[Federal Register Volume 62, Number 46 (Monday, March 10, 1997)]
[Proposed Rules]
[Pages 10786-10787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5737]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4149-P-01]
RIN 2577-AB73


Section 8 Rental Voucher and Certificate Programs Restrictions on 
Leasing to Relatives

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would limit the circumstances under which a 
landlord could lease a unit with Section 8 certificate or voucher 
assistance to a relative of the landlord. It would permit such leasing 
only if an HA determines that the leasing would accommodate a person 
with disabilities. The rule is intended to reduce the potential for 
misuse of Section 8 assistance. It would reduce the likelihood of 
families that have the ability to assist a family member from seeking 
Federal rental assistance and, thereby, would help to direct scarce 
Federal financial assistance to the more needy.

DATES: Comment due date: May 9, 1997.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Office of the General Counsel, Rules Docket 
Clerk, room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Comments should refer 
to the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each communication submitted will be available 
for public inspection and copying during regular business hours (7:30 
a.m. to 5:30 p.m. Eastern time) at the above address.

FOR FURTHER INFORMATION CONTACT:Gerald Benoit, Director, Operations 
Division, Office of Rental Assistance, Public and Indian Housing, 
Department of Housing and Urban Development, Room 4220, 451 Seventh 
Street, SW., Washington, DC 20410, telephone (202) 708-0477. Hearing or 
speech impaired individuals may call HUD's TTY number (202) 708-4594 or 
1-800-877-8399 (Federal Information Relay Service TTY). (Other than the 
``800'' number, these are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Discussion

    Currently, neither the statute nor HUD regulations place any 
restriction on an owner leasing a unit with Section 8 certificate or 
voucher assistance to a relative. All parties, of course, would have to 
meet requirements generally applicable to any certificate or voucher 
assisted tenancy. These requirements include: the applicant meets 
income and other eligibility requirements; the applicant is selected in 
appropriate order from the HA's waiting list; the unit meets housing 
quality standards, and the rent to the owner is reasonable.
    This policy of no restrictions on leasing with assistance to 
relatives has been in effect since the inception of the Certificate 
Program in the mid-1970s. Historically, it has been viewed by the 
Department as consistent with an over-arching policy of promoting 
maximum housing choice for assisted families.
    The Department does not have systematic data on the extent to 
which, or the circumstances under which, owners have been leasing to 
family members. Nonetheless, it must be recognized that a policy of 
allowing leasing between closely related individuals creates a 
potential for misallocation of scarce program resources. It can 
encourage families that can house family members to seek and obtain 
Federal assistance that otherwise would be available for more needy 
families. In short, it can shift, too readily, responsibility for 
housing a close relative from a relative with available housing or 
financial resources to the Federal Government.
    Recent newspaper articles have described a number of examples of 
relatives leasing to other relatives with

[[Page 10787]]

Section 8 assistance. The Department's review of these cases did not 
disclose any violation of program requirements. In a number of the 
examples the total rent received by an owner, from the assisted tenant 
and the HUD subsidy, was lower than rent the owner previously charged 
for the unit. In addition, a number of examples involved seriously ill 
close family members. Other examples, however, did appear to involve 
owners who should have had the financial ability to assist a close 
family member, but were nonetheless receiving Section 8 assistance 
payments.
    Section 982.306 of title 24 CFR sets out the restrictions on a 
housing agency (HA) approving a unit based on facts concerning the 
owner. The Department proposes to amend Sec. 982.306 so that an HA may 
not approve a unit for lease if the owner is the parent, child, 
grandparent, grandchild, sister, or brother of the certificate or 
voucher holder that is seeking to rent the unit. (Under 
Sec. 982.306(e), ``owner'' includes a principal or other interested 
party.) The HA, however, could still approve the unit for lease, if the 
HA determines that approving the unit would provide reasonable 
accommodation for a family member who is a person with disabilities. 
The Department specifically invites comments on whether there should be 
other exceptions to the general policy.
    When implemented, the policy would apply to new admissions and to 
moves with continued assistance. HUD would add to HAP contract forms a 
simple certification by the owner that the owner is not a parent, 
child, grandparent, grandchild, sister, or brother of any member of the 
family. HUD would also add a comparable certification to the rental 
certificate and rental voucher.

II. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR Part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the Office of the Rules Docket Clerk at the above address.

Regulatory Planning and Review

    This proposed rule has been reviewed in accordance with Executive 
Order 12866, issued by the President on September 30, 1993 (58 FR 
51735, October 4, 1993). Any changes to the proposed rule resulting 
from this review are available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk at the 
above address.

Regulatory Flexibility Act

    The Secretary has reviewed this proposed rule before publication 
and by approving it certifies, in accordance with 5 U.S.C. 605(b) (the 
Regulatory Flexibility Act), that this proposed rule does not have a 
significant economic impact on a substantial number of small entities 
because it simply restricts leasing with assistance between certain 
related individuals and does not otherwise restrict or impose burdens 
on the use or availability of Section 8 rental certificate or rental 
voucher assistance.

Unfunded Mandates Reform Act

    The Secretary has reviewed this proposed rule before publication 
and by approving it certifies, in accordance with the Unfunded Mandates 
Reform Act of 1995 (2 U.S.C. 1532), that this proposed rule does not 
impose a Federal mandate that will result in the expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any one year.

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 proposed 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. 
The proposed rule does not alter the relationship between HUD and the 
HAs. Rather, it simply amends one of the conditions for receipt of 
Federal assistance.

Family Impact

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this proposed 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. This proposed rule furthers the purposes of the 
Executive Order by revising program requirements to recognize the 
primary right and responsibility of families themselves to assist needy 
family members and by increasing the likelihood that Federal assistance 
is limited to those circumstances where it is most needed.

Catalog

    The Catalog of Federal Domestic Assistance numbers are 14.855 and 
14.857.

List of Subjects in 24 CFR Part 982

    Grant programs--housing and community development, Housing, Rent 
subsidies, Reporting and recordkeeping requirements.
    Accordingly, 24 CFR part 982 is proposed to be amended as follows:

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

    1. The authority citation for part 982 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d).

    2. In Sec. 982.306, paragraphs (d) and (e) are redesignated as 
paragraphs (e) and (f) and a new paragraph (d) is added to read as 
follows:


Sec. 982.306  HA disapproval of owner.

* * * * *
    (d) The HA must not approve a unit if the owner is the parent, 
child, grandparent, grandchild, sister, or brother of any member of the 
family, unless the HA determines that approving the unit would provide 
reasonable accommodation for a family member who is a person with 
disabilities.
* * * * *
    Dated: December 24, 1996.
Kevin Emanuel Marchman,
Acting Assistant Secretary for Public and Indian Housing.
[FR Doc. 97-5737 Filed 3-7-97; 8:45 am]
BILLING CODE 4210-33-P