[Federal Register Volume 61, Number 155 (Friday, August 9, 1996)]
[Pages 41640-41646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20361]


[[Page 41641]]

[Docket No. FR-4103-N-01]

Office of the Assistant Secretary for Public and Indian Housing; 
Notice of Implementation of the Omnibus Consolidated Rescissions and 
Appropriations Act of 1996

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.
ACTION: Notice of Implementation of the Omnibus Consolidated 
Rescissions and Appropriations Act of 1996 (Pub.L. 104-134, approved 
April 26, 1996) (``OCRA'') relating to the Public and Indian Housing 
Program and the Section 8 Certificate, Voucher, and Moderate 
Rehabilitation Programs.


SUMMARY: The OCRA affects the public and Indian housing and Section 8 
programs by providing certain funds and by amending the U.S. Housing 
Act of 1937 (the ``USHA''). This Notice advises the public of the 
Department's intentions regarding funding processes for affected 
programs. This Notice also advises the public of various changes to 
regulatory requirements and program policies, implementing the 
administrative provisions of the OCRA that amend the USHA for Federal 
Fiscal Year 1996 (``FY 1996'').
    The Department will issue instructions concerning Section 202 of 
the OCRA, Conversion of Certain Public Housing to Tenant-based Section 
8 Vouchers and Certificates, by separate notice.
    This Notice does not modify or negate the policies contained in 
Notices PIH 96-6 and 7 (HA) dated February 13, 1996, which were issued 
to implement provisions of the January 26, 1996 Continuing Resolution. 
Those Notices concerned minimum tenant rents, public and Indian housing 
ceiling rents, the definition of ``adjusted income'' for public and 
Indian housing residents, suspension of Federal tenant selection 
preferences, repeal of provisions regarding income disregards, delay in 
reissuance of turnover certificates and vouchers, and FY 1996 Section 8 
administrative fees.
    This Notice also does not modify or negate the guidance issued in 
Notice PIH 96-12 (HA) on March 21, 1996, which concerned management of 
the minimum rent requirements.
    In addition, this Notice does not modify or negate the guidance 
issued in Notice PIH 96-24 (HA) on May 3, 1996, which concerned 
Performance Funding System policy revisions to encourage public and 
Indian housing authorities to facilitate resident employment and 
undertake entrepreneurial initiatives.
    Further, this Notice is not intended to supersede the Public/
Private Partnership for Mixed-Finance Public Housing Development rule 
in 24 CFR part 941, subpart F (published May 2, 1996, 61 FR 19708). 
That rule remains in effect. This Notice is intended to provide 
implementation guidance on that subject in those limited areas where 
the language in the OCRA differs from that in the rule.
    The provisions of this Notice apply both to Public Housing Agencies 
(``PHAs'') and to Indian Housing Authorities (``IHAs''), which are 
collectively referred to in this Notice as ``HAs'' unless otherwise 

Contents of this Notice

I. Annual Contributions Contracts and Commitment of Funds
II. Extension of Administrative Provisions from the Rescissions Act
III. Streamlining Section 8 Tenant-Based Assistance
IV. Public Housing/Section 8 Moving to Work Demonstration
V. Extension Period for Sharing Utility Cost Savings with HAs
VI. Repeal of Frost-Leland
VII. Minimum Rent Waiver Authority

FOR FURTHER INFORMATION CONTACT: Rod Solomon, Director, Special 
Actions, Public and Indian Housing, Room 4116, Department of Housing 
and Urban Development, 451 Seventh Street, SW, Washington, DC 20410, 
telephone (202) 708-0713.
    For IHAs, contact Dom Nessi, Deputy Assistant Secretary for Native 
American Programs, Room B-133, 451 Seventh Street, SW, Washington, DC 
20410, telephone (202) 755-0032.
    For hearing or speech impaired persons, these numbers may be 
accessed via TTY by contacting the Federal Information Relay Service at 
1-800-877-8339. (Except for the ``800'' number, the telephone numbers 
are not toll-free.)


I. Annual Contributions Contracts and Commitment of Funds

A. Indian Housing

1. Indian Housing Development Funding
    A Notice of Funding Availability (``NOFA'') was published in the 
Federal Register on March 29, 1996 (61 FR 14218), which announced 
approximately $160 million in FY 1996 funding for the development of 
new Indian Housing units and provided the applicable criteria, 
processing requirements and action timetable.
2. Indian HOME Funding, Indian Community Development Block Grant 
Funding, and Indian Emergency Shelter Grant Funding
    A NOFA was published in the Federal Register on March 27, 1996 (61 
FR 13574) announcing the availability of up to $14 million in funding 
for FY 1996 for the HOME Program for Indian Tribes and providing 
selection criteria, information on how to apply, and an explanation of 
how selections would be made.
    A NOFA was published in the Federal Register on May 9, 1996 (61 FR 
21338), which announced the availability of $50,000,000 in funds for 
the Community Development Block Grant Program for Indian Tribes and 
Alaska Native Villages for Fiscal Year 1996.
    A NOFA was published in the Federal Register on March 5, 1996 (61 
FR 8824), which announced the availability of approximately $1,150,000 
in funds for emergency shelter grants to be allocated to Indian tribes 
and Alaskan Native villages by competition for Fiscal Year 1996.

B. Section 8 Certificate, Voucher and Moderate Rehabilitation Funding

    In a Federal Register notice published July 19, 1996 (61 FR 37758), 
HUD issued instructions concerning Section 8 certificate, voucher, and 
moderate rehabilitation funding.

C. Comprehensive Improvement Assistance Program (``CIAP'')

    A NOFA was published in the Federal Register on April 18, 1996 (61 
FR 17218), which announced the availability of up to $257 million for 
FY 1996 CIAP funding. The NOFA informed HAs that own or operate fewer 
than 250 public and Indian housing units (and, therefore, are eligible 
to apply and compete for CIAP funds) of the requirements and 
application deadline. The NOFA application deadline was June 17, 1996 
and the Department is now processing applications.

D. Public Housing Demolition, Site Revitalization, and Replacement 
Housing (HOPE VI) Grants

    Title II of the OCRA appropriates $480 million for public housing 
demolition, site revitalization, and replacement housing grants 
(referred to as the HOPE VI program). A NOFA was published on July 22, 
1996 (61 FR 38024), which announced the availability of HOPE VI 
funding. The funds will be used for grants to PHAs to enable them to 
demolish obsolete projects or portions of them, or

[[Page 41642]]

revitalize, where appropriate, the sites (including remaining public 
housing units) on which the projects are located. Also, grants may be 
used for replacement housing that will avoid or lessen concentrations 
of very low-income families and for tenant-based Section 8 assistance 
to provide replacement housing or to assist tenants who will be 
displaced by demolition.

E. Public and Indian Housing Drug Elimination Program (``PHDEP'') and 
Technical Assistance (``TA'') Program

    A NOFA was published in the Federal Register on April 8, 1996 (61 
FR 15674) announcing approximately $250 million for PHDEP. A notice was 
published in the Federal Register on July 10, 1996 (61 FR 36472), which 
makes two amendments to the April 8, 1996 NOFA, and reopens the 
application period for a period of 30 days. The application deadline 
under the July 10, 1996 NOFA is August 9, 1996.
    A NOFA was published in the Federal Register on June 25, 1996 ((61 
FR 32902) announcing the availability of $1.5 million under the PHDEP 
TA program. OCRA set aside $10 million for ``grants, technical 
assistance, contracts and other assistance training, program assessment 
and execution for or on behalf of public housing agencies and resident 
organizations.'' This NOFA makes $1.5 million out of the $10 million 
available under the PHDEP TA program. The NOFA provides that 
applications may be submitted anytime up to August 16, 1996.

F. Economic Development and Supportive Services Program

    The OCRA provided $53 million for supportive services under 
Community Development Block Grants. This funding will be used as 
    1. Section 202 Service Coordinators: Five million dollars will be 
used to assist elderly residents to obtain the supportive services they 
need from community agencies in order to prevent premature or 
unnecessary institutionalization. The Office of Housing will award 
funds on a first come, first serve, basis pursuant to current 
    2. Tenant-Based Section 8 Family Self-Sufficiency Service 
Coordinators (FSS): A NOFA was published on July 26, 1996 (61 FR 
39262), announcing $9.2 million for this program. Under the FSS 
program, HAs are required to use Section 8 rental assistance together 
with public and private resources to provide supportive services to 
enable participating families to achieve economic independence and 
self-sufficiency. Effective delivery of supportive services is a 
critical element in a successful program. Funds are available under 
this NOFA to employ or otherwise retain the services of up to one FSS 
program coordinator for one year. A part-time FSS program coordinator 
may be retained where appropriate. The application deadline is 
September 9, 1996.
    3. Economic Development and Supportive Services: The Department 
will publish a NOFA in the Federal Register announcing a total of up to 
$30.8 million in grant funds. This funding will allow HAs to (1) 
provide economic development opportunities or supportive services to 
assist residents of public and Indian housing to become economically 
self-sufficient and (2) provide supportive services to assist elderly 
and handicapped persons to live independently.
    4. Bridges to Work: The Department has set-aside $8 million for a 
Bridges to Work Demonstration to assist central city low-income 
individuals and families, including public housing and Section 8 
recipients, who are work ready, to become self-sufficient by linking 
them with suburban jobs. The linkage is to be achieved by coordinated 
programs of job search assistance, work preparation and job retention 
counseling, transportation and child care assistance, and other 
necessary supportive services. The six sites for the demonstration are: 
Baltimore, Chicago, Denver, Milwaukee, St. Louis, and Philadelphia.

G. Public and Indian Housing Youth Sports (YSP) Program

    There will not be a NOFA this year for the Public and Indian 
Housing Youth Sports Program. A notice was published in the Federal 
Register on June 12, 1996 (61 FR 29884) that announced that HUD would 
not fund the Youth Sports Program for FY 1996.

H. Tenant Opportunities Program (``TOP'') Technical Assistance

    A NOFA was published in the Federal Register on July 3, 1996 (61 FR 
35022) announcing the availability of $15 million for this program. TOP 
provides assistance to Resident Councils, Resident Management 
Corporations, Resident Organizations, National Resident Organizations, 
Regional Resident Organizations, and Statewide Resident Organizations, 
to fund training and other tenant opportunities, such as the formation 
of such entities, identification of the relevant social support needs, 
and securing of such support for residents of public and Indian 
    The application deadline is August 9, 1996.

II. Extension of Administrative Provisions From the Rescissions Act

A. Expansion of Eligible Uses of Modernization and Development 

1. General Provisions
    Section 201(a) of the OCRA gives HAs significant new flexibility in 
using public and Indian housing modernization and development funds 
provided under authority of the United States Housing Act (the 
``USHA''). This provision follows the expansion of the permitted uses 
of modernization funds that was made by Section 1001(a) of the 1995 
Rescissions Act (Pub.L. 104-19, approved July 27, 1995). The OCRA 
amends Section 14(q) of the USHA (as defined above), which was added by 
the 1995 Rescissions Act, to further expand the eligible uses of 
modernization assistance and also to expand the eligible uses of public 
and Indian housing development assistance. These provisions apply to 
modernization and development funds appropriated in FY 1996 and in 
prior fiscal years.
    With certain limitations, HAs may now use modernization assistance 
or development assistance for any eligible activity authorized (a) by 
the public and Indian housing modernization program (under Section 14 
of the USHA, as amended by the OCRA), (b) by the public and Indian 
housing development program (under Section 5 of the USHA), or (c) by 
applicable appropriations acts for an HA. Eligible activities include 
the demolition, rehabilitation, revitalization, and replacement of 
existing units and developments. Eligible activities also include those 
authorized under the Urban Revitalization Demonstration program (also 
known as ``HOPE VI''), as set forth in the 1993 HUD, VA, and 
Independent Agencies Appropriations Act (Pub.L. 102-389, approved), 
which authorizes both physical revitalization activities and activities 
to promote resident self-sufficiency, such as community services, 
social services, training and education, and other activities designed 
to encourage and support work by public housing residents. Although 
IHAs have not been eligible for HOPE VI funding in the past, IHAs may 
now use modernization and development funds for eligible activities 
authorized under HOPE VI.
2. Assistance Previously Allocated for Priority Replacement Housing
    The expansion of the eligible uses of modernization and development

[[Page 41643]]

assistance, as described above, does not apply to public and Indian 
housing development assistance that was allocated, as determined by the 
Department, for priority replacement housing. Such assistance may only 
be used for the specific activities for which it was allocated to the 
HA by the Department. In general, development assistance allocated for 
priority replacement housing is development assistance that was 
committed by the Department to an HA for an approved replacement 
housing plan, or development assistance (including assistance under a 
Major Reconstruction of Obsolete Projects (``MROP'') grant) which was 
not under an Annual Contributions Contract prior to July 27, 1995, and 
which HUD did not recapture. (Please note that the MROP program does 
not apply to IHAs.)
3. Section 5(j) Limitations on Public Housing Development
    While the OCRA authorizes the use of modernization assistance for 
the development activities authorized by Section 5 of the USHA, it does 
not exempt HAs from compliance with other applicable requirements of 
Section 5. In particular, the development of public housing (though not 
Indian housing) remains subject to Section 5(j) of the USHA, which 
limits the circumstances under which HUD may provide assistance to an 
HA for development activity. More specifically, Section 5(j) permits 
the use of funds for public housing development only if at least one of 
the following five conditions is met:
    (1) The Department determines that additional amounts are required 
to complete the development of units already under development;
    (2) The HA certifies that 85 percent of its units--
    (i) Are maintained in substantial compliance with Housing Quality 
    (ii) Will be so maintained upon completion of modernization for 
which funding has been awarded; or
    (iii) Will be so maintained upon completion of modernization which 
is likely to be funded;
    (3) The HA certifies that such development--
    (i) Is for replacement housing; or
    (ii) Is required to comply with court orders or directions of the 
    (4) The HA certifies that it has demands for family housing not 
satisfied by tenant-based Section 8 assistance for which it plans 
developments of not more than 100 units; or
    (5) In the case of elderly housing development, the HA certifies 
that the use of such assistance will expand housing opportunities for 
disabled persons.
4. Other Limitations on Incremental Public Housing Development
    Section 201(a)(1) of the OCRA provides that housing units developed 
with modernization funds are eligible for operating subsidies unless 
the Department determines that such units do not meet other 
requirements of the USHA. The USHA contains other limitations on the 
use of modernization assistance for public housing development in 
addition to those imposed by Section 5(j).
    Section 14 of the USHA (which authorizes the public and Indian 
housing modernization program), provides that the Department may 
disapprove an HA's 5-year comprehensive plan for modernization where 
the Department determines that the HA's action plan for performing 
modernization work is plainly inappropriate to meeting the needs 
identified in the comprehensive plan. HUD considers the use of 
modernization funds to be ``plainly inappropriate'' under Section 14 
where an HA would use such funds for incremental development (i.e., for 
units other than replacement housing) while the HA has substantial 
backlog modernization needs, unfunded emergency work, or work required 
to comply with Federal laws (e.g., lead-based paint abatement or 
Section 504 compliance) or court-ordered settlements at existing 
developments. In such situations, an HA may not use modernization funds 
for incremental public housing development, although it may use such 
funds to meet replacement housing needs or to fulfill obligations under 
a court-ordered settlement.
    Section 9(a)(2) of the USHA permits the Department to make 
operating assistance available only for public housing units that have 
been ``developed'' under an ACC authorized by Section 5 of the USHA. 
Section 5 authorizes the Department to make grants to HAs for the 
development of public housing. Under Section 201(a) of the OCRA, an HA 
may now also use Section 14 modernization funds for Section 5 
development activities. Thus, under the USHA, the Department's 
contribution of operating assistance to an HA is predicated on the 
Department's contribution of funds for development, regardless of 
whether such funds were allocated to the HA under authority of Section 
5 or Section 14.
    By the same reasoning, an HA may not use a nominal amount of 
Federal capital assistance simply to trigger operating assistance 
eligibility for incremental (i.e., other than replacement) units. As 
outlined above, only units ``developed'' under Section 5 are eligible 
for operating assistance under Section 9. Therefore, it would subvert 
the intent of the statute and the structure of the program to commit 
public housing operating assistance in a manner that is essentially 
independent of public housing capital assistance, or for purposes other 
than expansion of low-income housing resources (e.g., to relieve State 
or local jurisdictions of responsibility for their low-income housing 
    The Department does not intend, at this time, to set firm rules as 
to the level or nature of capital investment that an HA must make in 
order for housing units to be eligible for public housing operating 
assistance. Rather, the critical test for determining operating subsidy 
eligibility should be whether such units could have been developed but 
for the HA's investment of Federal capital funds. In general, the 
Department will consider this test to have been met, without further 
scrutiny, if the HA contributes Federal funds amounting to at least 50 
percent of the HUD-computed total development cost of the units, 
including acquisition and rehabilitation costs. An HA may meet this 
test in all other cases (i.e., where it contributes less than 50 
percent of the total development cost) only where it demonstrates to 
HUD's satisfaction that the HA's investment of Federal capital funds is 
necessary to leverage other, non-Federal capital funds essential to 
development, and will not be used merely to trigger eligibility for 
Federal operating assistance.
    The Department is aware that these restrictions preclude an HA from 
receiving Federal public housing operating subsidies for incremental 
housing units that would be donated to the HA, or for which the HA 
would contribute a nominal amount of capital funds. However, HUD 
believes that this result is required by existing law and that a 
different outcome would require further Congressional action.
    Finally, HAs should also be aware that public housing development 
activity under Section 5 of the USHA, including that funded with 
modernization assistance, is subject to the public housing development 
rule at 24 CFR part 941. The Department intends to issue a new, 
streamlined development rule in the near future. IHAs are subject to 
the development

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regulations found in 24 CFR part 950, subpart C.
    The Department is also issuing a separate notice that provides 
additional processing guidance, including accounting procedures, on 
using modernization funds for development activities and using 
development funds for modernization activities.
5. Operating Subsidy Eligibility
    Subject to the limitations above, low-income and very low-income 
units assisted under Section 14(q)(1) of the USHA are eligible for 
operating subsidies, unless (as provided in the OCRA) the Department 
determines that such units or developments do not meet other 
requirements of the USHA.
6. Use of Modernization and Development Assistance for Operations
    An HA may also use up to 10 percent of the modernization and 
development assistance it has received in FY 1996, or in any prior 
fiscal year, for operating expenses of projects included under Section 
9 of the USHA. An HA may implement this provision by requisitioning 
funds from its modernization (or development) grant program and 
reflecting the funds for operations as a cost in its modernization (or 
development) plan. Any such funds may be used by an HA for any eligible 
expenditure included in an approved operating budget.
    Except for modernization and development assistance used for 
operating subsidy purposes, modernization and development assistance 
for a fiscal year shall principally be used, states the OCRA, for the 
following activities: the physical improvement, replacement of public 
housing, other capital purposes, and for associated management 
improvements, and such other extraordinary purposes as may be approved 
by the Department. In general, the Department considers assistance to 
be used ``principally'' for the eligible activities described above in 
this paragraph as long as at least 90 percent of the assistance is used 
for such activities.

B. Assistance to Mixed-Income Developments

1. Eligible Entities and Forms of Assistance
    The OCRA also amends Section 14(q)(2) of the USHA to permit HAs to 
provide assistance to developments that include units other than public 
housing units (``mixed-income developments''), in the form of a grant, 
loan, operating assistance, or other form of investment. An HA may 
provide such assistance to entities described in paragraphs (1) or (2), 
    (1) A partnership, a limited liability company, or other legal 
entity in which the HA or its affiliate is a general partner, managing 
member, or otherwise participates in the activities of such entity. For 
purposes of this paragraph, HUD will find that an HA ``otherwise 
participates'' in the activities of an entity if the HA and the entity 
have entered into a valid and enforceable regulatory or operating 
agreement, which, among other things, (a) states the number and 
characteristics of units in the development that will be made available 
for occupancy by low-income and very low-income families, as well as 
the duration and conditions of such availability, and (b) provides 
binding assurances that the operation of such units will be in 
accordance with public housing program requirements. The HA must 
perform monitoring and oversight duties, including but not limited to, 
periodic performance reviews, or provide for delivery of services and 
programs to low- and very low-income residents in mixed-income 
    (2) Any entity which grants to the HA the option to purchase the 
development within 20 years after initial occupancy in accordance with 
certain rules under the Low-Income Housing Tax Credit program, as set 
forth in Section 42(i)(7) of the Internal Revenue Code of 1986, as 
2. Units for Low-Income and Very Low-Income Occupancy
    Units in any such mixed-income development must be made available 
for periods of not less than 20 years, by master contract or by 
individual lease, for occupancy by low-income and very low-income 
families whom the HA refers (either directly, or through any other 
tenant selection and assignment system now permissible under public and 
Indian housing program rules) to the development. The period of 
availability may be extended by HUD, on a case-by-case basis, if the 
level of public benefit is not commensurate with the amount and kind of 
assistance provided. Except as otherwise approved by HUD, the number of 
units in such a development that must be made available must be in the 
same proportion to the total number of units in the development that 
the total financial commitment provided by the HA bears to the value of 
the total financial commitment in the development, provided that the 
number of units for occupancy by low-income and very low-income 
families must not be less than the number of units that could have been 
developed under the conventional public and Indian housing program with 
the assistance involved. In making this determination, the financial 
commitment provided by the HA to cover the cost of putting an existing 
public housing site in buildable condition, such as relocation, 
demolition, and site remediation, should not be included in the 
proportionality calculation.
3. Local Real Estate Taxes
    A mixed-income development may elect to have all units subject only 
to the applicable local real estate taxes, notwithstanding that the 
low-income units assisted by public and Indian housing funds would 
otherwise be subject to Section 6(d) of the USHA, which relates to 
local real estate tax exemptions and payments in lieu of taxes for 
public housing units.
4. Deviations from the United States Housing Act
    Section 201(a) of the OCRA adds a new Subsection 14(q)(4) to the 
USHA, which directs HUD to promulgate regulations providing guidelines 
and procedures under which an entity that owns or operates a mixed-
income development may deviate from various requirements. In 
particular, the OCRA states that a contract between an HA and such an 
entity may provide that, in the event the HA is unable to fulfill its 
contractual obligations with respect to the public housing units in the 
development (as a result of a reduction in operating subsidy 
appropriations, or any other change in applicable law), then that 
entity may deviate, under procedures and requirements to be developed 
through regulations by HUD, from otherwise applicable restrictions 
under the USHA regarding rents, income eligibility, and other areas of 
public housing management. Such deviations may be made with respect to 
a portion or all of the public housing units in the development, to the 
extent necessary to preserve the viability of those units while 
maintaining the low-income character of the units, to the maximum 
extent practicable. HUD expects to provide regulations in the near 
C. Suspension of One-For-One Replacement Housing Requirement
    Section 201(b) of the OCRA extends, up to September 30, 1996, the 
suspension of the one-for-one replacement housing requirement that was 
made in the Fiscal Year 1995 Rescissions Act. Therefore, except as 
provided below with respect to priority replacement housing, there is 

[[Page 41645]]

replacement housing requirement for public housing demolition, 
disposition, or homeownership conversion applications that are approved 
by the Secretary, or for other consolidation and relocation activities 
of HAs undertaken before September 30, 1996. In such cases, HAs are no 
longer required to provide replacement housing, and HUD is not 
obligated to commit the funds necessary to carry out the replacement 
housing plan.
    The OCRA also amends Section 18(f) of the USHA, which was added by 
the 1995 Rescissions Act, and which describes the circumstances under 
which replacement housing units for public housing units demolished may 
be built on the original public housing site or in the same 
neighborhood. The OCRA amendment provides that ``no one may rely on 
[Section 18(f)] as the basis for reconsidering a final order of a court 
issued, or a settlement approved, by a court.''

III. Streamlining Section 8 Tenant-Based Assistance

    The Department issued Notice PIH 26-23 (HA) on May 1, 1996 
providing detailed instructions to HAs on implementing the Section 8 
administrative provisions. While the scope of this Notice is described 
briefly below, HAs should review the Notice in its entirety.

A. ``Take-One, Take-All'' Suspension

    Section 203(a) of the OCRA suspends Section 8(t) of the USHA for FY 
1996. Section 8(t) required that an owner who entered into a Section 8 
HAP contract on behalf of any tenant in a multifamily housing project 
could not refuse to lease certain units in all multifamily projects of 
the owner, if the proximate cause of the refusal was that the family 
was a certificate or voucher holder.

B. Suspension of Owner Termination Notices to HUD

    Section 203(b) of the OCRA amends Section 8(c)(9) of the USHA so 
that the owner termination notice provisions do not apply to HAP 
contracts under the certificate and voucher program for FY 1996.

C. ``Endless Lease'' Elimination

    Section 203(c) of the OCRA amends Sections 8(d)(1)(B)(ii) and (iii) 
of the USHA for FY 1996. Section 8(d)(1)(B)(ii) provides that the owner 
may not terminate a Section 8 tenancy except for serious or repeated 
lease violations, for violation of applicable Federal, State, or local 
law, or for other good cause. Section 8(d)(1)(B)(iii) provides that 
certain criminal activity is grounds for the tenancy termination. The 
OCRA amends the law to confirm that the above cited statutory 
requirements for termination of tenancy only apply to a termination 
that occurs ``during the term of the lease.''

IV. Public Housing/Section 8 Moving to Work Demonstration

    Section 204 of the OCRA creates the Public Housing/Moving to Work 
Demonstration (``MTW'') in order to give HAs and HUD the flexibility to 
design and test various approaches for providing and administering 
housing assistance that: reduce cost and achieve greater cost 
effectiveness in Federal expenditures; give incentives to families with 
children when the head of household is working, seeking work, or is 
preparing for work by participating in job training, educational 
programs, or programs that assist people to obtain employment and 
become economically self-sufficient; and increase housing choices for 
low-income families.
    HUD will implement MTW in two phases. The first, entitled Jobs-
Plus, will be a collaborative effort of HUD, the Manpower Demonstration 
Research Corporation, and the Rockefeller Foundation. Jobs-Plus will 
target six to ten public housing developments for families with a goal 
of substantially raising employment levels by providing saturation-
level services to residents. The impact of Jobs-Plus will be closely 
monitored in order to develop replicable models for increasing 
employment levels among public housing residents. HUD will use the $5 
million in technical assistance funds appropriated in the OCRA to 
leverage additional funding from private foundations. Requests for 
expressions of interest in Jobs-Plus were mailed to certain HAs deemed 
to be the most promising for this aspect of the demonstration on June 
14, 1996.
    The second phase of MTW will be implemented by selecting 
approximately 20 to 25 high-performing HAs to design innovative 
programs for providing housing assistance and related services to low-
income families. Selected HAs may combine public housing operating and 
modernization funds and Section 8 assistance into a single pool of 
resources. They may also seek HUD waivers from most provisions of the 
United States Housing Act, permitting unprecedented flexibility in 
program design and implementation.
    The Department will issue an invitation to apply for this phase of 
MTW in the near future.

V. Extension Period for Sharing Public Housing Utility Cost Savings 
With HAs

    Section 218 of the OCRA removes the limitation on the period during 
which HUD may share utility cost savings with HAs. The Act amends 
Section 9(a)(3)(B)(i) of the USHA by deleting the words ``for a period 
not to exceed six years''.
    Consequently, HAs that take actions to reduce the rate paid for 
utilities (including water, fuel oil, electricity and gas) now will be 
able to retain half of the savings for as long as the savings last. 
Examples of such actions are the well-head purchase of natural gas, 
administrative appeals, or legal action (beyond routine public 
participation in general ratemaking proceedings leading to broadly 
applicable rate adjustments). Under these circumstances, HAs that have 
reached the end of the six year period previously permitted for the 
sharing of the resulting rate savings may now continue to share such 
savings on a fifty/fifty basis. There is no longer a specified time 
limitation on the sharing of rate saving arrangements.
    HAs which had reached the six year time limit as of September 30, 
1995 may reinstate the fifty/fifty rate savings with HUD for the fiscal 
years ending September 30, 1996 and thereafter. Other HAs contemplating 
entering into such arrangements may do so with the knowledge that the 
sharing of the savings will continue without the specific six year time 
    This change is being made not only for public housing but also for 
Indian housing.

VI. Repeal of Frost-Leland

    Section 220 of the OCRA repeals section 415 of the fiscal year 1988 
appropriations act (often referred to as ``Frost-Leland''), which 
prohibited the use of any funds appropriated under any act for any 
fiscal year for demolishing George Loving Place, Edgar Ward Place or 
Elmer Scott Place in Dallas, Texas, or Allen Parkway Village in 
Houston, Texas.

VII. Minimum Rent Waiver Authority

    Section 230 of the OCRA permits HUD or HAs to waive the minimum 
rent requirement to provide a transition period for affected families. 
The term of the waiver approved may be retroactive, but may not apply 
for more than three months with respect to any family. The Department 
issued further guidance on this provision by Notice PIH 96-42 (HA) on 
June 20, 1996.

[[Page 41646]]

    Dated: August 5, 1996.
Kevin Marchman,
Acting Assistant Secretary for Public and Indian Housing.
[FR Doc. 96-20361 Filed 8-8-96; 8:45 am]