foods in a sanitary manner.
(ii) There must be adequate facilities and services for the
sanitary disposal of food wastes and refuse, including facilities for
temporary storage where necessary (e.g, garbage cans).
(2) Acceptability criteria. (i) The dwelling unit must have an
oven, and a stove or range, and a refrigerator of appropriate size for
the family. All of the equipment must be in proper operating condition.
The equipment may be supplied by either the owner or the family. A
microwave oven may be substituted for a tenant-supplied oven and stove
or range. A microwave oven may be substituted for an owner-supplied
oven and stove or range if the tenant agrees and microwave ovens are
furnished instead of an oven and stove or range to both subsidized and
unsubsidized tenants in the building or premises.
(ii) The dwelling unit must have a kitchen sink in proper operating
condition, with a sink trap and hot and cold running water. The sink
must drain into an approvable public or private system.
(iii) The dwelling unit must have space for the storage,
preparation, and serving of food.
(iv) There must be facilities and services for the sanitary
disposal of food waste and refuse, including temporary storage
facilities where necessary (e.g., garbage cans).
(d) Space and security.--(1) Performance requirement. The dwelling
unit must provide adequate space and security for the family.
(2) Acceptability criteria. (i) At a minimum, the dwelling unit
must have a living room, a kitchen area, and a bathroom.
(ii) The dwelling unit must have at least one bedroom or living/
sleeping room for each two persons. Children of opposite sex, other
than very young children, may not be required to occupy the same
bedroom or living/sleeping room.
(iii) Dwelling unit windows that are accessible from the outside,
such as basement, first floor, and fire escape windows, must be
lockable (such as window units with sash pins or sash locks, and
combination windows with latches). Windows that are nailed shut are
acceptable only if these windows are not needed for ventilation or as
an alternate exit in case of fire.
(iv) The exterior doors of the dwelling unit must be lockable.
Exterior doors are doors by which someone can enter or exit the
dwelling unit.
(e) Thermal environment.--(1) Performance requirement. The dwelling
unit must have and be capable of maintaining a thermal environment
healthy for the human body.
(2) Acceptability criteria. (i) There must be a safe system for
heating the dwelling unit (and a safe cooling system, where present).
The system must be in proper operating condition. The system must be
able to provide adequate heat (and cooling, if applicable), either
directly or indirectly, to each room, in order to assure a healthy
living environment appropriate to the climate.
(ii) The dwelling unit must not contain unvented room heaters that
burn gas, oil, or kerosene. Electric heaters are acceptable.
(f) Illumination and electricity.--(1) Performance requirement.
Each room must have adequate natural or artificial illumination to
permit normal indoor activities and to support the health and safety of
occupants. The dwelling unit must have sufficient electrical sources so
occupants can use essential electrical appliances. The electrical
fixtures and wiring must ensure safety from fire.
(2) Acceptability criteria. (i) There must be at least one window
in the living room and in each sleeping room.
(ii) The kitchen area and the bathroom must have a permanent
ceiling or wall light fixture in proper operating condition. The
kitchen area must also have at least one electrical outlet in proper
operating condition.
(iii) The living room and each bedroom must have at least two
electrical outlets in proper operating condition. Permanent overhead or
wall-mounted light fixtures may count as one of the required electrical
outlets.
(g) Structure and materials.--(1) Performance requirement. The
dwelling unit must be structurally sound. The structure must not
present any threat to the health and safety of the occupants and must
protect the occupants from the environment.
(2) Acceptability criteria. (i) Ceilings, walls, and floors must
not have any serious defects such as severe bulging or leaning, large
holes, loose surface materials, severe buckling, missing parts, or
other serious damage.
(ii) The roof must be structurally sound and weathertight.
(iii) The exterior wall structure and surface must not have any
serious defects such as serious leaning, buckling, sagging, large
holes, or defects that may result in air infiltration or vermin
infestation.
(iv) The condition and equipment of interior and exterior stairs,
halls, porches, walkways, etc., must not present a danger of tripping
and falling. For example, broken or missing steps or loose boards are
unacceptable.
(v) Elevators must be working and safe.
(h) Interior air quality.--(1) Performance requirement. The
dwelling unit must be free of pollutants in the air at levels that
threaten the health of the occupants.
(2) Acceptability criteria. (i) The dwelling unit must be free from
dangerous levels of air pollution from carbon monoxide, sewer gas, fuel
gas, dust, and other harmful pollutants.
(ii) There must be adequate air circulation in the dwelling unit.
(iii) Bathroom areas must have one openable window or other
adequate exhaust ventilation.
(iv) Any room used for sleeping must have at least one window. If
the window is designed to be openable, the window must work.
(i) Water supply. (1) Performance requirement. The water supply
must be free from contamination.
(2) Acceptability criteria. The dwelling unit must be served by an
[[Page 34710]]
approvable public or private water supply that is sanitary and free
from contamination.
(j) Lead-based paint performance requirement.--(1) Purpose and
applicability. (i) The purpose of paragraph (j) of this section is to
implement section 302 of the Lead-Based Paint Poisoning Prevention Act,
42 U.S.C. 4822, by establishing procedures to eliminate as far as
practicable the hazards of lead-based paint poisoning for units
assisted under this part. Paragraph (j) of this section is issued under
24 CFR 35.24 (b)(4) and supersedes, for all housing to which it
applies, the requirements of subpart C of 24 CFR part 35.
(ii) The requirements of paragraph (j) of this section do not apply
to 0-bedroom units, units that are certified by a qualified inspector
to be free of lead-based paint, or units designated exclusively for
elderly. The requirements of subpart A of 24 CFR part 35 apply to all
units constructed prior to 1978 covered by a HAP contract under part
982.
(2) Definitions.
Chewable surface. Protruding painted surfaces up to five feet from
the floor or ground that are readily accessible to children under six
years of age; for example, protruding corners, window sills and frames,
doors and frames, and other protruding woodwork.
Component. An element of a residential structure identified by type
and location, such as a bedroom wall, an exterior window sill, a
baseboard in a living room, a kitchen floor, an interior window sill in
a bathroom, a porch floor, stair treads in a common stairwell, or an
exterior wall.
Defective paint surface. A surface on which the paint is cracking,
scaling, chipping, peeling, or loose.
Elevated blood lead level (EBL). Excessive absorption of lead.
Excessive absorption is a confirmed concentration of lead in whole
blood of 20 ug/dl (micrograms of lead per deciliter) for a single test
or of 15-19 ug/dl in two consecutive tests 3-4 months apart.
HEPA means a high efficiency particle accumulator as used in lead
abatement vacuum cleaners.
Lead-based paint. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1
milligram per centimeter squared (mg/cm2), or 0.5 percent by
weight or 5000 parts per million (PPM).
(3) Requirements for pre-1978 units with children under 6. (i) If a
dwelling unit constructed before 1978 is occupied by a family that
includes a child under the age of six years, the initial and each
periodic inspection (as required under this part), must include a
visual inspection for defective paint surfaces. If defective paint
surfaces are found, such surfaces must be treated in accordance with
paragraph (j)(6) of this section.
(ii) The HA may exempt from such treatment defective paint surfaces
that are found in a report by a qualified lead-based paint inspector
not to be lead-based paint, as defined in paragraph (j)(2) of this
section. For purposes of this section, a qualified lead-based paint
inspector is a State or local health or housing agency, a lead-based
paint inspector certified or regulated by a State or local health or
housing agency, or an organization recognized by HUD.
(iii) Treatment of defective paint surfaces required under this
section must be completed within 30 calendar days of HA notification to
the owner. When weather conditions prevent treatment of the defective
paint conditions on exterior surfaces within the 30 day period,
treatment as required by paragraph (j)(6) of this section may be
delayed for a reasonable time.
(iv) The requirements in this paragraph (j)(3) apply to:
(A) All painted interior surfaces within the unit (including
ceilings but excluding furniture);
(B) The entrance and hallway providing ingress or egress to a unit
in a multi-unit building; and
(C) Exterior surfaces up to five feet from the floor or ground that
are readily accessible to children under six years of age (including
walls, stairs, decks, porches, railings, windows and doors, but
excluding outbuildings such as garages and sheds).
(4) Additional requirements for pre-1978 units with children under
6 with an EBL. (i) In addition to the requirements of paragraph (j)(3)
of this section, for a dwelling unit constructed before 1978 that is
occupied by a family with a child under the age of six years with an
identified EBL condition, the initial and each periodic inspection (as
required under this part) must include a test for lead-based paint on
chewable surfaces. Testing is not required if previous testing of
chewable surfaces is negative for lead-based paint or if the chewable
surfaces have already been treated.
(ii) Testing must be conducted by a State or local health or
housing agency, an inspector certified or regulated by a State or local
health or housing agency, or an organization recognized by HUD. Lead
content must be tested by using an X-ray fluorescence analyzer (XRF) or
by laboratory analysis of paint samples. Where lead-based paint on
chewable surfaces is identified, treatment of the paint surface in
accordance with paragraph (j)(6) of this section is required, and
treatment shall be completed within the time limits in paragraph (j)(3)
of this section.
(iii) The requirements in paragraph (j)(4) of this section apply to
all protruding painted surfaces up to five feet from the floor or
ground that are readily accessible to children under six years of age:
(A) Within the unit;
(B) The entrance and hallway providing access to a unit in a multi-
unit building; and
(C) Exterior surfaces (including walls, stairs, decks, porches,
railings, windows and doors, but excluding outbuildings such as garages
and sheds).
(5) Treatment of chewable surfaces without testing. In lieu of the
procedures set forth in paragraph (j)(4) of this section, the HA may,
at its discretion, waive the testing requirement and require the owner
to treat all interior and exterior chewable surfaces in accordance with
the methods set out in paragraph (j)(6) of this section.
(6) Treatment methods and requirements. Treatment of defective
paint surfaces and chewable surfaces must consist of covering or
removal of the paint in accordance with the following requirements:
(i) A defective paint surface shall be treated if the total area of
defective paint on a component is:
(A) More than 10 square feet on an exterior wall;
(B) More than 2 square feet on an interior or exterior component
with a large surface area, excluding exterior walls and including, but
not limited to, ceilings, floors, doors, and interior walls; or
(C) More than 10 percent of the total surface area on an interior
or exterior component with a small surface area, including, but not
limited to, window sills, baseboards and trim.
(ii) Acceptable methods of treatment are: removal by wet scraping,
wet sanding, chemical stripping on or off site, replacing painted
components, scraping with infra-red or coil type heat gun with
temperatures below 1100 degrees, HEPA vacuum sanding, HEPA vacuum
needle gun, contained hydroblasting or high pressure wash with HEPA
vacuum, and abrasive sandblasting with HEPA vacuum. Surfaces must be
covered with durable materials with joints and edges sealed and caulked
as needed to prevent the escape of lead contaminated dust.
(iii) Prohibited methods of removal are: open flame burning or
torching; machine sanding or grinding without a HEPA exhaust;
uncontained
[[Page 34711]]
hydroblasting or high pressure wash; and dry scraping except around
electrical outlets or except when treating defective paint spots no
more than two square feet in any one interior room or space (hallway,
pantry, etc.) or totalling no more than twenty square feet on exterior
surfaces.
(iv) During exterior treatment soil and playground equipment must
be protected from contamination.
(v) All treatment procedures must be concluded with a thorough
cleaning of all surfaces in the room or area of treatment to remove
fine dust particles. Cleanup must be accomplished by wet washing
surfaces with a lead solubilizing detergent such as trisodium phosphate
or an equivalent solution.
(vi) Waste and debris must be disposed of in accordance with all
applicable Federal, state and local laws.
(7) Tenant protection. The owner must take appropriate action to
protect residents and their belongings from hazards associated with
treatment procedures. Residents must not enter spaces undergoing
treatment until cleanup is completed. Personal belongings that are in
work areas must be relocated or otherwise protected from contamination.
(8) Owner information responsibilities. Prior to execution of the
HAP contract, the owner must inform the HA and the family of any
knowledge of the presence of lead-based paint on the surfaces of the
residential unit.
(9) HA data collection and recordkeeping responsibilities. (i) The
HA must attempt to obtain annually from local health agencies the names
and addresses of children with identified EBLs and must annually match
this information with the names and addresses of participants under
this part. If a match occurs, the HA must determine whether local
health officials have tested the unit for lead-based paint. If the unit
has lead-based paint the HA must require the owner to treat the lead-
based paint. If the owner does not complete the corrective actions
required by this section, the family must be issued a certificate or
voucher to move.
(ii) The HA must keep a copy of each inspection report for at least
three years. If a dwelling unit requires testing, or if the dwelling
unit requires treatment of chewable surfaces based on the testing, the
HA must keep the test results indefinitely and, if applicable, the
owner certification of treatment. The records must indicate which
chewable surfaces in the dwelling units have been tested and which
chewable surfaces in the units have been treated. If records establish
that certain chewable surfaces were tested or tested and treated in
accordance with the standards prescribed in this section, such chewable
surfaces do not have to be tested or treated at any subsequent time.
(k) Access performance requirement. The dwelling unit must be able
to be used and maintained without unauthorized use of other private
properties. The building must provide an alternate means of exit in
case of fire (such as fire stairs or egress through windows).
(l) Site and Neighborhood.--(1) Performance requirement. The site
and neighborhood must be reasonably free from disturbing noises and
reverberations and other dangers to the health, safety, and general
welfare of the occupants.
(2) Acceptability criteria. The site and neighborhood may not be
subject to serious adverse environmental conditions, natural or
manmade, such as dangerous walks or steps; instability; flooding, poor
drainage, septic tank back-ups or sewage hazards; mudslides; abnormal
air pollution, smoke or dust; excessive noise, vibration or vehicular
traffic; excessive accumulations of trash; vermin or rodent
infestation; or fire hazards.
(m) Sanitary condition.--(1) Performance requirement. The dwelling
unit and its equipment must be in sanitary condition.
(2) Acceptability criteria. The dwelling unit and its equipment
must be free of vermin and rodent infestation.
(n) Smoke detectors performance requirement.--(1) Except as
provided in paragraph (n)(2) of this section, each dwelling unit must
have at least one battery-operated or hard-wired smoke detector, in
proper operating condition, on each level of the dwelling unit,
including basements but excepting crawl spaces and unfinished attics.
Smoke detectors must be installed in accordance with and meet the
requirements of the National Fire Protection Association Standard
(NFPA) 74 (or its successor standards). If the dwelling unit is
occupied by any hearing-impaired person, smoke detectors must have an
alarm system, designed for hearing-impaired persons as specified in
NFPA 74 (or successor standards).
(2) For units assisted prior to April 24, 1993, owners who
installed battery-operated or hard-wired smoke detectors prior to April
24, 1993 in compliance with HUD's smoke detector requirements,
including the regulations published on July 30, 1992, (57 FR 33846),
will not be required subsequently to comply with any additional
requirements mandated by NFPA 74 (i.e., the owner would not be required
to install a smoke detector in a basement not used for living purposes,
nor would the owner be required to change the location of the smoke
detectors that have already been installed on the other floors of the
unit).
Sec. 982.402 Subsidy standards.
(a) Purpose. (1) The HA must establish subsidy standards that
determine the number of bedrooms needed for families of different sizes
and compositions.
(2) For each family, the HA determines the appropriate number of
bedrooms under the HA subsidy standards (family unit size).
(3) The family unit size number is entered on the certificate or
voucher issued to the family. The HA issues the family a voucher or
certificate for the family unit size when a family is selected for
participation in the program.
(b) Determining family unit size. The following requirements apply
when the HA determines family unit size under the HA subsidy standards:
(1) The subsidy standards must provide for the smallest number of
bedrooms needed to house a family without overcrowding.
(2) The subsidy standards must be consistent with space
requirements under the housing quality standards (See Sec. 982.401(d)).
(3) The subsidy standards must be applied consistently for all
families of like size and composition.
(4) A child who is temporarily away from the home because of
placement in foster care is considered a member of the family in
determining the family unit size.
(5) A family that consists of a pregnant woman (with no other
persons) must be treated as a two-person family.
(6) Any live-in aide (approved by the HA to reside in the unit to
care for a family member who is disabled or is at least 50 years of
age) must be counted in determining the family unit size;
(7) Unless a live-in-aide resides with the family, the family unit
size for any family consisting of a single person must be either a zero
or one-bedroom unit, as determined under the HA subsidy standards.
(8) In determining family unit size for a particular family, the HA
may grant an exception to its established subsidy standards if the HA
determines that the exception is justified by the age, sex, health,
handicap, or relationship of family members or other personal
circumstances. (For a single person other than a disabled or elderly
person
[[Page 34712]]
or remaining family member, such HA exception may not override the
limitation in paragraph (b)(7) of this section.)
(c) Effect of family unit size--maximum subsidy. The family unit
size, as determined for a family under the HA subsidy standards, is
used to determine the maximum rent subsidy for the family:
(1) Certificate program. HUD establishes fair market rents by
number of bedrooms. The sum of the initial contract rent plus any
utility allowance may not exceed either:
(i) The FMR/exception rent limit for the family unit size; or
(ii) The FMR/exception rent limit for the unit rented by the
family.
(2) Voucher program. The HA establishes payment standards by number
of bedrooms. The payment standard for the family must be the lower of:
(i) The payment standard for the family unit size; or
(ii) The payment standard for the unit rented by the family.
(d) Size of unit occupied by family. (1) The family may lease an
otherwise acceptable dwelling unit with fewer bedrooms than the family
unit size. However, the dwelling unit must meet the applicable HQS
space requirements.
(2) The family may lease an otherwise acceptable dwelling unit with
more bedrooms than the family unit size.
Sec. 982.403 Terminating HAP contract: When unit is too big or too
small.
(a) Violation of HQS space standards. (1) Paragraph (a) of this
section applies to the tenant-based certificate program and voucher
program.
(2) If the HA determines that a unit does not meet the HQS space
standards because of an increase in family size or a change in family
composition, the HA must issue the family a new certificate or voucher,
and the family and HA must try to find an acceptable unit as soon as
possible.
(3) If an acceptable unit is available for rental by the family,
the HA must terminate the HAP contract in accordance with its terms.
(b) Certificate program only--Subsidy too big for family size.
(1) Paragraph (b) of this section applies to the tenant-based
certificate program.
(2) The HA must issue the family a new certificate, and the family
and HA must try to find an acceptable unit as soon as possible if:
(i) The family is residing in a dwelling unit with a larger number
of bedrooms than appropriate for the family unit size under the HA
subsidy standards; and
(ii) The gross rent for the unit (sum of the contract rent plus any
utility allowance for the unit size leased) exceeds the FMR/exception
rent limit for the family unit size under the HA subsidy standards.
(3) The HA must notify the family that exceptions to the subsidy
standards may be granted, and the circumstances in which the grant of
an exception will be considered by the HA.
(4) If an acceptable unit is available for rental by the family
within the FMR/exception rent limit, the HA must terminate the HAP
contract in accordance with its terms.
(c) Termination. When the HA terminates the HAP contract (under
paragraphs (a) or (b) of this section):
(1) The HA must notify the family and the owner of the termination;
and
(2) The HAP contract terminates at the end of the calendar month
that follows the calendar month in which the HA gives such notice to
the owner.
(3) The family may move to a new unit in accordance with
Sec. 982.314.
Sec. 982.404 Maintenance: Owner and family responsibility; HA
remedies.
(a) Owner obligation. (1) The owner must maintain the unit in
accordance with HQS.
(2) If the owner fails to maintain the dwelling unit in accordance
with HQS, the HA must take prompt and vigorous action to enforce the
owner obligations. HA remedies for such breach of the HQS include
termination, suspension or reduction of housing assistance payments and
termination of the HAP contract.
(3) The HA must not make any housing assistance payments for a
dwelling unit that fails to meet the HQS, unless the owner corrects the
defect within the period specified by the HA and the HA verifies the
correction. If a defect is life threatening, the owner must correct the
defect within no more than 24 hours. For other defects, the owner must
correct the defect within no more than 30 calendar days (or any HA-
approved extension).
(4) The owner is not responsible for a breach of the HQS that is
not caused by the owner, and for which the family is responsible (as
provided in Sec. 982.404(b) and Sec. 982.551(c)). (However, the HA may
terminate assistance to a family because of HQS breach caused by the
family.)
(b) Family obligation. (1) The family is responsible for a breach
of the HQS that is caused by any of the following:
(i) The family fails to pay for any utilities that the owner is not
required to pay for, but which are to be paid by the tenant;
(ii) The family fails to provide and maintain any appliances that
the owner is not required to provide, but which are to be provided by
the tenant; or
(iii) Any member of the household or guest damages the dwelling
unit or premises (damages beyond ordinary wear and tear).
(2) If an HQS breach caused by the family is life threatening, the
family must correct the defect within no more than 24 hours. For other
family-caused defects, the family must correct the defect within no
more than 30 calendar days (or any HA-approved extension).
(3) If the family has caused a breach of the HQS, the HA must take
prompt and vigorous action to enforce the family obligations. The HA
may terminate assistance for the family in accordance with
Sec. 982.552.
Sec. 982.405 HA periodic unit inspection.
(a) The HA must inspect the unit leased to a family at least
annually, and at other times as needed, to determine if the unit meets
HQS.
(b) The HA must conduct supervisory quality control HQS
inspections.
(c) In scheduling inspections, the HA must consider complaints and
any other information brought to the attention of the HA.
(d) The HA must notify the owner of defects shown by the
inspection.
(e) The HA may not charge the family or owner for initial
inspection or reinspection of the unit.
Sec. 982.406 Enforcement of HQS.
Part 982 does not create any right of the family, or any party
other than HUD or the HA, to require enforcement of the HQS
requirements by HUD or the HA, or to assert any claim against HUD or
the HA, for damages, injunction or other relief, for alleged failure to
enforce the HQS.
Subpart J--Housing Assistance Payments Contract and Owner
Responsibility
Sec. 982.451 Housing assistance payments contract.
(a) The housing assistance payments contract (HAP contract) is a
contract between the HA and an owner. In the HAP contract for tenant-
based assistance, the owner agrees to lease a specified dwelling unit
to a specified eligible family, and the HA agrees to make monthly
housing assistance payments to the owner for the family.
(b)(1) The HAP contract must be in the form required by HUD.
(2) The term of the HAP contract is the same as the term of the
lease.
(c)(1) The amount of the monthly housing assistance payment by the
HA
[[Page 34713]]
to the owner is determined by the HA in accordance with HUD regulations
and other requirements. The amount of the housing assistance payment is
subject to change during the HAP contract term.
(2) The monthly housing assistance payment by the HA is credited
toward the monthly rent to owner under the family's lease.
(3) The total of rent paid by the tenant plus the HA housing
assistance payment to the owner may not be more than the rent to owner.
The owner must immediately return any excess payment to the HA.
(4)(i) The part of the rent to owner which is paid by the tenant
may not be more than:
(A) The rent to owner; minus
(B) The HA housing assistance payment to the owner.
(ii) The owner may not demand or accept any rent payment from the
tenant in excess of this maximum, and must immediately return any
excess rent payment to the tenant.
(iii) The family is not responsible for payment of the portion of
rent to owner covered by the housing assistance payment under the HAP
contract between the owner and the HA. See Sec. 982.310(b).
(5) The HA must pay the housing assistance payment promptly when
due to the owner in accordance with the HAP contract. If the HA fails
to make timely payment, the HA may be obligated to pay a late payment
fee in accordance with State or local law. However, unless authorized
by HUD the HA may only use the following sources for payment of any
such late payment fee:
(i) Administrative fee income; or
(ii) The administrative fee reserve.
Sec. 982.452 Owner responsibilities.
(a) The owner is responsible for performing all of the owner's
obligations under the HAP contract and the lease.
(b) The owner is responsible for:
(1) Performing all management and rental functions for the assisted
unit, including selecting a certificate-holder or voucher-holder to
lease the unit, and deciding if the family is suitable for tenancy of
the unit.
(2) Maintaining the unit in accordance with HQS, including
performance of ordinary and extraordinary maintenance.
(3) Complying with equal opportunity requirements.
(4) Preparing and furnishing to the HA information required under
the HAP contract.
(5) Collecting from the family:
(i) Any security deposit.
(ii) The tenant contribution
(the part of rent to owner not covered by the housing assistance
payment).
(iii) Any charges for unit damage by the family.
(6) Enforcing tenant obligations under the lease.
(7) Paying for utilities and services (unless paid by the family
under the lease).
(c) For provisions on modifications to a dwelling unit occupied or
to be occupied by a disabled person, see 24 CFR 100.203.
Sec. 982.453 Owner breach of contract.
(a) Any of the following actions by the owner (including a
principal or other interested party) is a breach of the HAP contract by
the owner:
(1) If the owner has violated any obligation under the HAP contract
for the dwelling unit, including the owner's obligation to maintain the
unit in accordance with the HQS.
(2) If the owner has violated any obligation under any other
housing assistance payments contract under Section 8 of the 1937 Act
(42 U.S.C. 1437f).
(3) If the owner has committed fraud, bribery or any other corrupt
or criminal act in connection with any federal housing program.
(4) For projects with mortgages insured by HUD or loans made by
HUD, if the owner has failed to comply with the regulations for the
applicable mortgage insurance or loan program, with the mortgage or
mortgage note, or with the regulatory agreement; or if the owner has
committed fraud, bribery or any other corrupt or criminal act in
connection with the mortgage or loan.
(5) If the owner has engaged in drug-trafficking.
(b) The HA rights and remedies against the owner under the HAP
contract include recovery of overpayments, abatement or other reduction
of housing assistance payments, termination of housing assistance
payments, and termination of the HAP contract.
Sec. 982.454 Termination of HAP contract: Insufficient funding.
The HA may terminate the HAP contract if the HA determines, in
accordance with HUD requirements, that funding under the consolidated
ACC is insufficient to support continued assistance for families in the
program. See Sec. 982.455 concerning owner notice of termination.
Sec. 982.455 Termination of HAP contract: Expiration and opt-out.
(a) Automatic. The HAP contract terminates automatically 180
calendar days after the last housing assistance payment to the owner.
(b) Owner termination notice. (1) Law. Paragraph (b) of this
section implements Section 8(c) (9) and (10) of the 1937 Act (42 U.S.C.
1437f(c) (9) and (10)) for the tenant-based Section 8 programs.
(2) Definitions. The following terms are defined for purposes of
this section:
(i) Termination. Termination of the HAP contract because of:
(A) Owner opt-out; or
(B) Expiration of the HAP contract.
(ii) Opt-out. Owner's decision to terminate tenancy of an assisted
family for ``other good cause'' that is a business or economic reason
for termination of tenancy. See Sec. 982.310 (a)(3) and (d).
(iii) Expiration. ``Expiration'' means the occurrence of either of
the following events:
(A) Automatic termination of the HAP contract when 180 calendar
days have passed since the last housing assistance payment.
(B) An HA determination, in accordance with HUD requirements, that
the HAP contract must be terminated because there is insufficient
funding under the consolidated ACC to support continued assistance for
families in the program.
(3) Owner termination notice. Not less than 90 calendar days before
a termination of a tenant-based HAP contract because of an opt-out or
expiration, the owner must provide written notice of the termination to
the HUD field office, the HA and the family. The owner's notice must
specify the reasons for the termination. The notice must contain
sufficient detail to enable the HUD field office to evaluate whether
the termination is lawful and whether there are additional actions that
can be taken by HUD to avoid the termination. The owner's notice must
state that the owner and the HA may agree to a renewal of the HAP
contract, thus avoiding the termination.
(4) HUD review of owner termination notice. (i) The HUD field
office must review the owner's notice, and consider whether there are
additional actions which should be taken to avoid the termination.
(ii) For a unit assisted under the certificate program:
(A) The HUD field office will determine whether the HA has properly
adjusted the contract rent in accordance with the HAP contract and HUD
regulations. If not the HUD field office will require the HA to make a
proper adjustment of the contract rent in accordance with the HAP
contract and the regulation.
(B) In case of termination because of an opt-out, the owner must be
offered
[[Page 34714]]
the opportunity to enter into a new HAP contract (and assisted lease)
at the maximum initial contract rent allowed (within the FMR/exception
rent limit). However, the rent to owner may not exceed the reasonable
rent for a comparable unassisted unit.
(iii) The HUD field office will issue a written finding of the
legality of the HAP contract termination and the reasons for the
termination as stated in the owner's notice, including any actions
taken to avoid the termination. Within 30 calendar days of HUD's
finding, the owner must provide written notice of HUD's decision to the
tenant.
(iv) The owner may proceed with eviction whether the HUD field
office approves or disapproves, or fails to complete the required
review of the owner notice, before expiration of the 90 calendar day
review period.
Sec. 982.456 Third parties.
(a) Even if the family continues to occupy the unit, the HA may
exercise any rights and remedies against the owner under the HAP
contract.
(b) The family is not a party to or third party beneficiary of the
HAP contract. The family may not exercise any right or remedy against
the owner under the HAP contract. (However, the tenant may exercise any
right or remedies against the owner under the lease between the tenant
and the owner.)
(c) The HAP contract shall not be construed as creating any right
of the family or other third party (other than HUD) to enforce any
provision of the HAP contract, or to assert any claim against HUD, the
HA or the owner under the HAP contract.
Sec. 982.457 Owner refusal to lease.
(a) Section 8(t) of the 1937 Act (42 U.S.C. 1437f(t)) provides that
an owner who has entered into a HAP contract under Section 8 of the
1937 Act on behalf of any tenant in a multifamily housing project shall
not refuse:
(1) To lease any available dwelling unit in any multifamily housing
project of the owner that rents for an amount not greater than the fair
market rent for a comparable unit to a holder of a rental certificate
under Section 8 and to enter into a HAP contract respecting the unit,
if a proximate cause of the refusal is the status of the prospective
tenant as a holder of a certificate; or
(2) To lease any available dwelling unit in any multifamily housing
project of the owner to a voucher holder and to enter into a HAP
contract respecting the unit, a proximate cause of which is the status
of such prospective tenant as a holder of such voucher.
(b) For the purposes of Section 8(t), the term multifamily housing
project means a residential building containing more than four dwelling
units.
Subpart K--Rent and Housing Assistance Payment--[Reserved]
Subpart L--Family Obligations; Denial and Termination of Assistance
Sec. 982.551 Obligations of participant.
(a) Purpose. This section states the obligations of a participant
family under the program.
(b) Supplying required information.--(1) The family must supply any
information that the HA or HUD determines is necessary in the
administration of the program, including submission of required
evidence of citizenship or eligible immigration status (as provided by
24 CFR part 812). ``Information'' includes any requested certification,
release or other documentation.
(2) The family must supply any information requested by the HA or
HUD for use in a regularly scheduled reexamination or interim
reexamination of family income and composition in accordance with HUD
requirements. For provisions on reexamination and computation of family
income, see 24 CFR part 813.
(3) The family must disclose and verify social security numbers (as
provided by 24 CFR part 750) and must sign and submit consent forms for
obtaining information in accordance with 24 CFR part 760 and 24 CFR
part 813.
(4) Any information supplied by the family must be true and
complete.
(c) HQS breach caused by family. The family is responsible for an
HQS breach caused by the family as described in Sec. 982.404(b).
(d) Allowing HA inspection. The family must allow the HA to inspect
the unit at reasonable times and after reasonable notice.
(e) Violation of lease. The family may not commit any serious or
repeated violation of the lease.
(f) Family notice of move or lease termination. The family must
notify the HA and the owner before the family moves out of the unit, or
terminates the lease on notice to the owner. See Sec. 982.314(d).
(g) Owner eviction notice. The family must promptly give the HA a
copy of any owner eviction notice.
(h) Use and occupancy of unit.--(1) The family must use the
assisted unit for residence by the family. The unit must be the
family's only residence.
(2) The composition of the assisted family residing in the unit
must be approved by the HA. The family must promptly inform the HA of
the birth, adoption or court-awarded custody of a child. The family
must request HA approval to add any other family member as an occupant
of the unit.
(3) The family must promptly notify the HA if any family member no
longer resides in the unit.
(4) If the HA has given approval, a foster child or a live-in-aide
may reside in the unit. The HA has the discretion to adopt reasonable
policies concerning residence by a foster child or a live-in-aide, and
defining when HA consent may be given or denied.
(5) Members of the household may engage in legal profitmaking
activities in the unit, but only if such activities are incidental to
primary use of the unit for residence by members of the family.
(6) The family must not sublease or let the unit.
(7) The family must not assign the lease or transfer the unit.
(i) Absence from unit. The family must supply any information or
certification requested by the HA to verify that the family is living
in the unit, or relating to family absence from the unit, including any
HA-requested information or certification on the purposes of family
absences. The family must cooperate with the HA for this purpose. The
family must promptly notify the HA of absence from the unit.
(j) Interest in unit. The family must not own or have any interest
in the unit.
(k) Fraud and other program violation. The members of the family
must not commit fraud, bribery or any other corrupt or criminal act in
connection with the programs.
(l) Crime by family members. The members of the family may not
engage in drug-related criminal activity, or violent criminal activity
(see Sec. 982.553).
(m) Other housing assistance. An assisted family, or members of the
family, may not receive Section 8 tenant-based assistance while
receiving another housing subsidy, for the same unit or for a different
unit, under any duplicative (as determined by HUD or in accordance with
HUD requirements) federal, State or local housing assistance program.
Sec. 982.552 HA denial or termination of assistance for family.
(a) Action or inaction by family.--(1) This section states the
grounds on which an HA may deny assistance for an applicant or
terminate assistance for a participant under the programs because of
the family's action or failure to act. The provisions of this section
do not affect denial or termination of
[[Page 34715]]
assistance for grounds other than action or failure to act by the
family.
(2) Denial of assistance for an applicant may include any or all of
the following: denying listing on the HA waiting list, denying or
withdrawing a certificate or voucher, refusing to enter into a HAP
contract or approve a lease, and refusing to process or provide
assistance under portability procedures.
(3) Termination of assistance for a participant may include any or
all of the following: refusing to enter into a HAP contract or approve
a lease, terminating housing assistance payments under an outstanding
HAP contract, and refusing to process or provide assistance under
portability procedures.
(4) This section does not limit or affect exercise of the HA rights
and remedies against the owner under the HAP contract, including
termination, suspension or reduction of housing assistance payments, or
termination of the HAP contract.
(b) Grounds for denial or termination of assistance. The HA may at
any time deny program assistance for an applicant, or terminate program
assistance for a participant, for any of the following grounds:
(1) If the family violates any family obligations under the program
(see Sec. 982.551).
(2) If any member of the family has ever been evicted from public
housing.
(3) If an HA has ever terminated assistance under the certificate
or voucher program for any member of the family.
(4) If any member of the family commits drug-related criminal
activity, or violent criminal activity (see Sec. 982.553).
(5) If any member of the family commits fraud, bribery or any other
corrupt or criminal act in connection with any federal housing program.
(6) If the family currently owes rent or other amounts to the HA or
to another HA in connection with Section 8 or public housing assistance
under the 1937 Act.
(7) If the family has not reimbursed any HA for amounts paid to an
owner under a HAP contract for rent, damages to the unit, or other
amounts owed by the family under the lease.
(8) If the family breaches an agreement with the HA to pay amounts
owed to an HA, or amounts paid to an owner by an HA. (The HA, at its
discretion, may offer a family the opportunity to enter an agreement to
pay amounts owed to an HA or amounts paid to an owner by an HA. The HA
may prescribe the terms of the agreement.)
(9) If a family participating in the FSS program fails to comply,
without good cause, with the family's FSS contract of participation.
(10) If the family has engaged in or threatened abusive or violent
behavior toward HA personnel.
(c) HA discretion to consider circumstances.--(1) In deciding
whether to deny or terminate assistance because of action or failure to
act by members of the family, the HA has discretion to consider all of
the circumstances in each case, including the seriousness of the case,
the extent of participation or culpability of individual family
members, and the effects of denial or termination of assistance on
other family members who were not involved in the action or failure.
(2) The HA may impose, as a condition of continued assistance for
other family members, a requirement that family members who
participated in or were culpable for the action or failure will not
reside in the unit. The HA may permit the other members of a
participant family to continue receiving assistance.
(d) Requirement to sign consent forms. The HA must deny or
terminate assistance if any member of the family fails to sign and
submit consent forms for obtaining information in accordance with 24
CFR part 760 and 24 CFR part 813.
(e) Restriction on assistance to noncitizens. The family must
submit required evidence of citizenship or eligible immigration status.
See 24 CFR 812.9 for a statement of circumstances in which the HA must
deny or terminate assistance because a family member does not establish
citizenship or eligible immigration status, and the applicable informal
hearing procedures. See 24 CFR 812.10 for provisions on assistance for
mixed families (families whose members include those with eligible
immigration status, and those without eligible immigration status)
instead of denial or termination of assistance, and for provisions on
deferral of termination of assistance.
(f) Information for family. The HA must give the family a written
description of:
(1) Family obligations under the program.
(2) The grounds on which the HA may deny or terminate assistance
because of family action or failure to act.
(3) The HA informal hearing procedures.
Sec. 982.553 Crime by family members.
(a) At any time, the HA may deny assistance to an applicant, or
terminate assistance to a participant family if any member of the
family commits:
(1) Drug-related criminal activity; or
(2) Violent criminal activity.
(b) If the HA seeks to deny or terminate assistance because of
illegal use, or possession for personal use, of a controlled substance,
such use or possession must have occurred within one year before the
date that the HA provides notice to the family of the HA determination
to deny or terminate assistance. The HA may not deny or terminate
assistance for such use or possession by a family member, if the family
member can demonstrate that he or she:
(1) Has an addiction to a controlled substance, has a record of
such an impairment, or is regarded as having such an impairment; and
(2) Is recovering, or has recovered from, such addiction and does
not currently use or possess controlled substances. The HA may require
a family member who has engaged in the illegal use of drugs to submit
evidence of participation in, or successful completion of, a treatment
program as a condition to being allowed to reside in the unit.
(c) Evidence of criminal activity. In determining whether to deny
or terminate assistance based on drug-related criminal activity or
violent criminal activity, the HA may deny or terminate assistance if
the preponderance of evidence indicates that a family member has
engaged in such activity, regardless of whether the family member has
been arrested or convicted.
Sec. 982.554 Informal review for applicant.
(a) Notice to applicant. The HA must give an applicant for
participation prompt notice of a decision denying assistance to the
applicant. The notice must contain a brief statement of the reasons for
the HA decision. The notice must also state that the applicant may
request an informal review of the decision and must describe how to
obtain the informal review.
(b) Informal review process. The HA must give an applicant an
opportunity for an informal review of the HA decision denying
assistance to the applicant. The administrative plan must state the HA
procedures for conducting an informal review. The HA review procedures
must comply with the following:
(1) The review may be conducted by any person or persons designated
by the HA, other than a person who made or approved the decision under
review or a subordinate of this person.
[[Page 34716]]
(2) The applicant must be given an opportunity to present written
or oral objections to the HA decision.
(3) The HA must notify the applicant of the HA final decision after
the informal review, including a brief statement of the reasons for the
final decision.
(c) When informal review is not required. The HA is not required to
provide the applicant an opportunity for an informal review for any of
the following:
(1) Discretionary administrative determinations by the HA.
(2) General policy issues or class grievances.
(3) A determination of the family unit size under the HA subsidy
standards.
(4) An HA determination not to approve an extension or suspension
of a certificate or voucher term.
(5) An HA determination not to grant approval to lease a unit under
the program or to approve a proposed lease.
(6) An HA determination that a unit selected by the applicant is
not in compliance with HQS.
(7) An HA determination that the unit is not in accordance with HQS
because of the family size or composition.
(d) Restrictions on assistance for noncitizens. The informal
hearing provisions for the denial of assistance on the basis of
ineligible immigration status are contained in 24 CFR 812.9.
Sec. 982.555 Informal hearing for participant.
(a) When hearing is required.--(1) An HA must give a participant
family an opportunity for an informal hearing to consider whether the
following HA decisions relating to the individual circumstances of a
participant family are in accordance with the law, HUD regulations and
HA policies:
(i) A determination of the family's annual or adjusted income, and
the use of such income to compute the housing assistance payment.
(ii) A determination of the appropriate utility allowance (if any)
for tenant-paid utilities from the HA utility allowance schedule.
(iii) A determination of the family unit size under the HA subsidy
standards.
(iv) A determination that a certificate program family is residing
in a unit with a larger number of bedrooms than appropriate for the
family unit size under the HA subsidy standards, or the HA
determination to deny the family's request for an exception from the
standards.
(v) A determination to terminate assistance for a participant
family because of the family's action or failure to act (see
Sec. 982.552).
(vi) A determination to terminate assistance because the
participant family has been absent from the assisted unit for longer
than the maximum period permitted under HA policy and HUD rules.
(2) In the cases described in paragraphs (a)(1) (iv), (v) and (vi)
of this section, the HA must give the opportunity for an informal
hearing before the HA terminates housing assistance payments for the
family under an outstanding HAP contract.
(b) When hearing is not required. The HA is not required to provide
a participant family an opportunity for an informal hearing for any of
the following:
(1) Discretionary administrative determinations by the HA.
(2) General policy issues or class grievances.
(3) Establishment of the HA schedule of utility allowances for
families in the program.
(4) An HA determination not to approve an extension or suspension
of a certificate or voucher term.
(5) An HA determination not to approve a unit or lease.
(6) An HA determination that an assisted unit is not in compliance
with HQS. (However, the HA must provide the opportunity for an informal
hearing for a decision to terminate assistance for a breach of the HQS
caused by the family as described in Sec. 982.551(c).)
(7) An HA determination that the unit is not in accordance with HQS
because of the family size.
(8) A determination by the HA to exercise or not to exercise any
right or remedy against the owner under a HAP contract.
(c) Notice to family. (1) In the cases described in paragraphs
(a)(1) (i), (ii) and (iii) of this section, the HA must notify the
family that the family may ask for an explanation of the basis of the
HA determination, and that if the family does not agree with the
determination, the family may request an informal hearing on the
decision.
(2) In the cases described in paragraphs (a)(1) (iv), (v) and (vi)
of this section, the HA must give the family prompt written notice that
the family may request a hearing. The notice must:
(i) Contain a brief statement of reasons for the decision,
(ii) State that if the family does not agree with the decision, the
family may request an informal hearing on the decision, and
(iii) State the deadline for the family to request an informal
hearing.
(d) Expeditious hearing process. Where a hearing for a participant
family is required under this section, the HA must proceed with the
hearing in a reasonably expeditious manner upon the request of the
family.
(e) Hearing procedures--(1) Administrative plan. The administrative
plan must state the HA procedures for conducting informal hearings for
participants.
(2) Discover--(i) By family. The family must be given the
opportunity to examine before the HA hearing any HA documents that are
directly relevant to the hearing. The family must be allowed to copy
any such document at the family's expense. If the HA does not make the
document available for examination on request of the family, the HA may
not rely on the document at the hearing.
(ii) By HA. The HA hearing procedures may provide that the HA must
be given the opportunity to examine at HA offices before the HA hearing
any family documents that are directly relevant to the hearing. The HA
must be allowed to copy any such document at the HA's expense. If the
family does not make the document available for examination on request
of the HA, the family may not rely on the document at the hearing.
(iii) Documents. The term ``documents'' includes records and
regulations.
(3) Representation of family. At its own expense, the family may be
represented by a lawyer or other representative.
(4) Hearing officer: Appointment and authority. (i) The hearing may
be conducted by any person or persons designated by the HA, other than
a person who made or approved the decision under review or a
subordinate of this person.
(ii) The person who conducts the hearing may regulate the conduct
of the hearing in accordance with the HA hearing procedures.
(5) Evidence. The HA and the family must be given the opportunity
to present evidence, and may question any witnesses. Evidence may be
considered without regard to admissibility under the rules of evidence
applicable to judicial proceedings.
(6) Issuance of decision. The person who conducts the hearing must
issue a written decision, stating briefly the reasons for the decision.
Factual determinations relating to the individual circumstances of the
family shall be based on a preponderance of the evidence presented at
the hearing. A copy of the hearing decision shall be furnished promptly
to the family.
(f) Effect of decision. The HA is not bound by a hearing decision:
[[Page 34717]]
(1) Concerning a matter for which the HA is not required to provide
an opportunity for an informal hearing under this section, or that
otherwise exceeds the authority of the person conducting the hearing
under the HA hearing procedures.
(2) Contrary to HUD regulations or requirements, or otherwise
contrary to federal, State, or local law.
(3) If the HA determines that it is not bound by a hearing
decision, the HA must promptly notify the family of the determination,
and of the reasons for the determination.
(g) Restrictions on assistance for noncitizens. The informal
hearing provisions for the denial of assistance on the basis of
ineligible immigration status are contained in 24 CFR 812.9.
Subpart M--Special Housing Types--[Reserved]
16. Subpart E of part 982, is amended as follows:
16a. In Sec. 982.3, the definition for ``EO plan'' is removed.
17. Paragraph (f)(2) of Sec. 982.201 is revised to read as follows:
Sec. 982.201 Eligibility.
* * * * *
(f) * * *
(2) Grounds for decision. For a discussion of the grounds for
denying assistance because of action or inaction by the applicant, see
Sec. 982.552.
18-19. In Sec. 982.202, paragraph (b)(1) is amended by revising the
last sentence, and paragraph (d) is amended by removing the words ``and
EO plan'' from the end of the first sentence, to read as follows:
Sec. 982.202 How applicants are selected: General requirements.
* * * * *
(b) * * *
(1) * * * (See Sec. 982.553.)
* * * * *
20. In Sec. 982.204, paragraph (a) is amended by removing the words
``and EO plan'' from the end of the second sentence.
21. In Sec. 982.206, paragraphs (a)(2) and (b)(2) are revised to
read as follows:
Sec. 982.206 Waiting list: Opening and closing; public notice.
(a) * * *
(2) The HA must give the public notice by publication in a local
newspaper of general circulation, and also by minority media.
* * * * *
(b) * * *
(2) If the waiting list is open, the HA must accept applications
from families for whom the list is open unless there is good cause for
not accepting the applications (such as a denial of assistance because
of action or inaction by members of the family) for the grounds stated
in Sec. 982.552.
* * * * *
22. Part 983 is added to read as follows:
PART 983--SECTION 8 PROJECT-BASED CERTIFICATE PROGRAM
Subpart A--General Information
Sec.
983.1 Purpose and applicability.
983.2 Additional definitions.
983.3 Information to be submitted to HUD by the HA concerning its
plan to attach assistance to units.
983.4 HUD review of HA plans to attach assistance to units.
983.5 Housing quality standards and construction standards.
983.6 Site and neighborhood standards.
983.7 Eligible and ineligible properties and HA-owned units.
983.8 Rehabilitation: Minimum expenditure requirement.
983.9 Prohibition against new construction or rehabilitation with
U.S. Housing Act of l937 assistance and use of flexible subsidy;
pledge of Agreement or HAP contract.
983.10 Displacement, relocation, and acquisition.
983.11 Other Federal requirements.
983.12 Initial contract rents.
983.13 Annual contract rent adjustments.
983.14 Special contract rent adjustments.
Subpart B--Owner Application Submission to Agreement
983.51 HA unit selection policy, advertising, and owner application
requirements.
983.52 Rehabilitation: Initial inspection and determination of unit
eligibility.
983.53 Rehabilitation: HUD field office review of applications.
983.54 Rehabilitation: Work write-ups.
983.55 New construction: HA evaluation and technical processing.
983.56 New construction: HUD field office review of applications.
983.57 New construction: Working drawings and specifications.
Subpart C--Agreement and New Construction or Rehabilitation Period
983.101 Agreement to enter into HAP contract, and contract rents in
Agreement.
983.102 Owner selection of contractor.
983.103 New construction or rehabilitation period.
983.104 New construction or rehabilitation completion.
Subpart D--Housing Assistance Payments Contract
983.151 Housing assistance payments contract (HAP contract).
983.152 Reduction of number of units covered by HAP contract.
Subpart E--Management
983.201 Responsibilities of the HA.
983.202 Responsibilities of the owner.
983.203 Family participation.
983.204 Maintenance, operation and inspections.
983.205 Reexamination of family income and composition.
983.206 Overcrowded and underoccupied units.
983.207 Assisted tenancy and termination of tenancy.
983.208 Informal review.
Authority: 42 U.S.C. 1437f and 3535(d).
Subpart A--General Information
Sec. 983.1 Purpose and applicability.
(a) This part 983 establishes the procedures under which a Housing
Agency (HA) may, at its sole option, choose to provide Section 8
project-based assistance using funds provided to the HA for its Section
8 rental certificate program. This part 983 implements section 8(d)(2)
of the 1937 Act (42 U.S.C. 1437f(d)(2)), which directs the Department
to permit an HA to ``attach to structures'' up to 15 percent of the
Section 8 assistance provided by the HA under the certificate program.
(A 30 percent limit is applicable for certain State-assisted units).
(b) Within this 15 percent limit, the HA may attach a Section 8
housing assistance payments (HAP) contract to a structure if the owner
agrees to construct or rehabilitate the structure other than with
assistance provided under the United States Housing Act of 1937. The
purpose of the Project-Based Certificate (PBC) Program is to induce
property owners to construct standard, or upgrade substandard, rental
housing stock, and make it available to low-income families at rents
within the Section 8 existing housing fair market rents.
(c) This part 983 refers to assistance that is attached to units as
``project-based'' assistance to distinguish this assistance from the
``tenant-based'' assistance provided by the certificate and the voucher
programs under part 982 of this chapter. With tenant-based assistance,
the assisted unit is selected by the family. The HA then enters into a
HAP contract, which only covers a single unit and the specific assisted
family. If the family moves out of a unit, the HAP contract terminates.
The family
[[Page 34718]]
may move with continued tenant-based assistance to a new unit. With
project-based assistance, the HA enters into a HAP contract to make
housing assistance payments during the contract term for a specific
unit. The subsidy is paid when the owner leases the unit to an eligible
family. (The unit may be vacant for a limited time.) To fill vacant
project-based units, the HA refers families from its waiting list to
the project owner. Because the assistance is tied to the unit, a family
that moves from the unit does not have any right to continued
assistance. The unit is rented to another eligible family.
(d) Except as otherwise expressly modified or excluded by this part
983, all provisions of part 982 of this chapter apply to project-based
assistance under this part 983.
(e) The following sections in part 982 of this chapter, which
implement the tenant-based aspect of the certificate program, do not
apply to project-based assistance under this part 983: 24 CFR part 982,
subpart H (Where family can live and move); Sec. 982.314 of this
chapter (Move with continued tenant-based assistance); and Sec. 982.303
of this chapter (Term of a certificate or voucher). Other sections in
this part 983 identify other tenant-based provisions of part 982 of
this chapter that do not apply to project-based assistance under this
part 983.
(f) Subparts C and F of this part, which implement shared housing
and assistance for owners of manufactured housing for the tenant-based
aspect of the certificate program, do not apply to project-based
assistance under this part 983.
(g) HUD does not provide any separate funding for project-based
assistance. Funding for project-based assistance is part of the ACC
funding authority for the HA's entire Section 8 certificate program.
Sec. 983.2 Additional definitions.
The following definitions apply to assistance subject to this part
983, in addition to the definitions in Sec. 982.3 of this chapter:
Agreement to enter into housing assistance payments contract
(``Agreement''). A written agreement between the owner and the HA that,
upon satisfactory completion of the new construction or the
rehabilitation in accordance with requirements specified in the
Agreement, the HA will enter into a HAP contract with the owner.
15-percent limit. Fifteen percent of the total number of budgeted
units for an HA's Section 8 certificate program.
Funding source. The ACC funding authority from which the HAP
contract is to be funded. Each funding increment identified in the ACC
is a separate, potential funding source.
Percent limit. The applicable maximum number of budgeted units for
an HA's certificate program that may be project-based. (The applicable
percent limit is either the 15-percent limit or the 30-percent limit.)
Project-based Certificate (PBC) program. A Section 8 program
administered by an HA pursuant to 24 CFR part 983.
Repair or replacement of a major building system or component. The
complete electrical rewiring of a unit; the installation of new
plumbing supply or waste pipes in a unit; the installation of a new
heating distribution system, including piping and ductwork, or the
installation of a new boiler or furnace; the installation of a new
roof; or the replacement or major repair of exterior structural
elements which are essential to achieve a stable general condition with
no threat of further deterioration.
State certified appraiser. Any individual who satisfies the
requirements for certification as a certified general appraiser in a
State that has adopted criteria that currently meet or exceed the
minimum certification criteria issued by the Appraiser Qualifications
Board of the Appraisal Foundation. The State criteria must include a
requirement that the individual have achieved a satisfactory grade upon
a State-administered examination consistent with and equivalent to the
Uniform State Certification Examination issued or endorsed by the
Appraiser Qualifications Board of the Appraisal Foundation.
Furthermore, if the Appraisal Foundation has issued a finding that the
policies, practices, or procedures of the state are inconsistent with
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, an individual must comply with any additional standards for state
certified appraisers imposed by HUD under 24 CFR 267.11(c)(1).
30-Percent limit. Thirty percent of the total number of budgeted
units for a HA's Section 8 certificate program.
Sec. 983.3 Information to be submitted to HUD by the HA concerning its
plan to attach assistance to units.
(a) Requirements. An HA may attach certificate assistance to units
in accordance with this part 983 if:
(1) The number of units to be project-based does not exceed the
applicable percent limit.
(2) The number of units to be project-based are not under a tenant-
based or project-based HAP contract or otherwise committed (e.g.,
certificates issued to families searching for housing or units under an
Agreement).
(b) Percent limit. The applicable percent limit is either the 15-
percent limit or the 30-percent limit. The 30-percent limit is only
applicable if:
(1) There are no project-based new construction units in the HA's
certificate program;
(2) The additional 15 percent of project-based units (in excess of
the 15-percent limit) is for the rehabilitation of units in projects
assisted under a State program that permits owners to prepay State-
assisted or subsidized mortgages; and
(3) The additional 15 percent of project-based units is necessary
to provide incentives for project owners to preserve the projects for
occupancy by low and moderate income families for the term of the HAP
contract, and assist low-income tenants to afford any rent increases.
(c) HA notification to HUD of intent to attach assistance to units.
Before implementing a PBC program, the HA must submit the following
information to the HUD field office for review:
(1) The total number of units for which the HA is requesting
approval to attach assistance;
(2) The number of budgeted certificate units;
(3) The number of certificate units available to be project-based;
i.e., the number of budgeted certificate units that are not under a
tenant-based or project-based HAP contract or otherwise committed
(e.g., certificates issued to families searching for housing or units
under an Agreement).
Sec. 983.4 HUD review of HA plans to attach assistance to units.
(a) Notice to HA. (1) If the requirements of Sec. 983.3 are
satisfied, the field office must authorize the HA to proceed in
accordance with this part 983.
(2) If the submission is approved, the field office must notify the
HA that the HA may implement a PBC program subject to the requirements
of this part 983, including the requirements for approval by the HUD
field office of the HA unit selection policy and advertisement, and
competitive selection of eligible units. The approval letter must
specify the maximum number of units for which the HA may execute
Agreements.
(3) If any of the requirements of Sec. 983.3 are not satisfied, the
field office must not approve the HA submission. The field office must
notify the HA of the reasons for disapproval.
(b) [Reserved]
[[Page 34719]]
Sec. 983.5 Housing quality standards and construction standards.
Section 982.401, Housing quality standards, applies to assistance
under this part. In addition, Sec. 882.109 (m), (n), and (p) of this
title apply.
Sec. 983.6 Site and neighborhood standards.
(a) Rehabilitation site and neighborhood standards. In addition to
meeting the standards required in Sec. 982.401(l) of this chapter, the
proposed sites for rehabilitation units must meet the following site
and neighborhood standards:
(1) Be adequate in size, exposure and contour to accommodate the
number and type of units proposed; adequate utilities and streets must
be available to service the site. (The existence of a private disposal
system and private sanitary water supply for the site, approved in
accordance with law, may be considered adequate utilities.)
(2) Be suitable from the standpoint of facilitating and furthering
full compliance with the applicable provisions of Title VI of the Civil
Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, E.O.
11063, and HUD regulations issued pursuant thereto.
(3) Promote greater choice of housing opportunities and avoid undue
concentration of assisted persons in areas containing a high proportion
of low-income persons.
(4) Be accessible to social, recreational, educational, commercial,
and health facilities and services, and other municipal facilities and
services that are at least equivalent to those typically found in
neighborhoods consisting largely of unassisted, standard housing of
similar market rents.
(5) Be so located that travel time and cost via public
transportation or private automobile from the neighborhood to places of
employment providing a range of jobs for lower-income workers is not
excessive. (While it is important that housing for the elderly not be
totally isolated from employment opportunities, this requirement need
not be adhered to rigidly for such projects.)
(b) New construction site and neighborhood standards. The proposed
sites for new construction units must be approved by the HUD field
office as meeting the following site and neighborhood standards:
(1) The site must be adequate in size, exposure, and contour to
accommodate the number and type of units proposed, and adequate
utilities (water, sewer, gas, and electricity) and streets must be
available to service the site.
(2) The site and neighborhood must be suitable from the standpoint
of facilitating and furthering full compliance with the applicable
provisions of title VI of the Civil Rights Act of 1964, the Fair
Housing Act, Executive Order 11063, and implementing HUD regulations.
(3)(i) The site must not be located in an area of minority
concentration, except as permitted under paragraph (b)(3)(ii) of this
section, and must not be located in a racially mixed area if the
project will cause a significant increase in the proportion of minority
to non-minority residents in the area.
(ii) A project may be located in an area of minority concentration
only if:
(A) Sufficient, comparable opportunities exist for housing for
minority families, in the income range to be served by the proposed
project, outside areas of minority concentration (see paragraph
(b)(3)(iii) of this section for further guidance on this criterion); or
(B) The project is necessary to meet overriding housing needs that
cannot be met in that housing market area (see paragraph (b)(3)(iv) of
this section for further guidance on this criterion).
(iii)(A) ``Sufficient'' does not require that in every locality
there be an equal number of assisted units within and outside of areas
of minority concentration. Rather, application of this standard should
produce a reasonable distribution of assisted units each year, that,
over a period of several years, will approach an appropriate balance of
housing choices within and outside areas of minority concentration. An
appropriate balance in any jurisdiction must be determined in light of
local conditions affecting the range of housing choices available for
low-income minority families and in relation to the racial mix of the
locality's population.
(B) Units may be considered ``comparable opportunities'' if they
have the same household type (elderly, disabled, family, large family)
and tenure type (owner/renter); require approximately the same tenant
contribution towards rent; serve the same income group; are located in
the same housing market; and are in standard condition.
(C) Application of this sufficient, comparable opportunities
standard involves assessing the overall impact of HUD-assisted housing
on the availability of housing choices for low-income minority families
in and outside areas of minority concentration, and must take into
account the extent to which the following factors are present, along
with other factors relevant to housing choice:
(1) A significant number of assisted housing units are available
outside areas of minority concentration.
(2) There is significant integration of assisted housing projects
constructed or rehabilitated in the past 10 years, relative to the
racial mix of the eligible population.
(3) There are racially integrated neighborhoods in the locality.
(4) Programs are operated by the locality to assist minority
families that wish to find housing outside areas of minority
concentration.
(5) Minority families have benefited from local activities (e.g.,
acquisition and write-down of sites, tax relief programs for
homeowners, acquisitions of units for use as assisted housing units)
undertaken to expand choice for minority families outside of areas of
minority concentration.
(6) A significant proportion of minority households has been
successful in finding units in non-minority areas under the Section 8
certificate and voucher programs.
(7) Comparable housing opportunities have been made available
outside areas of minority concentration through other programs.
(iv) Application of the ``overriding housing needs'' criterion, for
example, permits approval of sites that are an integral part of an
overall local strategy for the preservation or restoration of the
immediate neighborhood and of sites in a neighborhood experiencing
significant private investment that is demonstrably changing the
economic character of the area (a ``revitalizing area''). An
``overriding housing need,'' however, may not serve as the basis for
determining that a site is acceptable if the only reason the need
cannot otherwise be feasibly met is that discrimination on the basis of
race, color, religion, sex, national origin, age, familial status or
disability renders sites outside areas of minority concentration
unavailable or if the use of this standard in recent years has had the
effect of circumventing the obligation to provide housing choice.
(4) The site must promote greater choice of housing opportunities
and avoid undue concentration of assisted persons in areas containing a
high proportion of low-income persons.
(5) The neighborhood must not be one which is seriously detrimental
to family life or in which substandard dwellings or other undesirable
conditions predominate, unless there is actively in progress a
concerted program to remedy the undesirable conditions.
(6) The housing must be accessible to social, recreational,
educational, commercial, and health facilities and
[[Page 34720]]
services, and other municipal facilities and services that are at least
equivalent to those typically found in neighborhoods consisting largely
of unassisted, standard housing of similar market rents.
(7) Except for new construction housing designed for elderly
persons, travel time and cost via public transportation or private
automobile, from the neighborhood to places of employment providing a
range of jobs for lower-income workers, must not be excessive.
Sec. 983.7 Eligible and ineligible properties and HA-owned units.
(a) Section 982.352 of this chapter, Eligible Housing, does not
apply. Newly constructed and existing structures of various types may
be appropriate for attaching assistance to the units under this part
983, including single-family housing and multifamily structures.
(b) An HA may not attach assistance under this part 983 to units in
the following types of housing:
(1) Housing for which the construction is started before Agreement
execution;
(2) Housing for which the rehabilitation is started before
Agreement execution;
(3) Shared housing; nursing homes; and facilities providing
continual psychiatric, medical, nursing services, board and care or
intermediate care;
(4) Units within the grounds of penal, reformatory, medical,
mental, and similar public or private institutions;
(5) Housing located in the Coastal Barrier Resources System
designated under the Coastal Barrier Resources Act; or
(6) Housing located in an area that has been identified by the
Federal Emergency Management Agency (FEMA) as having special flood
hazards, unless:
(i)(A) The community in which the area is situated is participating
in the National Flood Insurance Program (see 44 CFR parts 59 through
79); or
(B) Less than a year has passed since FEMA notification regarding
such hazards; and
(ii) The HA will ensure that flood insurance on the structure is
obtained in compliance with section 102(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4001 et seq.).
(7) A public housing or Indian housing unit.
(c) An HA may attach assistance under this part 983 to a highrise
elevator project for families with children only if HUD determines
there is no practical alternative. HUD may make this determination for
an HA's project-based assistance, in whole or in part, and need not
review each project on a case-by-case basis.
(d) An HA may attach assistance to units under this part 983 for
use as single room occupancy (SRO) housing only if:
(1) The property is located in an area in which there is a
significant demand for these units, as determined by the HUD field
office;
(2) The HA and the unit of general local government in which the
property is located approve the attaching of assistance to these units;
and
(3) The HA and the unit of general local government certify to HUD
that the property meets applicable local health and safety standards.
(e) Assistance may not be attached to a unit that is occupied by an
owner; however, cooperatives are considered to be rental housing for
purposes of this part 983.
(f) In no event may any occupant of a unit with project-based
assistance under this part 983 receive the benefit of any of the
following: any other form of Section 8 assistance, rent supplement,
Section 23 housing assistance, or Section 236 ``deep subsidy'' rental
assistance payments.
(g)(1) HA-owned unit means a unit (other than public housing) that
is owned by the HA which administers the assistance under this part 983
pursuant to an ACC between HUD and the HA (including a unit owned by an
entity substantially controlled by the HA).
(2) An HA-owned unit may only be assisted under the project-based
certificate program if:
(i) The HA-owned unit is not ineligible housing under this section.
(ii) The HUD field office selects the HA-owned unit pursuant to the
competitive ranking and rating process specified in the HA's HUD-
approved unit selection policy (see Sec. 983.51).
(iii) The HUD field office establishes the initial contract rents.
(iv) The HUD field office has conducted all HA reviews required
under this part before execution of the Agreement.
(3) Any adjustment of the contract rent for an HA-owned unit must
be approved in advance by the HUD field office.
(4) As owner of an HA-owned unit, the HA is subject to all of the
same program requirements that apply to other owners in the program.
(5) HUD headquarters establishes the amount of the administrative
fee for an HA-owned unit. The HA will earn a lower ongoing
administrative fee for an HA-owned unit than for a unit not owned by
the HA, and no fee for the cost to help a family experiencing
difficulty in renting appropriate housing.
(6) HA-owned units are subject to the same requirements as units
that are not HA-owned, including the ineligibility of units that are
currently public or Indian housing and units constructed or
rehabilitated with other assistance under the U.S. Housing Act of 1937.
Sec. 983.8 Rehabilitation: Minimum expenditure requirement.
(a) To qualify as rehabilitation under this part 983, existing
structures must require a minimum expenditure of $1000 per assisted
unit, including the unit's prorated share of work to be accomplished on
common areas or systems, in order to:
(1) Upgrade the property to decent, safe, and sanitary condition to
comply with the housing quality standards or other standards approved
by HUD, from a condition below those standards;
(2) Repair or replace major building systems or components in
danger of failure within two years from the date of the initial HA
inspection;
(3) Convert or merge units to provide housing for large families;
or
(4) For up to seven percent of the units to be assisted, make
accessibility improvements to the property necessary to meet the
requirements of Section 504 of the Rehabilitation Act of 1973 and the
Fair Housing Amendments Act of 1988.
(b) In determining the minimum expenditure of $1000 per assisted
unit, the HA must include the prorated cost of common improvements in
the costs of the individual units.
Sec. 983.9 Prohibition against new construction or rehabilitation with
U.S. Housing Act of 1937 assistance and use of flexible subsidy; pledge
of Agreement or HAP contract.
(a) Assistance may not be attached to any unit which was in the
five years before execution of the Agreement, or will be, constructed
or rehabilitated with other assistance under the U.S. Housing Act of
1937 (e.g., public housing (development or modernization), rental
rehabilitation grants under 24 CFR part 511, housing development grants
under 24 CFR part 850, or other Section 8 programs). In addition, a
unit to which assistance is to be attached under this part 983 may not
be rehabilitated with flexible subsidy assistance under part 219 of
this title. HUD may approve attachment of assistance to a unit that was
rehabilitated with public housing modernization funds before conveyance
to a resident management corporation under section 21 of the U.S.
Housing Act of 1937 (42 U.S.C. 1437s) if
[[Page 34721]]
attachment of project-based assistance would further the purposes of
the sale of the public housing project to the corporation.
(b) If an owner is proposing to pledge the Agreement or HAP
contract as security for financing, the owner must submit the financing
documents to the HA. In determining the approvability of a pledge
arrangement, the HA must review the documents submitted by the owner to
ensure that the financing documents do not modify the Agreement or HAP
contract, and do not contain any requirements inconsistent with the
Agreement or HAP contract. Any pledge of the Agreement or HAP contract
must be limited to amounts payable under the HAP contract in accordance
with the terms of the HAP contract.
Sec. 983.10 Displacement, relocation, and acquisition.
(a) Minimizing displacement. (1) Consistent with the other goals
and objectives of this part, an owner must assure that it has taken all
reasonable steps to minimize the displacement of persons (households,
businesses, nonprofit organizations, and farms) as a result of a
rehabilitation project assisted under this part.
(2) Whenever a building or complex is rehabilitated and some, but
not all, of the rehabilitated units will be assisted upon completion of
the rehabilitation, the relocation requirements described in this
section cover the occupants of each rehabilitated unit, whether or not
Section 8 assistance will be provided for the unit.
(b) Temporary relocation. The following policies cover residential
tenants who will not be required to move permanently but who must
relocate temporarily for the project. Such tenants must be provided:
(1) Reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the temporary relocation, including the
cost of moving to and from the temporary housing and any increase in
monthly rent/utility costs;
(2) Appropriate advisory services, including reasonable advance
written notice of:
(i) The date and approximate duration of the temporary relocation;
(ii) The location of the suitable, decent, safe and sanitary
dwelling to be made available for the temporary period;
(iii) The terms under which the tenant may lease and occupy a
suitable, decent, safe, and sanitary dwelling in the project upon
completion of the project; and
(iv) The assistance required under paragraph (b)(1) of this
section.
(c) Relocation assistance for displaced persons. A ``displaced
person'' (defined in paragraph (g) of this section) must be provided
relocation assistance at the levels described in, and in accordance
with the requirements of, the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C.
4201-4655) and implementing regulations at 49 CFR part 24. A
``displaced person'' must be advised of his/her rights under the Fair
Housing Act (42 U.S.C. 3600-3620), and, if the representative
comparable replacement dwelling used to establish the amount of the
replacement housing payment to be provided to a minority is located in
an area of minority concentration, such person must also be given, if
possible, referrals to comparable and suitable, decent, safe, and
sanitary replacement dwellings not located in such areas.
(d) Real property acquisition requirements. The acquisition of real
property for a project is subject to the URA and the requirements of 49
CFR part 24, subpart B.
(e) Appeals. A person who disagrees with the HA's determination
concerning whether the person qualifies as a ``displaced person,'' or
the amount of relocation assistance for which the person is eligible,
may file a written appeal of that determination with the HA. A person
who is dissatisfied with the HA's determination on the appeal may
submit a written request for review of that determination to the HUD
field office responsible for administering the URA requirements in the
jurisdiction.
(f) Responsibility of HA. (1) The HA must provide assurance of
compliance as required by 49 CFR part 24 that it will comply with the
URA, the regulations at 49 CFR part 24, and the requirements of this
section, and must ensure such compliance notwithstanding any third
party's contractual obligation to the HA to comply with these
provisions.
(2) The cost of required relocation assistance may be paid for with
funds provided by the owner, or with local public funds, or with funds
available from other sources. The cost of HA advisory services for
temporary relocation of tenants may be paid from preliminary fees or
ongoing administrative fees.
(3) The HA must maintain records in sufficient detail to
demonstrate compliance with the provisions of this section. The HA must
maintain data on the race, ethnicity, gender, and disability of
displaced persons.
(g) Definition of displaced person. (1) For purposes of this
section, the term displaced person means a person (household, business,
nonprofit organization, or farm) that moves from real property, or
moves personal property from real property, permanently, as a direct
result of acquisition, rehabilitation, or demolition for a project
assisted under this part. The term ``displaced person'' includes, but
may not be limited to:
(i) A person who moves permanently from the real property after
receiving a notice from the owner requiring such move, if the move
occurs on or after the date of the submission of the owner application
to the HA;
(ii) A person who moves permanently before the submission of the
owner application to the HA, if the HA or HUD determines that the
displacement resulted directly from acquisition, rehabilitation, or
demolition for the assisted project; or
(iii) A tenant-occupant of a dwelling unit who moves from the
building or complex, permanently, after execution of the Agreement
between the owner and the HA, if the move occurs before the tenant is
provided written notice offering the opportunity to lease and occupy a
suitable, decent, safe, and sanitary dwelling in the same building or
complex under reasonable terms and conditions, upon completion of the
project. Such reasonable terms and conditions include a monthly rent
and estimated average monthly utility costs that do not exceed the
greater of:
(A) The tenant's monthly rent before execution of the Agreement and
estimated average monthly utility costs; or
(B) The total tenant payment, as determined under 24 CFR 813.107,
if the tenant is low-income, or 30 percent of gross household income,
if the tenant is not low-income; or
(iv) A tenant-occupant of a dwelling who is required to relocate
temporarily, but does not return to the building or complex, if either:
(A) The tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation,
including the cost of moving to and from the temporarily occupied unit
and any increased housing costs; or
(B) Other conditions of the temporary relocation are not
reasonable; or
(v) A tenant-occupant of a dwelling who moves from the building or
complex permanently after he or she has been required to move to
another dwelling unit in the same building or complex in order to carry
out the rehabilitation or construction, if either:
[[Page 34722]]
(A) The tenant is not offered reimbursement for all reasonable out-
of-pocket expenses incurred in connection with the move; or
(B) Other conditions of the move are not reasonable; or
(2) Notwithstanding the provisions of paragraph (g)(1) of this
section, a person does not qualify as a ``displaced person'' (and is
not eligible for relocation assistance under the URA or this section),
if:
(i) The person has been evicted for serious or repeated violation
of the terms and conditions of the lease or occupancy agreement,
violation of applicable Federal, State or local law, or other good
cause, and the HA determines that the eviction was not undertaken for
the purpose of evading the obligation to provide relocation assistance;
(ii) The person moved into the property after the submission of the
owner application to the HA and, before signing a lease and commencing
occupancy, was provided written notice of the owner application, its
possible impact on the person (e.g., the person may be displaced,
temporarily relocated, or suffer a rent increase) and the fact that the
person would not qualify as a ``displaced person'' (or for any
assistance provided under this section) if the owner application is
approved;
(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
(iv) HUD determines that the person was not displaced as a direct
result of acquisition, rehabilitation, or demolition for the project.
(3) The HA may request, at any time, HUD's determination of whether
a displacement is or would be covered by this section.
(h) Definition of initiation of negotiations. For purposes of
determining the formula for computing a replacement housing payment to
be provided to a residential tenant displaced as a direct result of
privately undertaken rehabilitation or demolition of the real property,
the term ``initiation of negotiations'' means the execution of the
Agreement between the owner and the HA.
Sec. 983.11 Other Federal requirements.
(a) Equal Opportunity and related requirements. Participation in
this program requires compliance with the Equal Opportunity
requirements specified in Sec. 982.53 of this chapter including Section
504 of the Rehabilitation Act of 1973 (24 CFR part 8) and the Fair
Housing Amendments Act of 1988 (24 CFR part 100).
(b) Environmental requirements. Activities under this part 983 are
subject to HUD environmental regulations at 24 CFR part 58. An HA may
not attach assistance to a unit unless, before the HA enters into an
Agreement to provide project-based assistance for the unit:
(1) The unit of general local government within which the project
is located that exercises land use responsibility or, as determined by
HUD, the county or State has completed the environmental review
required by 24 CFR part 58 and provided to the HA for submission to HUD
the completed request for release of funds and certification; and
(2) HUD has approved the request for release of funds.
(c) Other Federal requirements. The following requirements must be
met, if applicable:
(1) Clean Air Act and Federal Water Pollution Control Act;
(2) Flood Disaster Protection Act of 1973;
(3) Section 3 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701u) and the regulations in 24 CFR part 135;
(4) Executive Order 11246, Equal Employment Opportunity (for all
construction contracts of over $10,000);
(5) Executive Order 11625, Prescribing Additional Arrangements for
Developing and Coordinating a National Program for Minority Business
Enterprises;
(6) Executive Orders 12432, Minority Business Enterprise
Development, and 12138, Creating a National Women's Business Enterprise
Policy; and
(7) Payment of not less than the wages prevailing in the locality,
as predetermined by the Secretary of Labor pursuant to the Davis-Bacon
Act, to all laborers and mechanics employed in the construction or
rehabilitation of the project under an Agreement covering nine or more
assisted units, and compliance with the Contract Work Hours and Safety
Standards Act, Department of Labor regulations in 29 CFR part 5, and
other Federal laws and regulations pertaining to labor standards
applicable to such an Agreement.
(8) The provisions of part 24 of this title relating to the
employment, engagement of services, awarding contracts, or funding of
any contractors or subcontractors during any period of debarment,
suspension, or placement in ineligibility status.
Sec. 983.12 Initial contract rents.
(a) General. Section 882.714 of this title, Initial contract rents,
applies to the Section 8 PBC Program.
(b) HA, HUD or Housing Credit Agency establishment of the initial
contract rents. (1) The HA establishes the initial contract rents for
PBC units that are neither HA-owned nor financed with a HUD insured or
coinsured mortgage. The HA must contract with a state certified general
appraiser who has no interest, direct or indirect, with the property.
The appraiser will submit for the HA's review and approval a Form HUD-
92273, Estimates of Market Rent by Comparison, for each unit type using
comparable unsubsidized market-rate rental properties. In developing
the rental estimates, the appraiser must not consider the proposed
Section 8 assistance or any other Federal, state or local rent
subsidies. The HA must certify that the initial contract rents are
reasonable and not in excess of rents being charged for comparable
unassisted units.
(2) The HUD field office approves the initial contract rents for
HA-owned PBC units and projects financed with a HUD insured or
coinsured multifamily mortgage.
(3) HUD or a Housing Credit Agency may reduce the initial contract
rents as a result of a subsidy layering review.
Sec. 983.13 Annual contract rent adjustments.
Section 882.715 (a)(1) and (b) of this title apply to the Section 8
PBC Program.
Sec. 983.14 Special contract rent adjustments.
Section 882.715 (a)(2) and (b) of this title apply to the Section 8
PBC Program.
Subpart B--Owner Application Submission to Agreement
Sec. 983.51 HA unit selection policy, advertising, and owner
application requirements.
(a) General. The HA must adopt a written policy establishing
competitive procedures for owner submission of applications and for HA
selection of units to which assistance is to be attached and must
submit the policy to the HUD field office for review and approval. The
HA must select units in accordance with its approved selection policy.
The HA's written selection policy must comply with the requirements of
paragraph (b) of this section.
(b) Advertising requirements. The HA must advertise in a newspaper
of general circulation that the HA will accept applications for
assistance under this part 983 for specific projects. The advertisement
must be approved by the HUD field office and may not be published until
after the later of HUD authorization to implement a project-based
program or ACC execution. The
[[Page 34723]]
advertisement must: be published once a week for three consecutive
weeks; specify an application deadline of at least 30 days after the
date the advertisement is last published; specify the number of units
the HA estimates it will be able to assist under the funding the HA is
making available for this purpose; and state that only applications
submitted in response to the advertisement will be considered.
(c) Selection policy requirements. The HA's written selection
policy must identify, and specify the weight to be given to, the
factors the HA will use to rank and select applications. These factors
must include consideration of: site; design; previous experience of the
owner and other participants in development, marketing, and management;
and feasibility of the project as a whole (including likelihood of
financing and marketability). The HA may add other factors, such as
responsiveness to local objectives specified by the HA.
(d) Owner application. The owner's submission to the HA of
applications containing:
(1) A description of the housing to be constructed or
rehabilitated, including the number of units by size (square footage),
bedroom count, bathroom count, sketches of the proposed new
construction or rehabilitation, unit plans, listing of amenities and
services, and estimated date of completion. For rehabilitation, the
description must describe the property as is, and must also describe
the proposed rehabilitation;
(2) Evidence of site control, and for new construction
identification and description of the proposed site, site plan and
neighborhood;
(3) Evidence that the proposed new construction or rehabilitation
is permitted by current zoning ordinances or regulations or evidence to
indicate that the needed rezoning is likely and will not delay the
project;
(4) The proposed contract rent per unit, including an indication of
which utilities, services, and equipment are included in the rent and
which are not included. For those utilities that are not included in
the rent, an estimate of the average monthly cost for each unit type
for the first year of occupancy;
(5) A statement identifying:
(i) The number of persons (families, individuals, businesses and
nonprofit organizations) occupying the property on the date of the
submission of the application;
(ii) The number of persons to be displaced, temporarily relocated
or moved permanently within the building or complex;
(iii) The estimated cost of relocation payments and services, and
the sources of funding; and
(iv) The organization(s) that will carry out the relocation
activities;
(v) The identity of the owner and other project principals and the
names of officers and principal members, shareholders, investors, and
other parties having a substantial interest; certification showing that
the above-mentioned parties are not on the U.S. General Services
Administration list of parties excluded from Federal procurement and
nonprocurement programs; a disclosure of any possible conflict of
interest by any of these parties that would be a violation of the
Agreement or the HAP contract; and information on the qualifications
and experience of the principal participants. Information concerning
any participant who is not known at the time of the owner's submission
must be provided to the HA as soon as the participant is known;
(vi) The owner's plan for managing and maintaining the units;
(vii) Evidence of financing or lender interest and the proposed
terms of financing;
(viii) The proposed term of the HAP contract; and
(ix) Such other information as the HA believes necessary.
(e) Resident management corporation competitive selection
exception. An HA may select units to which assistance is to be
attached, without advertising under paragraph (b) of this section and
without applying the selection factors otherwise required by paragraph
(c) of this section, if attachment of project-based assistance would
further the purposes of the sale of a public housing project to a
resident management corporation under section 21 of the U.S. Housing
Act of 1937 (42 U.S.C. 1437s).
Sec. 983.52 Rehabilitation: Initial inspection and determination of
unit eligibility.
(a) Before selecting a unit or executing an Agreement, the HA must
determine that the application is responsive to and in compliance with
the HA's written selection criteria and procedures, and is otherwise in
conformity with HUD program regulations and requirements. For example,
the owner must submit with the application evidence of site control and
the certification required by Sec. 983.51(d)(5)(v). The HA must
determine that the proposed initial gross rents are within the fair
market rent limitation under Sec. 882.714 of this title. The HA must
inspect the property to determine that rehabilitation has not begun and
that the property meets the $1000 per assisted unit rehabilitation
requirement under Sec. 982.8 of this chapter. If the property meets
this rehabilitation requirement, the HA must determine the specific
work items that are needed to bring each unit to be assisted up to the
housing quality standards specified in Sec. 983.5 (or other standards
as approved in the HA's application), to complete any other repairs
needed to meet the $1000 per assisted unit rehabilitation requirement
and, in the case of projects of five or more units, any work items
necessary to meet the accessibility requirements of Section 504 of the
Rehabilitation Act of 1973.
(b) Before selecting a unit or executing an Agreement, the HA must
also consider whether the property is eligible housing under
Sec. 983.7; meets the other Federal requirements in Sec. 983.11 and the
site and neighborhood standards cross-referenced in Sec. 983.6; and
will be rehabilitated with other than assistance under the U.S. Housing
Act of 1937 in accordance with Sec. 983.9. The HA must also determine
the number of current tenants that are low-income families. An HA may
not select a unit, or enter into an Agreement with respect to a unit,
if the unit is occupied by persons who are not eligible for
participation in the program.
(c) Before executing an Agreement, the HA must contract with a
State certified general appraiser and establish the rents in accordance
with Sec. 983.12, or seek and obtain the HUD-determined initial
contract rents for any HA owned or controlled units or projects
financed with a HUD insured or coinsured multifamily mortgage; obtain
subsidy layering contract rent reviews from HUD or a Housing Credit
Agency; obtain environmental clearance in accordance with Sec. 983.11;
submit a certification to the HUD field office stating that the unit or
units were selected in accordance with the HA's approved unit selection
policy; and receive approval from the HUD field office to execute an
Agreement pursuant to the reviews required in Sec. 983.53.
(d) When the HA administering the ACC or an entity substantially
controlled by the HA administering the ACC has submitted an
application, the HUD field office will select the owner applications.
The HA must submit to the HUD field office all owner applications in
response to the advertisement.
(e) The HUD field office may terminate the Agreement or HAP
contract upon at least 30 days written notice to the owner by the HUD
field office if the HUD field office determines at any time that the
units were not selected in accordance with the HA's
[[Page 34724]]
approved written selection policy or that the units did not initially
meet the HUD eligibility requirements.
Sec. 983.53 Rehabilitation: HUD field office review of applications.
(a) The HUD field office must establish initial contract rents for
any HA owned units or projects financed with a HUD insured or coinsured
multifamily mortgage. HUD (or a Housing Credit Agency) must also
conduct subsidy layering contract rent reviews.
(b) When the HA administering the ACC or an entity substantially
controlled by the HA administering the ACC has submitted an
application, the HA must submit to the HUD field office all owner
applications in response to the advertisement. The HUD field office
must review the owner applications and make the final selections based
on the criteria in the HA selection policy approved by the HUD field
office.
Sec. 983.54 Rehabilitation: Work write-ups.
The owner must prepare work write-ups and, where determined
necessary by the HA, specifications and plans. The HA has flexibility
to determine the appropriate documentation to be submitted by the owner
based on the nature of the identified rehabilitation. The work write-
ups must address the specific work items identified by the HA under
Sec. 983.52.
Sec. 983.55 New construction: HA evaluation and technical processing.
(a) Before selecting a unit or executing an Agreement, the HA must
determine that the application is responsive to and in compliance with
the HA's written selection criteria and procedures, and is otherwise in
conformity with HUD program regulations and requirements. For example,
the owner must submit with the application evidence of site control and
the certification required by Sec. 983.51(d)(5)(v). The HA must
determine that construction (foundation work) has not begun. The HA
must determine that the proposed initial gross rents are within the
fair market rent limitation under Sec. 983.12. The HA must also
consider whether the property is eligible housing within the meaning of
Sec. 983.7; meets the other Federal requirements in Sec. 983.11 and the
site and neighborhood standards in Sec. 983.6; will be constructed with
other than assistance under the U.S. Housing Act of 1937 in accordance
with Sec. 983.9; and, in the case of projects of four or more units,
whether any work items necessary to meet the accessibility requirements
of Section 504 of the Rehabilitation Act of 1973 and the Fair Housing
Amendments Act of 1988 will be completed.
(b) Before executing an Agreement, the HA must contract with a
State certified general appraiser and establish the rents in accordance
with Sec. 983.12 or seek and obtain the HUD-determined initial contract
rents for any HA owned or controlled units or projects financed with a
HUD insured or coinsured multifamily mortgage; seek and obtain subsidy
layering contract rent reviews from HUD or a Housing Credit Agency;
seek and obtain environmental clearance in accordance with Sec. 983.11;
and receive approval from the HUD field office to execute an Agreement
pursuant to the reviews required in Sec. 983.56.
(c) If the HA administering the ACC or an entity substantially
controlled by the HA administering the ACC has submitted an
application, the HA must submit to the HUD field office all owner
applications in response to the advertisement. The HUD field office
will select the owner applications to be funded from the applications
received in response to the HA advertisement.
(d) If there are no HA-owned or controlled applicants, the HA must
submit to the HUD field office for the site and neighborhood review
only those applications determined by the HA to be eligible for further
processing pursuant to paragraph (a) of this section, and must submit a
certification to the HUD field office stating that the unit or units
were selected in accordance with the HA's approved unit selection
policy. The HA's submission must not exceed the number of uncommitted
units for which the HA is authorized to project-base assistance in
connection with new construction. If the number of units contained in
applications the HA has determined to be eligible for further
processing exceeds the number for which the HA is authorized to
project-base assistance, the HA may submit only the top-ranked
applications.
(e) The HUD field office may terminate the Agreement or HAP
contract upon at least 30 days written notice to the owner by HUD if
the HUD field office determines that the units were not selected in
accordance with the HA's approved written selection policy or that the
units did not initially meet the HUD eligibility requirements.
Sec. 983.56 New construction: HUD field office review of applications.
(a) The HUD field office must review the owner applications
submitted by an HA to determine compliance with requirements concerning
the site and neighborhood standards in Sec. 983.6.
(b) The HUD field office must establish initial contract rents for
any HA owned units or projects financed with a HUD insured or coinsured
multifamily mortgage. HUD (or a Housing Credit Agency) must also
conduct subsidy layering contract rent reviews.
(c) When the HA administering the ACC or an entity substantially
controlled by the HA administering the ACC has submitted an
application, the HA must submit to the HUD field office all owner
applications in response to the advertisement. The HUD field office
must review the owner applications and make the final selections based
on the criteria in the HA selection policy approved by the HUD field
office.
Sec. 983.57 New construction: Working drawings and specifications.
Before an Agreement is executed for new construction units, the
owner must submit the design architect's certification that the
proposed new construction reflected in the working drawings and
specifications complies with housing quality standards, local codes and
ordinances, and zoning requirements.
Subpart C--Agreement and New Construction or Rehabilitation Period
Sec. 983.101 Agreement to enter into HAP contract, and contract rents
in Agreement.
(a) Agreement. The HA must enter into an Agreement with the owner
in the form prescribed by HUD for assistance provided under this part
983. The Agreement must be executed before the start of any new
construction or rehabilitation. Under the Agreement, the owner agrees
to construct the units in accordance with the HA-approved working
drawings and specifications or to rehabilitate the units in accordance
with the HA-approved work write-ups.
(b) Contract rents in Agreement. The Agreement must list the
initial contract rents that will apply to the units after they are
constructed or rehabilitated. The amounts of the contract rents that
are listed in the Agreement or, if applicable, as lowered under
Sec. 983.103(c), must be the initial contract rents upon execution of
the HAP contract. These initial contract rents may only be increased
if:
(1) The project is financed with a HUD insured or coinsured
multifamily mortgage;
(2) The initial contract rents listed in the Agreement were based
on the amount determined by HUD to be necessary to amortize the insured
or coinsured mortgage; and
(3) The HUD field office approves a cost increase prior to closing.
In such a
[[Page 34725]]
case, the HUD field office may redetermine the initial contract rents
in accordance with Sec. 983.12 except that the field office may use the
comparable rents originally used in processing the insured or coinsured
mortgage in lieu of the amount determined in accordance with
Sec. 983.12.
Sec. 983.102 Owner selection of contractor.
The owner is responsible for selecting a competent contractor to
undertake the new construction or rehabilitation work under the
Agreement. The owner may not award contracts to, otherwise engage the
services of, or fund any contractor or subcontractor, to perform such
work, that fails to provide a certification that neither it nor its
principals is presently debarred, suspended, or placed in ineligibility
status under 24 CFR part 24, or is on the list of ineligible
contractors or subcontractors established and maintained by the
Comptroller General under 29 CFR part 5. The HA must promote
opportunities for minority contractors to participate in the program.
Sec. 983.103 New construction or rehabilitation period.
(a) Timely performance of work. After the Agreement has been
executed, the owner must promptly proceed with the construction or
rehabilitation work as provided in the Agreement. In the event the work
is not so commenced, diligently continued, or completed, the HA may
terminate the Agreement or take other appropriate action.
(b) Inspections. The HA must inspect during construction or
rehabilitation to ensure that work is proceeding on schedule and is
being accomplished in accordance with the terms of the Agreement. The
inspection must be carried out to ensure that the work meets the types
of materials specified in the work write-ups or working drawings and
specifications, and meets typical levels of workmanship in the area.
(c) Changes. The owner must obtain prior HA approval for any
changes from the work specified in the Agreement that would alter the
design or the quality of the required new construction or
rehabilitation. The HA may disapprove any changes requested by the
owner. HA approval of changes may be conditioned on establishing lower
initial contract rents in the amount determined by the HA (or the HUD
field office for HA owned units or projects financed with a HUD insured
or coinsured multifamily mortgage). If the owner makes any changes
without prior HA approval, the HA may lower the initial contract rents
in the amount determined by the HA (or the HUD field office for HA
owned units or projects financed with a HUD insured or coinsured
multifamily mortgage), and may require the owner to remedy any
deficiencies, prior to, and as a condition for, acceptance of the
units. Initial contract rents, however, must not be increased because
of any change from the work specified in the Agreement as originally
executed. When a HUD insured or a HUD coinsured multifamily mortgage is
used to finance new construction or rehabilitation of the units to
which assistance is to be attached under this part 983, the HUD field
office may lower the initial contract rents to reflect any reduction in
the amount necessary to amortize the insured or coinsured mortgage.
(d) Notification of vacancies. At least 60 days before the
scheduled completion of the new construction or rehabilitation, the
owner must notify the HA of any units expected to be vacant on the
anticipated effective date of the HAP contract. The HA must refer to
the owner appropriate-sized families from the HA waiting list. When the
HAP contract is executed, the owner must notify the HA which units are
vacant. (See also Sec. 983.203).
Sec. 983.104 New construction or rehabilitation completion.
(a) Notification of completion. The owner must notify the HA when
the work is completed and submit to the HA the evidence of completion
described in paragraph (b) of this section.
(b) Evidence of completion. To demonstrate completion of the work
the owner must furnish the HA with:
(1) A certificate of occupancy or other official approvals as
required by the locality.
(2) A certification by the owner that:
(i) The work has been completed in accordance with the requirements
of the Agreement;
(ii) There are no defects or deficiencies in the work except for
items of delayed completion which are minor or which are incomplete
because of weather conditions and, in any case, do not preclude or
affect occupancy;
(iii) The unit(s) has been constructed or rehabilitated in
accordance with the applicable zoning, building, housing and other
codes, ordinances or regulations, as modified by any waivers obtained
from the appropriate officials;
(iv) Unit(s) built before 1978 is in compliance with
Sec. 982.401(j) (Lead-based paint); and
(v) The owner has complied with any applicable labor standards
requirements in the Agreement.
(3) For projects where a HUD field office construction inspection
is not required during construction, a certification from the
inspecting architect stating that the units have been constructed in
accordance with the certified working drawings and specifications,
housing quality standards, local codes and ordinances, and zoning
requirements.
(c) Review and inspections. The HA must review the evidence of
completion for compliance with paragraph (b) of this section. The HA
also must inspect the unit(s) to be assisted to determine that the
unit(s) has been completed in accordance with the Agreement, including
meeting the housing quality standards or other standards approved by
the HUD field office for the program. If the inspection discloses
defects or deficiencies, the inspector must report these in detail.
(d) Acceptance. (1) If the HA determines from the review and
inspection that the unit(s) has been completed in accordance with the
Agreement, the HA must accept the unit(s).
(2) If there are any items of delayed completion that are minor
items or that are incomplete because of weather conditions, and in any
case that do not preclude or affect occupancy, and all other
requirements of the Agreement have been met, the HA may accept the
unit(s). The HA must require the owner to deposit in escrow with the HA
funds in an amount the HA determines to be sufficient to ensure
completion of the delayed items. The HA and owner must also execute a
written agreement, specifying the schedule for completion of these
items. If the items are not completed within the agreed time period,
the HA may terminate the HAP contract or exercise other rights under
the HAP contract.
(3) If other deficiencies exist, the HA must determine whether and
to what extent the deficiencies are correctable and whether a time
extension is warranted, and HUD must determine whether the contract
rents should be reduced.
(4) Otherwise, the unit(s) may not be accepted, and the owner must
be notified with a statement of the reasons for nonacceptance.
Subpart D--Housing Assistance Payments Contract
Sec. 983.151 Housing assistance payments contract (HAP contract).
(a) Required form. The HA must enter into a HAP contract with the
owner in the form prescribed by HUD for assistance provided under this
part 983.
(b) Term of HAP contract. (1) The initial HAP contract term may not
be
[[Page 34726]]
less than one year nor more than five years, and may not extend beyond
the ACC expiration date for the funding source from which the HAP
contract is to be funded.
(2) The contract authority for the funding source must exceed the
estimated annual housing assistance payments for all tenant-based and
project-based HAP contracts funded from the funding source.
(3) Within these limitations, the HA has the sole discretion to
determine the HAP contract term. For example, assuming that the ACC
expiration date for the applicable funding source is June 30, 1999, and
the effective date of a HAP contract will be July 1, 1995, the HAP
contract could have a fixed term of 1 to 4 years.
(c) Renewal of HAP contracts. With HUD field office approval and at
the sole option of the HA, HAs may renew expiring HAP contracts for
such period or periods as the HUD field office determines appropriate
to achieve long-term affordability of the assisted housing, provided
that the term does not extend beyond the ACC expiration date for the
funding source. HAs must identify the funding source for renewals;
different funding sources may be used for the initial term and renewal
terms of the HAP contract. In addition to assessing whether the HAP
contract should be renewed to achieve long term affordability, HUD will
review an HA's renewal request to determine that the requirements
listed in Sec. 983.3(a) will be satisfied, and to determine if a rent
reduction is warranted pursuant to 24 CFR part 12. The owner and
owner's successors in interest must accept all HAP contract renewals
agreed to by the HA and approved by HUD.
(d) Time of execution. The HA must execute the HAP contract if the
HA accepts the unit(s) under Sec. 983.104. The effective date of the
HAP contract may not be earlier than the date of HA inspection and
acceptance of the unit(s).
(e) Units under lease. After commencement of the HAP contract term,
the HA must make the monthly housing assistance payments in accordance
with the HAP contract for each unit occupied under lease by a family.
Sec. 983.152 Reduction of number of units covered by HAP contract.
(a) Limitation on leasing to ineligible families. Owners must lease
all assisted units under HAP contract to eligible families. Leasing of
vacant, assisted units to ineligible tenants is a violation of the HAP
contract and grounds for all available legal remedies, including
suspension or debarment from HUD programs and reduction of the number
of units under the HAP contract, as set forth in paragraph (b) of this
section. Once the HA has determined that a violation exists, the HA
must notify the HUD field office of its determination and the suggested
remedies. At the direction of the HUD field office, the HA must take
the appropriate action.
(b) Reduction for failure to lease to eligible families. If, at any
time beginning 180 calendar days after the effective date of the HAP
contract, the owner fails for a period of 180 continuous calendar days
to have the assisted units leased to families receiving housing
assistance or to families who were eligible when they initially leased
the unit but are no longer receiving housing assistance, the HA may, on
at least 30 calendar days notice, reduce the number of units covered by
the HAP contract. The HA may reduce the number of units to the number
of units actually leased or available for leasing by eligible families
plus 10 percent (rounded up). If the owner has only one unit under HAP
contract and if one year has elapsed since the date of the last housing
assistance payment, the HAP contract may be terminated with the consent
of the owner.
(c) Restoration. The HA will agree to an amendment of the HAP
contract to provide for subsequent restoration of any reduction made
pursuant to paragraph (b) of this section if:
(1) The HA determines that the restoration is justified by demand,
(2) The owner otherwise has a record of compliance with obligations
under the HAP contract; and
(3) Contract authority is available.
Subpart E--Management
Sec. 983.201 Responsibilities of the HA.
Section 982.153 of this chapter, HA Responsibilities, applies,
except for Sec. 982.153(b)(7) of this chapter, where it pertains to the
HA issuing a voucher or certificate to each selected family and
providing housing information to families selected, and
Sec. 982.153(b)(9) of this chapter. The HA must also:
(a) Brief the family in accordance with Sec. 983.203(d);
(b) Obtain requests for participation from owners, and select
projects;
(c) Approve contract rent adjustments, and make rent reasonableness
determinations for units which are not HA owned;
(d) Inspect the project before, during, and upon completion of, new
construction or rehabilitation; and
(e) Ensure that the amount of assistance that is attached to units
is within the amounts available under the ACC.
Sec. 983.202 Responsibilities of the owner.
Section 982.452 of this chapter, Owner responsibilities, applies.
The owner is also responsible for performing all of the owner
responsibilities under the Agreement and the HAP contract, disclosing
information and submitting certifications as required by 24 CFR part 12
and implementing instructions, providing the HA with a copy of any
termination of tenancy notification, and offering vacant, accessible
units to a Family with one or more members with a disability requiring
that accessibility features of the vacant unit and occupying an
assisted unit not having such features.
Sec. 983.203 Family participation.
Subpart E of part 982 of this chapter, Selection for Tenant-based
Program, does not apply, except as it is expressly made applicable by
this section.
(a) HA selection for participation. (1) The following provisions
apply to this part: Secs. 982.201, 982.202 except paragraph (b)(3),
982.203, 982.204 except paragraph (a) and (d), 982.205 except paragraph
(a), 982.206, 982.207 except (b)(1), and 982.208 through 982.213 of
this chapter.
(2) For purposes of this part, a family becomes a participant when
the family and owner execute a lease for a unit with project-based
assistance.
(3) An HA may use the tenant-based waiting list, a merged waiting
list, or a separate PBC waiting list for admission to the PBC program.
If the HA opts to have a separate PBC waiting list, the HA may use a
single waiting list for all PBC projects, or may use a separate PBC
waiting list for an area not smaller than a county or municipality.
(4) Except for special admissions and admissions pursuant to
paragraph (c)(3) of this section, participants must be selected from
the HA waiting list. The HA must select participants from the waiting
list in accordance with admission policies in the HA administrative
plan.
(5) Local preference limit means 30 percent of total annual waiting
list admissions to an HA's PBC program (including admissions pursuant
to paragraph (c)(3) of this section). In any year, the number of
families given preference in admission to the HA PBC program pursuant
to a local preference over families with a federal preference may not
exceed the local preference limit.
(6) Has authorized to use the 30-percent limit to prevent
prepayments under State mortgage programs must not
[[Page 34727]]
count families selected to occupy units in these State-assisted or
subsidized projects against the local preference limit.
(7) The selection of eligible in-place families does not count
against the local preference limit.
(b) HA determination of eligibility of in-place families. Before an
HA selects a specific unit to which assistance is to be attached, the
HA must determine whether the unit is occupied, and if occupied,
whether the unit's occupants are eligible for assistance. If the unit
is occupied by an eligible family (including a single person) and the
HA selects the unit, the family must be afforded the opportunity to
lease that unit or another appropriately sized, project-based assisted
unit in the project without requiring the family to be placed on the
waiting list. (The HA is authorized, under Sec. 812.3(b)(1) of this
chapter and consistent with other applicable requirements of
Sec. 812.3, to permit occupancy of the project by single persons
residing in the project at the time of conversion to project-based
assistance to prevent displacement.) An HA may not select a unit, or
enter into an Agreement with respect to a unit, if the unit is occupied
by persons who are not eligible for participation in the program.
(c) Filling vacant units. (1) When the owner notifies the HA of
vacancies in the units to which assistance is attached, the HA will
refer to the owner one or more families of the appropriate size on its
waiting list. A family that refuses the offer of a unit assisted under
this part 983 keeps its place on the waiting list.
(2) The owner must rent all vacant units to eligible families
referred by the HA from its waiting list. The HA must determine
eligibility for participation in accordance with HUD requirements.
(3) If the HA does not refer a sufficient number of interested
applicants on the HA waiting list to the owner within 30 days of the
owner's notification to the HA of a vacancy, the owner may advertise
for or solicit applications from eligible very low-income families, or,
if authorized by the HA in accordance with HUD requirements, low-income
families. The owner must refer these families to the HA to determine
eligibility.
(4)(i) The owner is responsible for screening and selection of
tenants. The owner must adopt written tenant selection procedures that
are consistent with the purpose of improving housing opportunities for
very low-income families, and reasonably related to program eligibility
and an applicant's ability to perform the lease obligations.
(ii)(A) An owner must promptly notify in writing any rejected
applicant of the grounds for any rejection.
(B) If the owner rejects an applicant family who believes that the
rejection was the result of unlawful discrimination, the family may
request the assistance of the HA in resolving the issue. The family may
also file a discrimination complaint with the HUD field office or
exercise other rights provided by law.
(d) Briefing of families. When a family is selected to occupy a
project-based unit, the HA must provide the family with information
concerning the tenant rent and any applicable utility allowance and a
copy of the HUD-prescribed lead-based paint brochure. The family must
also, either in group or individual sessions, be provided with a full
explanation of the following:
(1) Family and owner responsibilities under the lease and HAP
contract;
(2) Information on Federal, State, and local equal opportunity
laws;
(3) The fact that the subsidy is tied to the unit, that the family
must occupy a unit constructed or rehabilitated under the program, and
that a family that moves from the unit does not have any right to
continued assistance;
(4) The likelihood of the family receiving a certificate after the
HAP contract expires;
(5) The family's options under the program, if the family is
required to move because of a change in family size or composition;
(6) Information on the HA's procedures for conducting informal
hearings for participants, including a description of the circumstances
in which the HA is required to provide the opportunity for an informal
hearing (under Sec. 983.208), and of the procedures for requesting a
hearing.
(e) Continued assistance for a family when the HAP contract is
terminated. If the HAP contract for the unit expires or if the HA
terminates the HAP contract for the unit:
(1) The HA must issue the assisted family in occupancy of a unit a
certificate of family participation for assistance under the HA's
certificate program unless the HA has determined that it does not have
sufficient funding for continued assistance for the family, or unless
the HA denies issuance of a certificate in accordance with Sec. 982.552
of this chapter.
(2) If the unit is not occupied by an assisted family, then the
available funds under the ACC that were previously committed for
support of the project-based assistance for the unit must be used for
the HA's certificate program.
(f) Amount of rent payable by family to owner. The amount of rent
payable by the Family to the owner must be the Tenant Rent.
(g) Lease requirements. (1) The lease between the family and the
owner must be in accordance with Sec. 983.207 and any other applicable
HUD regulations and requirements. The lease must include all provisions
required by HUD and must not include any of the provisions prohibited
by HUD.
(2) When offering an accessible unit to an applicant not having
disabilities requiring the accessibility features of the unit, the
owner may require the applicant to agree (and may incorporate this
agreement in the Lease) to move to a non-accessible unit when
available.
Sec. 983.204 Maintenance, operation and inspections.
(a) Section 982.404 of this chapter, Maintenance: Owner and family
responsibility; HA remedies, pertaining to owner responsibilities and
HA remedies, does not apply. Section 982.405 of this chapter, HA
periodic unit inspection, and Sec. 982.406 of this chapter, Enforcement
of HQS, do not apply.
(b) Maintenance and operation. The owner must provide all the
services, maintenance and utilities as agreed under the HAP contract,
subject to abatement of housing assistance payments or other applicable
remedies if the owner fails to meet these obligations.
(c) Periodic inspection. In addition to the inspections required
prior to execution of the HAP contract, the HA must inspect or cause to
be inspected each dwelling unit under HAP contract at least annually
and at such other times as may be necessary to assure that the owner is
meeting the obligations to maintain the unit in decent, safe and
sanitary condition and to provide the agreed upon utilities and other
services. The HA must take into account complaints and any other
information coming to its attention in scheduling inspections.
(d) Units not decent, safe and sanitary. If the HA notifies the
owner that the unit(s) under HAP contract are not being maintained in
decent, safe and sanitary condition and the owner fails to take
corrective action within the time prescribed in the notice, the HA may
exercise any of its rights or remedies under the HAP contract,
including abatement of housing assistance payments (even if the family
continues in occupancy), termination of the HAP contract on the
affected unit(s) and termination of assistance to the family
[[Page 34728]]
in accordance with Sec. 982.552 of this chapter.
Sec. 983.205 Reexamination of family income and composition.
(a) Section 882.212 of this title, Reexaminations of family income
and composition, does not apply.
(b) Regular and interim reexaminations. (1) The HA must reexamine
the income and composition of all families at least once every 12
months. After consultation with the family and upon verification of the
information, the HA must make appropriate adjustments in the total
tenant payment in accordance with part 813 of this title and determine
whether the family's unit size is still appropriate (see Sec. 982.402
of this chapter). The HA must adjust tenant rent and the housing
assistance payment to reflect any change in total tenant payment.
(2) The family must supply any information requested by the HA or
HUD concerning changes in income. If the HA receives information
concerning a change in the family's income or other circumstances
between regularly scheduled reexaminations, the HA must consult with
the family and make any adjustments determined to be appropriate. Any
change in the family's income or other circumstances that results in an
adjustment in the total tenant payment, tenant rent, and housing
assistance payment must be verified.
(3) The family must disclose and verify social security numbers (as
provided by 24 CFR part 750) and must sign and submit consent forms for
obtaining information in accordance with 24 CFR part 760 and 24 CFR
part 813.
(c) Continuation of housing assistance payments. A family's
eligibility for housing assistance payments shall continue until the
total tenant payment equals the gross rent. The termination of
eligibility at such point will not affect the family's other rights
under its lease, nor will such termination preclude the resumption of
payments as a result of later changes in income, rents, or other
relevant circumstances during the term of the HAP contract. However,
eligibility also may be terminated in accordance with HUD requirements
for such reasons as failure to submit requested verification
information.
Sec. 983.206 Overcrowded and underoccupied units.
(a) Section 982.403(a)(2) of this chapter, Termination of HAP
contract: violation of HQS space standards; Sec. 982.403(b) of this
chapter, Certificate program only: Termination of HAP contract--subsidy
too big for family size; and Sec. 982.403(c) of this chapter,
Termination, do not apply.
(b) If the HA determines that a contract unit is not decent, safe,
and sanitary because of an increase in family size that causes the unit
to be overcrowded or that a contract unit is larger than appropriate
for the size of the family in occupancy under the HA's subsidy
standards, housing assistance payments with respect to the unit may not
be terminated for this reason. The owner, however, must offer the
family a suitable alternative unit if one is available and the family
shall be required to move. If the owner does not have available a
suitable unit within the family's ability to pay the rent, the HA (if
it has sufficient funding) must offer Section 8 assistance to the
family or otherwise assist the family in locating other standard
housing in the HA's jurisdiction within the family's ability to pay,
and require the family to move to such a unit as soon as possible. The
family must not be forced to move, nor shall housing assistance
payments under the HAP contract be terminated for the reasons specified
in this paragraph, unless the family rejects, without good reason, the
offer of a unit that the HA judges to be acceptable.
Sec. 983.207 Assisted tenancy and termination of tenancy.
(a) Section 982.309 of this chapter, Term of assisted tenancy, and
Sec. 982.310 of this chapter, Owner termination of tenancy, do not
apply.
(b) Term of lease. The term of a lease, including a new lease or a
lease amendment, executed by the owner and the family must be for at
least one year, or the remaining term of the HAP contract if the
remaining term of the HAP contract is less than one year.
(c) Move from unit. The family must notify the HA and the owner
before the family moves out of the unit.
(d) Termination of tenancy. (1) Subpart A of part 247 of this
title, Eviction from Certain Subsidized and HUD-Owned Projects,
applies, except Sec. 247.4(d) of this title.
(2) The lease may contain a provision permitting the family to
terminate the lease on not more than 60 days advance written notice to
the owner. In the case of a lease term for more than one year, the
lease must contain a provision permitting the family to terminate the
lease on such notice after the first year of the term.
(3) The owner may offer the family a new lease for execution by the
family for a term beginning at any time after the first year of the
term of the lease. The owner must give the family written notice of the
offer at least 60 days before the proposed commencement date of the new
lease term. The offer may specify a reasonable time for acceptance by
the family. Failure by the family to accept the offer of a new lease in
accordance with this paragraph shall be ``other good cause'' for
termination of tenancy (under Sec. 247.3(a)(3) of this title).
Sec. 983.208 Informal review.
Section 982.554, Informal review for applicant, applies, except
Sec. 982.554(c)(3) of this chapter.
Dated: June 8, 1995.
Joseph Shuldiner,
Assistant Secretary.
[FR Doc. 95-15906 Filed 6-30-95; 8:45 am]
BILLING CODE 4210-33-P