[Federal Register Volume 61, Number 77 (Friday, April 19, 1996)]
[Rules and Regulations]
[Pages 17538-17542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9613]




[[Page 17537]]


_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 990



Low-Income Public Housing Performance Funding System; Streamlining; 
Final Rule

  Federal Register / Vol. 61, No. 77 / Friday, April 19, 1996 / Rules 
and Regulations  

[[Page 17538]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 990

[Docket No. FR-3760-F-01]
RIN 2577-AB50


Office of the Assistant Secretary for Public and Indian Housing; 
Low-Income Public Housing Performance Funding System--Streamlining

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Final rule.

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

SUMMARY: This final rule eliminates obsolete provisions from part 990 
that had been retained solely for historical purposes. Additionally, 
revisions have been made to part 990 to reflect recent policy actions 
relating to the submission of operating budgets and the elimination of 
the maximum operating reserve.

EFFECTIVE DATE: May 20, 1996.

FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Deputy Assistant 
Secretary, Office of Public and Assisted Housing Operations, Public and 
Indian Housing, Room 4204, Department of Housing and Urban Development, 
451 Seventh Street, SW, Washington, DC 20410, telephone (202) 708-0614. 
For hearing or speech-impaired persons, this number may be accessed via 
TDD by contacting the Federal Information Relay Service at 1-800-877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On March 4, 1995, President Clinton issued a memorandum on 
regulatory reform wherein he directed all Federal departments and 
agencies to, among other things, delete obsolete and unnecessary 
regulations, and revise necessary regulations. The memorandum built on 
the regulatory philosophy set forth in the President's Executive Order 
12866 of September 30, 1993, Regulatory Planning and Review, which is 
premised on the recognition of the legitimate role of government to 
govern, but to do so in a focused and sensible way.
    This final rule accomplishes the President's goal by eliminating 
obsolete sections in 24 CFR part 990, and revising several other 
sections.
    In addition to the removal of obsolete provisions which had been 
retained in the regulation for historical purposes, the rule has been 
changed to reflect the following policy changes:
    (1) In 1994, as part of HUD's reinvention efforts and 
recommendations made as a result of the Public and Indian Housing 
Statutory and Regulatory Review Program on financial management, a 
streamlined operating budget submission procedure was adopted. HUD 
waived the requirement in Section 407 of the Annual Contributions 
Contract for the submission of annual operating budgets and revisions 
for certain housing authorities (HAs) which have successfully passed 
performance measures found in the Public Housing Management Assessment 
Program.
    (2) In 1995, HUD administratively removed the maximum allowable 
operating reserve for the Low Rent Public Housing and Turnkey III 
programs. As a result of this step, the requirement (for applicable 
programs) to remit to HUD residual receipts generated out of operations 
of HAs is inoperative because such residual receipts were created by a 
maximum allowable operating reserve.

II. Summary of Amendments

    Section 990.101 has been revised to remove a general discussion of 
the background leading to the development of the Performance Funding 
System (PFS) in 1975. It also removes an overview of the PFS which 
summarized in a general way the basic elements of the PFS.
    The following changes have been made to the definitions found in 
Sec. 990.102. The statement that the Formula is subject to annual 
update has been removed because the Formula published in this 
regulation in 1992 is not updated annually. The definition of Interim 
Formula has been removed because it is a historical reference to the 
formula used before PFS. The definition of Local Inflation Factor has 
been simplified to remove language describing the adoption of a revised 
factor in 1982. The definition of Operating Budget has been revised to 
reflect the fact that some HAs are no longer required to submit 
operating budgets for HUD approval. Top of Range, which has changed 
over time, is now defined here and will no longer have to be defined 
each time it is referenced in Sec. 990.105.
    Section 990.103 has been revised to eliminate a reference to the 
starting dates for commencement of the PFS in 1975.
    The following changes have been made to Sec. 990.105. Section 
990.105(a) has been revised to drop two references to budgets being 
``approved'' because some HAs are no longer required to obtain HUD 
approval of their operating budgets. The detailed description of the 
current PFS formula has been moved to Sec. 990.105 from 
Sec. 990.110(f), the FY 1992 Formal Review Process section. The Top of 
Range is now defined in Sec. 990.102, and its definition has been 
removed from Sec. 990.105. Sections describing the Allowable Expense 
Level calculations before 1992 have been removed.
    Section 990.107 has been revised to eliminate a general discussion 
of the reasons behind the PFS treatment of utilities. It has also been 
revised to reflect that there is no longer a heating degree day 
adjustment and to remove reference to the 1983 starting date for the 
current provisions.
    References to Residual Receipts have been eliminated from 
Sec. 990.108 to reflect the fact that the requirement to remit residual 
receipts is no longer operative. A sentence on the proration of audit 
costs has been removed because it only discussed proration of 
development costs and proration to other programs is also often 
appropriate. The limitation on approval of costs attributable to 
changes in Federal law or regulation has been revised to remove the 
requirement for a determination that sufficient other funds are not 
available. The Section on Costs beyond Control has been removed because 
this provision is statutory and does not need to be repeated in 
regulation.
    The revisions to Sec. 990.109 have been made to simplify the 
reference to the Tenant Rent Roll and to reflect the fact that some HAs 
are no longer required to submit an operating budget.
    Section 990.110 has also been changed to reflect elimination of a 
universal requirement to submit operating budgets. The phrase 
``independent audit'' has been substituted for ``IPA audit.'' The 
section on utility adjustments has been simplified so that separate 
discussions of upward and downward adjustments are combined into one 
paragraph. This section has also been revised to reflect the fact that 
the requirement to remit residual receipts is no longer operative. The 
discussion of rental income adjustments has been shortened by removing 
examples of two of the reasons for these adjustments. The paragraph 
covering the Formal Review Process which took place in 1992 has been 
removed.
    Section 990.111, Operating Reserves, has been removed to reflect 
the elimination of a maximum operating reserve.
    The entire description of operating budget submission and approval 
has been rewritten to reflect the fact that some HAs are no longer 
required to submit an operating budget.

[[Page 17539]]

    Section 990.113 has been revised to eliminate specific regulatory 
citations for occupancy regulations.
    A one-time 1982 Energy Conservation procedure has been removed by 
deleting Sec. 990.116.
    A change in a regulatory reference has been made in Sec. 990.401(a) 
to reflect the revision to Sec. 990.105.

III. Justification for Final Rulemaking

    The Department has determined that it is unnecessary to subject 
this rule to public comment. Since this rule is limited to removing 
obsolete provisions and updating provisions in part 990 to reflect 
current practices, prior public comment was determined to be 
unnecessary. Section 10.1 of 24 CFR part 10 states that notice and 
public procedure can be omitted if the Department determines in a 
particular case or class of cases that notice and public procedure are 
impracticable, unnecessary, or contrary to the public interest.

IV. Findings and Certifications

Executive Order 12866

    The Office of Management and Budget reviewed this final rule 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 at the Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-0500.

Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(o) of the HUD regulations, 
the policies and procedures contained in this final rule relate only to 
operating costs that do not affect a physical structure or property 
and, therefore, are categorically excluded from the requirements of the 
National Environmental Policy Act.

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 would not have a significant 
economic impact on a substantial number of small entities. This rule 
eliminates obsolete provisions which had been retained solely for 
historical purposes.

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 do not have federalism implications and, thus, 
are not subject to review under the Order.

Impact on the Family

    The General Counsel of HUD, as the Designated Official under 
Executive Order 12606, The Family, has determined that this rule does 
not have potential for significant impact on formation, maintenance, 
and general well-being of families, 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.

List of Subjects in 24 CFR Part 990

    Grant programs--housing and community development; Public housing, 
Reporting and record keeping requirements.

    Accordingly, 24 CFR part 990 is amended as follows:

PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY

    1. The authority citation for part 990 continues to read as 
follows:

    Authority: 42 U.S.C. 11437(g) and 3535(d).

    2-3. Section 990.101 is revised to read as follows:


Sec. 990.101  Purpose.

    Implementation of Section 9(a). The purpose of this subpart is to 
establish standards and policies for the determination of operating 
subsidy eligibility in accordance with section 9(a) of the U.S. Housing 
Act of 1937, 42 U.S.C. 1437g. Section 9(a) authorizes the Secretary of 
Housing and Urban Development (HUD) to make annual contributions for 
the operation of PHA-owned rental housing (operating subsidy).

    4. In Sec. 990.102, the following definitions are amended:
    (a) The last sentence of the definition of Formula is removed;
    (b) The definition of ``Interim Formula'' is removed;
    (c) The definition for Local Inflation Factor is revised:
* * * * *
    Local Inflation Factor. The HUD-supplied weighted average 
percentage increase in local government wages and salaries for the area 
in which the PHA is located and non-wage expenses;
* * * * *
    (d) The definition for ``Operating budget'' is revised:
* * * * *
    Operating budget. The PHA's operating budget and all related 
documents, as required by HUD, approved by the PHA Board of 
Commissioners;
* * * * *
and
    (e) The definition of ``Top of Range'' is added:
* * * * *
    Top of Range. Formula Expense Level multiplied by 1.15.
* * * * *
    5. In Sec. 990.103, paragraph (a) is revised; paragraph (b) is 
removed; and paragraph (c) is redesignated as paragraph (b), to read as 
follows:


Sec. 990.103  Applicability of PFS.

    (a) PFS has been and will be utilized in determining the amounts of 
operating subsidy payable to PHAs. PFS is applicable to all PHA-owned 
rental units under Annual Contributions Contracts. PFS applies to PHAs 
that have not received operating subsidy payments previously, but are 
eligible for such payments under PFS. PFS, as described in this part, 
is not applicable to Indian Housing, the Section 23 Leased Housing 
Program, the Section 23 Housing Assistance Payments Program, the 
Section 8 Housing Assistance Payments Program, or the Turnkey III or 
Turnkey IV Homeownership Opportunity Programs. PFS is not applicable to 
housing owned by the PHAs of the Virgin Islands, Puerto Rico, Guam, and 
Alaska. Operating subsidy payments to these PHAs are made in accordance 
with subpart B of this part. PFS for Indian Housing is described in 24 
CFR part 950.
* * * * *
    6. Section 990.105 is amended by revising the introductory text, 
paragraph (a), introductory text, paragraph (c), paragraph (d), 
introductory text, paragraphs (d)(1) and (d)(2), introductory text, 
paragraph (d)(4), and (d)(5), to read as follows:


Sec. 990.105  Computation of allowable expense level.

    The PHA shall compute its Allowable Expense Level using forms 
prescribed by HUD, as follows:
    (a) Computation of Base Year Expense Level. The Base Year Expense 
Level includes Payments in Lieu of Taxes (PILOT) required by a 
Cooperation Agreement even if PILOT is not included in the Operating 
Budget for the Base Year because of a waiver of the requirements by the 
local taxing jurisdiction(s). The Base Year Expense Level includes all 
other operating expenditures as reflected in the PHA's

[[Page 17540]]

Operating Budget for the Base Year except the following:
* * * * *
    (c) Computation of Formula Expense Level. The PHA shall compute its 
Formula Expense Level in accordance with a HUD-prescribed formula that 
estimates the cost of operating an average unit in a particular PHA's 
inventory. It uses weights and a Local Inflation Factor assigned each 
year to derive a Formula Expense Level for the current year and the 
requested budget year. The formula is the sum of the following six 
numbers and the weights of the formula and the formula are subject to 
updating by HUD:
    (1) The number of pre-1940 rental units occupied by poor households 
in 1980 as a percentage of the 1980 population of the community 
multiplied by a weight of 7.954. This Census-based statistic applies to 
the county of the PHA, except that, if the PHA has 80 percent or more 
of its units in an incorporated city of more than 10,000 persons, it 
uses city-specific data. County data will exclude data for any 
incorporated cities of more than 10,000 persons within its boundaries.
    (2) The Local Government Wage Rate multiplied by a weight of 
116.496. The wage rate used is a figure determined by the Bureau of 
Labor Statistics. It is a county-based statistic, calibrated to a unit-
weighted PHA standard of 1.0. For multi-county PHAs, the local 
government wage is unit-weighted. For this formula, the local 
government wage index for a specific county cannot be less than 85 
percent or more than 115 percent of the average local government wage 
for counties of comparable population and metro/non-metro status, on a 
state-by-state basis. In addition, for counties of more than 150,000 
population in 1980, the local government wage cannot be less than 85 
percent or more than 115 percent of the wage index of private 
employment determined by the Bureau of Labor Statistics and the 
rehabilitation cost index of labor and materials determined by the R.S. 
Means Company.
    (3) The lesser of the current number of the PHA's two or more 
bedroom units available for occupancy, or 15,000 units, multiplied by a 
weight of .002896.
    (4) The current ratio of the number of the PHA's two or more 
bedroom units available for occupancy in high-rise family projects to 
the number of all the PHA's units available for occupancy multiplied by 
a weight of 37.294. For this indicator, a high-rise family project is 
defined as averaging 1.5 or more bedrooms per unit available for 
occupancy and averaging 35 or more units available for occupancy per 
building and containing at least one building with units available for 
occupancy that is 5 or more stories high.
    (5) The current ratio of the number of the PHA's three or more 
bedroom units available for occupancy to the number of all the PHA's 
units available for occupancy multiplied by a weight of 22.303.
    (6) An equation calibration constant of -.2344.
    (d) Computation of Allowable Expense Level. The PHA shall compute 
its Allowable Expense Level as follows:
    (1) Allowable Expense Level for first budget year under PFS where 
Base Year Expense Level does not exceed the top of the range. Every PHA 
whose Base Year Expense Level is less than the top of the range shall 
compute its Allowable Expense Level for the first budget year under the 
PFS by adding the following to its Base Year Expense Level (before 
adjustments under Sec. 990.110):
* * * * *
    (2) Allowable Expense Level for first budget year under PFS where 
Base Year Expense Level exceeds the top of the range. Every PHA whose 
Base Year Expense Level exceeds the top of the range shall compute its 
Allowable Expense Level for the first budget year under PFS by adding 
the following to the top of the range (not to its Base Year Expense 
Level, as in paragraph (d)(1) of this section):
* * * * *
    (4) Allowable Expense Level for budget years after the first budget 
year under PFS. For each budget year after the first budget year under 
PFS, the AEL shall be computed as follows:
    (i) The Allowable Expense Level shall be increased by any increase 
to the AEL approved by HUD under Sec. 990.108(c);
    (ii) The AEL for the Current Budget Year also shall be adjusted as 
follows:
    (A) Increased by one-half of one percent (.5 percent); and
    (B) If the PHA has experienced a change in the number of units in 
excess of 5 percent or 1,000 units, whichever is less, since the last 
adjustment to the AEL based on this paragraph, it shall use the 
increase (decrease) between the Formula Expense Level calculated using 
the PHA's characteristics that applied to the Requested Year when the 
last adjustment to the AEL was made based on this paragraph and the 
Formula Expense Level calculated using the PHA's characteristics for 
the Requested Budget Year.
    (iii) The amount computed in accordance with paragraphs (d)(4) (i) 
and (ii) of this section shall be multiplied by the Local Inflation 
Factor.
    (5) Adjustment of Allowable Expense Level for budget years after 
the first budget year under PFS. HUD may adjust the Allowable Expense 
Level of budget years after the first year under PFS under the 
provisions of Sec. 990.105(b) or Sec. 990.108(c).
    7. Section 990.107 is amended by revising paragraphs (a) and 
(c)(1), introductory text, to read as follows:


Sec. 990.107  Computation of utilities expense level.

    (a) The PHA's Utilities Expense Level for the requested Budget Year 
shall be computed by multiplying the AUCL per unit per month for each 
utility, determined as provided in paragraph (c) of this section, by 
the projected utility rate determined as provided in paragraph (b) of 
this section.
    (c) * * *
    (1) Rolling Base Period System. For project utilities with 
consumption data for the entire Rolling Base Period, the AUCL is the 
average amount consumed per unit per month during the Rolling Base 
Period adjusted in accordance with paragraph (d) of this section. The 
PHA shall determine the average amount of each of the utilities 
consumed during the Rolling Base period (i.e., the 36-month period 
ending 12 months prior to the first day of the Requested Budget Year). 
An example of a rolling base is as follows:
* * * * *
    8. In Sec. 990.108, paragraphs (a) (1) and (2) and (c) are revised, 
paragraph (d) is removed, paragraph (e) is redesignated as paragraph 
(d), paragraph (f) is redesignated as paragraph (e), and paragraph (g) 
is redesignated as paragraph (f).


Sec. 990.108  Other costs.

    (a) Cost of independent audits. (1) Eligibility to receive 
operating subsidy for independent audits is considered separately from 
the PFS. However, the PHA shall not request, nor will HUD approve, an 
operating subsidy for the cost of an independent audit if the audit has 
already been funded by subsidy in a prior year. The PHA's estimate of 
cost of the independent audit is subject to adjustment by HUD. If the 
PHA requires assistance in determining the amount of cost to be 
estimated, the HUD Field Office should be contacted.
    (2) A PHA that is required by the Single Audit Act (see 24 CFR part 
44) to conduct a regular independent audit may receive operating 
subsidy to cover the cost of the audit. The estimated cost of an 
independent audit, applicable to the operations of PHA-owned rental 
housing, is not included in the Allowable Expense Level, but it is

[[Page 17541]]

allowed in full in computing the amount of operating subsidy under 
Sec. 990.104, above.
* * * * *
    (c) Costs attributable to changes in Federal law or regulation. In 
the event that HUD determines that enactment of a Federal law or 
revision in HUD or other Federal regulation has caused or will cause a 
significant increase in expenditures of a continuing nature above the 
Allowable Expense Level and Utilities Expense Level, HUD may in HUD's 
sole discretion decide to prescribe a procedure under which the PHA may 
apply for or may receive an increase in operating subsidy.
* * * * *
    9. In Sec. 990.109, paragraphs (b), introductory text, (b)(1), and 
(d) are revised to read as follows:


Sec. 990.109  Projected operating income level.

* * * * *
    (b) Computation of projected average monthly dwelling rental 
income. The projected average monthly dwelling rental income per unit 
for the PHA is computed as follows:
    (1) Average monthly dwelling rental charge per unit. The dollar 
amount of the average monthly dwelling rental charge per unit shall be 
computed on the basis of the total dwelling rental charges (total of 
the adjusted rent roll amounts) for all Project Units, as shown on the 
Tenant Rent Rolls which the PHA is required to maintain, for the first 
day of the month which is six months prior to the first day of the 
Requested Budget Year, except that if a change in the total of the Rent 
Rolls has occurred in a subsequent month which is prior to the 
beginning of the Requested Budget Year and prior to the submission of 
the Requested Budget Year calculation of operating subsidy eligibility, 
the PHA shall use the latest changed Rent Roll for the purpose of the 
computation. This aggregate dollar amount shall be divided by the 
number of occupied dwelling units as of the same date.
* * * * *
    (d) Estimate of additional dwelling rental income. After 
implementation of the provisions of any legislation enacted or any HUD 
administrative action taken subsequent to the effective date of these 
regulations, which affects rents paid by tenants of Projects, each PHA 
shall submit a revision of its calculation of operating subsidy 
eligibility showing an estimate of any change in rental income which it 
anticipates as the result of the implementation of said provisions. HUD 
shall have complete discretion to adjust the projected average monthly 
dwelling rental charge per unit to reflect such change or in the 
absence of this submission, if HUD has knowledge of such change. HUD 
also shall have complete discretion to reduce or increase the operating 
subsidy approved for the PHA current fiscal year in an amount 
equivalent to the change in the rental income.
* * * * *


Sec. 990.110  [Amended]

    10. Section 990.110 is amended as follows:
    (a) The first sentence of the introductory text is amended by 
removing the phrase ``operating budget'' and adding the phrase 
``calculation of operating subsidy eligibility'';
    (b) Paragraph (a)(1) is amended by removing the phrase ``IPA'' and 
adding the word ``independent'' in its place; paragraph (a)(2) is 
amended by removing the phrase ``operating budget'' and adding the 
phrase ``calculation of operating subsidy eligibility'' in its place;
    (c) Paragraph (c) is amended by removing the phrase ``IPA'' in two 
places and adding the word ``independent'' in its place;
    (d) Paragraph (c)(1)(i) is amended by removing the ``(i)'' and the 
first sentence and adding the sentence ``A change in the Utilities 
Expense Level because of changes in utility rates-to the extent funded 
by the operating subsidy-will result in an adjustment of future 
operating subsidy payments.'' in its place;
    (e) Paragraph (c)(1)(ii) is removed;
    (f) Paragraph (c)(2)(ii) is amended by removing the sentence ``The 
decreased consumption is to be determined by adjusting for any utility 
rate changes.'' and adding ``The decreased consumption is to be 
determined by adjusting for any utility rate changes and may be 
adjusted, subject to HUD approval, using a heating degree day 
adjustment for space heating utilities.'' in its place;
    (g) Paragraph (c)(2)(iii) is amended by removing the phrase, ``then 
50 percent of the amount will be funded by increased operating subsidy 
payment, subject to the availability of funds.'' and the following 
phrase is added in its place ``fifty percent of an increase in the 
Utilities Expense Level attributable to increased consumption, after 
adjustment for any utility rate change, will be funded by HUD by 
adjusting future operating subsidy payments.'';
    (h) The first sentence of paragraph (d)(1) is amended by removing 
the phrase ``, such as a substantial increase in general unemployment 
in the locality, or because of a revision of the PHA's rent schedule 
which has been approved by HUD'';
    (i) Paragraph (e) is amended by removing the phrase 
``990.107(g)(2)'' and adding ``990.107(f)(2)'' in its place;
    (j) Paragraph (e)(1)(i) is revised:
* * * * *
    (e) * * *
    (1) * * *
    (i) The consumption level that would have been expected if the 
energy conservation measure had not been undertaken would be adjusted 
for any change in utility rate and may be adjusted, subject to HUD 
approval, using a heating degree day adjustment for space heating 
utilities;
* * * * *
    (k) Paragraph (f) is removed; and
    (l) Paragraph (g) is redesignated as paragraph (f).
    11. Section 990.111 is revised to read as follows:


Sec. 990.111  Submission and Approval of Operating Subsidy Calculations 
and Budgets.

    (a) Required Documentation. (1) Prior to the beginning of its 
fiscal year, the PHA shall prepare an operating budget in a manner 
prescribed by HUD. The Board of Commissioners shall review and approve 
the budget by resolution. Each fiscal year, the PHA shall submit to the 
HUD Field Office, in a time and manner prescribed by HUD, the approved 
board resolution and the required operating subsidy eligibility 
calculation forms. The PHA shall submit revised calculations in support 
of mandatory or other adjustments based on procedures prescribed by 
HUD.
    (2) HUD may direct the PHA to submit its complete operating budget 
if the PHA has failed to achieve certain specified operating standards, 
or for other reasons which in HUD's determination threaten the PHA's 
future serviceability, efficiency, economy, or stability.
    (b) HUD operating budget review. (1) The HUD Field Office will 
perform a detailed review on operating budgets that are subject to HUD 
review and approval. If the HUD Field Office finds that an operating 
budget is incomplete, includes illegal or ineligible expenditures, 
mathematical errors, errors in the application of accounting 
procedures, or is otherwise unacceptable, the HUD Field Office may at 
any time require the submission by the PHA of further information 
regarding an operating budget or operating budget revision.
    (2) When the PHA no longer is operating in a manner that threatens 
the future serviceability, efficiency,

[[Page 17542]]

economy, or stability of the housing it operates, HUD will notify the 
PHA that it no longer is required to submit an operating budget to HUD 
for review and approval.
    12. Section 990.112 is removed and the present Sec. 990.113 is 
redesignated as Sec. 990.112.
    13. Section 990.115 is redesignated as Sec. 990.113 and paragraphs 
(a) and (b) are revised to read as follows:


Sec. 990.113  Payments of operating subsidy conditioned upon 
reexamination of income of families in occupancy.

    (a) Policy. The income of each family must be reexamined at least 
annually. PHAs must be in compliance with this reexamination 
requirement to be eligible to receive full operating subsidy payments.
    (b) PHAs in compliance with requirements. Each submission of the 
original calculation of operating subsidy eligibility for a fiscal year 
shall be accompanied by a certification by the PHA that it is in 
compliance with the annual income reexamination requirements and that 
rents have been or will be adjusted in accordance with current HUD 
requirements.
* * * * *


Sec. 990.116   [Removed]

    14. Section 990.116 is removed.


Sec. 990.401  [Amended]

    15. Section 990.401(a) is amended by removing from the last 
sentence the phrase Sec. 990.105(e)(5) and adding the phrase 
Sec. 990.105(e)(4) in its place.

    Dated: March 14, 1996.
Michael B. Janis,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 96-9613 Filed 4-18-96; 8:45 am]
BILLING CODE 4210-33-P