[Federal Register Volume 60, Number 129 (Thursday, July 6, 1995)]
[Rules and Regulations]
[Pages 35123-35126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16489]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 791

[Docket Numbers R-95-1637, R-95-1728; FR-3658-F-03]
RIN 2501-AB71


Allocation of Budget Authority for Housing Assistance

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This rule makes final two interim rules previously published 
by HUD which amended HUD regulations governing allocation of budget 
authority for housing assistance. The previous interim rules added two 
subcategories of budget authority for uses that the Secretary 
determines are incapable of geographic allocation by formula, and 
increased the amount of funding available under the Headquarters 
Reserve. In addition, this final rule also adds two technical 
amendments to HUD's regulations governing the allocation of budget 
authority for housing assistance.

EFFECTIVE DATE: This final rule is effective on August 7, 1995.

FOR FURTHER INFORMATION CONTACT: For the Public and Indian Housing 
program, and section 8 voucher, certificate, and moderate 
rehabilitation programs, Nanci Gelb, Director, Budget Division, Room 
4230, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-0500, telephone (202) 708-0920. Hearing- or 
speech-impaired individuals may call HUD's TDD number (202) 708-0850. 
For other assisted housing programs, Joel Balsham, Program Advisor, 
Office of the Deputy Assistant Secretary for Multifamily Housing, Room 
6124, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-8000, telephone (202) 708-4135. Hearing- or 
speech-impaired individuals may call HUD's TDD number (202) 755-4594. 
(These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Background

    This rule finalizes two previously published interim rules amending 
HUD's regulations governing allocation of budget authority. The first 
rule, published on August 4, 1993 (58 FR 41426), added two 
subcategories of budget assistance to Sec. 791.403 for uses that the 
Secretary determines are incapable of geographic allocation by formula: 
(1) Budget authority as identified in the Operating Plan submitted to 
the Appropriations Committees; and (2) Budget authority involving 
recently enacted legislation which prescribes that a portion of program 
assistance be set aside or otherwise mandated for other than general 
use. The second rule, published on July 11, 1994 (59 FR 35253), 
increased the amount of funding available under the Headquarters 
Reserve. 

[[Page 35124]]


A. August 4, 1993 Interim Rule

    The first subcategory added by the August 4, 1993, interim rule was 
budget authority as identified in the Operating Plan submitted to the 
Appropriations Committees. The ``Operating Plan'' is presented annually 
to the Appropriations Committees to reflect changes from the budget 
originally submitted to the Congress by the Administration. Its history 
dates back to 1987 when the Conference Report accompanying H.J. Res. 
395, ``Making Further Continuing Appropriations for the Fiscal Year 
Ending September 30, 1988,'' stated that ``because of the substantial 
changes in many accounts from the budget estimates (including a number 
of general reductions), the conferees direct that [HUD and the 
Independent Agencies covered in the same appropriation] submit a fiscal 
year 1988 operating plan by February 1, 1988.'' H.R. Rep. 100-498 (Dec. 
22, 1987), at 837. The statement added that ``the conferees expect such 
operating plans to include recommended changes from the budget 
estimates except that no reductions may be proposed in programs, 
projects, or activities for which funding has been added by the 
Congress.'' Ever since that time, the Department has furnished the 
Committees an Operating Plan annually which identifies changes from 
published estimates, including reprogramming within amounts set out in 
the Conference Report table.
    The August 1993 interim rule also added a second subcategory of 
budget authority incapable of geographic allocation by formula 
consisting of recently enacted legislation which prescribes that a 
portion of program assistance be set aside or otherwise mandated for 
other than general use. Recent HUD authorization statutory amendments 
contain provisions which have the effect of specifically targeting 
appropriated funds. For example, section 101(b) of the Housing and 
Community Development Act of 1992, Pub.L. 102-550 (Oct. 28, 1992), 
amended the United States Housing Act of 1937 to require funding of $20 
million in both FY 1993 and FY 1994 for section 8 15 year contracts for 
project-based assistance to be used for a multi-cultural tenant 
empowerment and homeownership project located in the District of 
Columbia. This assistance obviously is incapable of geographic 
allocation by formula because it is expressly authorized for one city 
only.
    In the first year following enactment of set-asides like the one 
described immediately above, the Operating Plan could be expected to 
address these newly established purposes. In subsequent years, however, 
they would have been incorporated in the Department's budget. For that 
reason, the interim rule also added to Sec. 791.403(b)(ii) the 
subcategory of assistance included in an authorization statute, such as 
set-asides, where the Secretary determines that such assistance is 
incapable of geographic allocation by formula.

B. July 11, 1994 Interim Rule

    The interim rule published on July 11, 1994 (59 FR 35253), 
increased the amount of funding available under the Headquarters 
Reserve. In the preamble of that rule, HUD explained that it was 
further implementing section 213(d) of the Housing and Community 
Development Act of 1974, as amended, 42 U.S.C. 1439(d), so as to 
maximize flexibility in the provision of the Headquarters Reserve 
authorized under section 213(d)(4) of the Act.
    Section 213(d)(4) permits the Secretary of HUD to retain not more 
than five percent of the financial assistance that becomes available 
under all programs authorized under the United States Housing Act of 
1937 (except for public housing operating subsidy under section 9 and 
modernization funding under section 14). Prior to the July 11, 1994, 
interim rule, the Headquarters Reserve at Sec. 791.407 was more 
delimited--it only permitted a Headquarters Reserve of five percent of 
the total amount of budget authority which is ``fair shared'' pursuant 
to part 791, subpart D. The effect of the regulatory limitation was to 
narrow considerably the base upon which the five percent Reserve was 
calculated, as compared to what the statute permits.
    The July 11, 1994, interim rule expanded the base by including not 
only the amount of funding which is fair shared pursuant to the formula 
at Sec. 791.403(b)(2), but also all budget authority allocated for uses 
that the Secretary determines are incapable of geographic formula, as 
spelled out at Sec. 791.403(b)(1). Examples of the latter category 
include amendments of existing contracts, renewals of assistance 
contracts, the section 8 loan management and property disposition 
accounts, assistance earmarked by the Congress in appropriation law 
line items, and uses of budget authority identified in the Department's 
Operating Plan submitted to the Appropriations Committee.
    While the interim rule increased the amount of funding available 
under the Headquarters Reserve, it did not change the limited statutory 
purposes for which funding may be used. Headquarters Reserve funding 
can only be used for unforeseen housing needs resulting from natural 
and other disasters; housing needs resulting from emergencies, as 
certified by the Secretary, other than such disasters; housing needs 
resulting from the settlement of litigation; and housing in support of 
desegregation efforts.
    As we stated in the preamble of the July 11, 1994, interim rule, 
because the incidence of these types of housing assistance funding are 
unpredictable, the availability of readier resources through an 
increased Reserve is one which HUD will only call upon as needed. 
Although a greater amount of budget authority is now available under 
current regulations, HUD may not use the full statutory maximum in any 
particular year. The draw upon the Reserve will be carefully tempered 
to exigencies and real, immediate need.
    Finally, as noted in the interim rule, the base upon which the 
Headquarters Reserve is calculated does not include the section 202 
program of supportive housing for the elderly. Section 801(b) of the 
Cranston-Gonzalez National Affordable Housing Act (NAHA) removed the 
section 202 program from coverage under section 213(d). However, NAHA 
did not repeal a previous amendment to section 213(d)(1)(A)(i) made by 
section 101 of the Department of Housing and Urban Development Reform 
Act of 1989 (Reform Act). The Reform Act amendment requires that 
section 202 assistance be allocated in a manner that ensures that 
awards of that assistance are made for projects of sufficient size to 
accommodate facilities with supportive services appropriate to the 
needs of frail elderly residents. Moreover, the Department has elected 
to continue the fair sharing of section 202 housing assistance in order 
to promote fair and balanced geographic diversity. (The fair sharing 
formula for section 202 assistance is specifically tailored at 
Sec. 791.402(c)(1) to reflect relevant characteristics of the elderly 
population.) Notwithstanding this retention of section 202 allocations 
in part 791, and the continued policy of fair sharing section 202 
housing assistance, the statutory range for calculation of the five 
percent Headquarters Reserve is limited to programs under the United 
States Housing Act of 1937 which are covered by section 213(d).

C. Conforming Changes in Today's Final Rule

    In addition to finalizing changes made in the two previously 
published interim 

[[Page 35125]]
rules, this rule adds several conforming changes to part 791. First, 
because the section 202 elderly housing program is no longer a loan 
program, the reference to that effect is removed from Sec. 791.401. 
Second, because section 101 of the Reform Act eliminated the statutory 
requirement of between 20 and 25 percent of non-metropolitan area 
funding, insofar as it had applied to the Headquarters Reserve, it is 
being deleted from Sec. 791.403(a). Third, because of the Department's 
reorganization which specifically eliminated the former Regions, 
Regional Administrators, Field Office Managers, and the functions 
previously performed by them, technical revisions are made to 
Secs. 791.403(b)(2) and 791.405 to replace certain nomenclatures.
II. Discussion of Public Comment

    The Department did not receive any public comments in response to 
the August 4, 1993, interim rule. The Department received two public 
comments in response to the July 11, 1994, interim rule. The first 
comment was from the Housing Authority of the City of Los Angeles which 
expressed its support of the rule, especially as it enhances the 
Secretary's ability to respond to unique disaster and emergency 
situations. The second comment was from the Oklahoma Housing Authority 
which urged consideration of three factors. First, the commenter stated 
that there is often no available housing when emergency funding is 
needed, so that HUD should consider purchasing modular-type housing 
rather than providing section 8 certificates. Neither this rule, nor 
its statutory authorization at section 213 of the Housing and Community 
Development Act of 1974, as amended, permits substitution of other 
resources for section 8 certificates, so that the alternative proposed 
by the commenter would not be viable in this context.
    This commenter further stated that HUD should consider the impact 
on portability when additional certificates are placed within a 
community. The Department acknowledges that relative unavailability of 
housing in a jurisdiction may result in utilization of portability to 
locate housing in other areas. Nevertheless, the purpose of the 
disaster and emergency set-aside authority is to provide relief for 
persons and families who are adversely affected by these conditions and 
who will utilize the assistance in a manner most efficacious to them.
    Finally, this commenter contended that the funding set-aside should 
be motivated completely by need. The Department agrees with this 
comment. In the preamble of the interim rule, HUD stated that, ``[t]he 
draw upon the Reserve will be carefully tempered to exigencies and 
real, immediate need.'' However, no regulatory text change is necessary 
to incorporate this argument.

III. Other matters

A. Executive Order 12866

    This rule was reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866 on Regulatory Planning and Review, issued 
by the President on September 30, 1993. Any changes made in the rule 
subsequent to its submission to OMB are identified in the docket file, 
which is available for public inspection between 7:30 a.m. and 5:30 
p.m. weekdays, at the office of the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-0500.

B. Regulatory Flexibility Act
    The Secretary in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this rule, and in so doing 
certifies that this rule does not have a significant economic impact on 
a substantial number of small entities. The rule revises existing 
procedures for the allocation of housing assistance funds and for local 
government and HUD review of applications for housing assistance, but 
will make no change in the economic impact of these procedures on small 
entities.

C. Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations, 
the policies and procedures contained in this rule relate only to 
internal administrative procedures whose content does not constitute a 
development decision nor affect the physical condition of project areas 
or building sites, and therefore, are categorically excluded from the 
requirements of the National Environmental Policy Act.

D. Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
states or their political subdivisions, or the relationship between the 
Federal government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Specifically, 
this rule will not substantially alter the established roles of HUD and 
the States and local governments, including PHAs, in administering the 
affected programs. As a result, the rule is not subject to review under 
the order.

E. Executive Order 12606, The Family

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

F. Regulatory Agenda

    This rule was listed as item number 1389 in the Department's 
Semiannual Agenda of Regulations published on May 8, 1995 (60 FR 23368, 
23380) in accordance with Executive Order 12866 and the Regulatory 
Flexibility Act.

G. Justification for Final Rulemaking

    In general, the Department publishes a rule for public comment 
before issuing a rule for effect, in accordance with its own 
regulations on rulemaking, 24 CFR part 10. However, part 10 does 
provide for exceptions from that general rule where the agency finds 
good cause to omit advance notice and public participation. The good 
cause requirement is satisfied when prior public procedure is 
``impracticable, unnecessary, or contrary to the public interest.'' (24 
CFR 10.1)
    The Department finds that good cause exists to publish this rule 
for effect without first soliciting public comment, because prior 
public procedure is unnecessary. The two changes added to this final 
rule (discussed above in section I(c) of the preamble) are merely 
technical, conforming changes.

H. The Catalog of Federal Domestic Assistance program numbers are as 
follows:

14.103  Interest Reduction Payments--Rental and Cooperative Housing for 
Lower Income Families
14.149  Rent Supplements--Rental Housing for Lower Income Families
14.156  Lower Income Housing Assistance Program (Section 8)
14.157  Housing for the Elderly or Handicapped
14.177  Housing Voucher Program
14.850  Public and Indian Housing 

[[Page 35126]]

14.851  Low Income Housing--Homeownership Opportunities for Low Income 
Families

List of Subjects in 24 CFR Part 791

    Grant programs--housing and community development, Indians, 
Intergovernmental relations, Public housing, Rent subsidies.

    Accordingly, 24 CFR part 791 is amended as follows:

PART 791--REVIEW OF APPLICATIONS FOR HOUSING ASSISTANCE AND 
ALLOCATIONS OF HOUSING ASSISTANCE FUNDS

    1. The authority citation for 24 CFR part 791 is revised to read as 
follows:

    Authority: 42 U.S.C. 1439 and 3535(d).

    2. Section 791.401 is revised to read as follows:


Sec. 791.401  General.

    This subpart establishes the procedures for allocating budget 
authority under section 213(d) of the Act for the programs identified 
in Sec. 791.101(a). It describes the allocation of budget authority by 
the appropriate Assistant Secretary to the applicable Program Office 
Director in the HUD State or Area Office, and by the Program Office 
Director to allocation areas within the HUD State or Area Office 
jurisdiction.
    3. Section 791.403 is amended by revising paragraphs (a), 
(b)(1)(ii), and (b)(2), to read as follows:


Sec. 791.403  Allocation of housing assistance.
    (a) The Assistant Secretary for Housing and the Assistant Secretary 
for Public and Indian Housing shall confer to determine how the 
available budget authority is to be allocated. The total budget 
authority available for any fiscal year shall be determined by adding 
any available, unreserved budget authority from prior fiscal years to 
any newly appropriated budget authority for each housing program. On a 
nationwide basis, at least 20 percent, but not more than 25 percent, of 
the total budget authority available for any fiscal year, which is 
allocated pursuant to paragraph (b)(2) of this section, shall be 
allocated for use in non-metropolitan areas.
    (b) * * *
    (1) * * *
    (ii) Assistance which is--
    (A) The subject of a line item identification in the HUD 
appropriations law, or in the table customarily included in the 
Conference Report on the appropriation for the Fiscal Year in which the 
funds are to be allocated;
    (B) Reported in the Operating Plan submitted by HUD to the 
Committees on Appropriations; or
    (C) Included in an authorization statute where the nature of the 
assistance, such as a prescribed set-aside, is, in the determination of 
the Secretary, incapable of geographic allocation by formula,
* * * * *
    (2) Budget authority remaining after carrying out allocation steps 
outlined in paragraph (b)(1) of this section shall be allocated in 
accordance with the housing needs percentages calculated under 
Sec. 791.402 (b), (c), (d), and (e). HUD may allocate assistance under 
this paragraph in such a manner that each State shall receive not less 
than one-half of one percent of the amount of funds available for each 
program referred to in Secs. 791.101(a) in each fiscal year. If the 
budget authority for a particular program is insufficient to fund 
feasible projects, or to promote meaningful competition at the State/
Area Office level, budget authority may be allocated among the ten 
geographic Areas of the country. The funds so allocated will be 
assigned by Headquarters to the State/Area Office(s) with the highest 
ranked applications within the ten geographic Areas.
* * * * *
    4. Section 791.405 is revised to read as follows:


Sec. 791.405  Reallocations of budget authority.

    (a) The State/Area Office shall make every reasonable effort to use 
the budget authority made available for each allocation area within 
such area. If the Program Office Director determines that not all of 
the budget authority allocated for a particular allocation area is 
likely to be used during the fiscal year, the remaining authority may 
be allocated to other allocation areas where it is likely to be used 
during that fiscal year.
    (b) If the Assistant Secretary determines that not all of the 
budget authority allocated to a State/Area Office is likely to be used 
during the fiscal year, the remaining authority may be reallocated to 
another State/Area Office where it is likely to be used during the 
fiscal year.
    (c) Any reallocations of budget authority among allocation areas or 
State/Area Offices shall be consistent with the assignment of budget 
authority for the specific program type and established set-asides.
    (d) Notwithstanding the requirements of paragraphs (a) through (c) 
of this section, budget authority shall not be reallocated for use in 
another State unless the appropriate Program Office Director or the 
Assistant Secretary has determined that other allocation areas within 
the same State cannot use the available authority during the fiscal 
year.
    5. Section 791.407 is amended by revising the introductory text of 
paragraph (a) to read as follows:


Sec. 791.407  Headquarters Reserve.

    (a) A portion of the budget authority available for the housing 
programs listed in Sec. 791.101(a), not to exceed an amount equal to 
five percent of the total amount of budget authority available for the 
fiscal year for programs under the United States Housing Act of 1937 
listed in Sec. 791.101(a), may be retained by the Assistant Secretary 
for subsequent allocation to specific areas and communities, and may 
only be used for:
* * * * *
    Dated: June 27, 1995.
Henry G. Cisneros,
Secretary.
[FR Doc. 95-16489 Filed 7-5-95; 8:45 am]
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