[Federal Register Volume 63, Number 17 (Tuesday, January 27, 1998)]
[Notices]
[Pages 4076-4087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1939]



[[Page 4075]]

_______________________________________________________________________

Part V





Department of Housing and Urban Development





_______________________________________________________________________



Indian Housing Block Grant Program--Revised Notice of Transition 
Requirements; Notice

  Federal Register / Vol. 63, No. 17 / Tuesday, January 27, 1998 / 
Notices  

[[Page 4076]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4170-N-11]
RIN: 2577-AB74


Indian Housing Block Grant Program--Revised Notice of Transition 
Requirements

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

ACTION: Revised notice of transition requirements.

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

SUMMARY: On January 27, 1997 (62 FR 3972), HUD published for public 
comment a notice to implement that part of section 106 of the Native 
American Housing Assistance and Self-Determination Act of 1996 
(NAHASDA) which requires HUD to establish the requirements necessary to 
provide for the transition from the provision of assistance for Indian 
tribes and Indian housing authorities under the United States Housing 
Act of 1937 and other related provisions of law to the provision of 
assistance in accordance with NAHASDA. The January 27, 1997 notice also 
provided notice of the negotiated rulemaking process for the 
development of regulations necessary to implement NAHASDA, and 
requested nominations for membership on the negotiated rulemaking 
committee. This notice addresses the public comments received on the 
January 27, 1997 transition requirements, and provides additional 
transition guidance and requirements.

DATES: The revised transition requirements are effective upon 
publication.
    IHP submission date: No earlier than the publication date of the 
final regulations implementing NAHASDA and no later than July 1, 1998.
    Effective date of NAHASDA section 701(c): November 3, 1998.

FOR FURTHER INFORMATION CONTACT: Deborah Lalancette, National Office of 
Native American Programs, Department of Housing and Urban Development, 
1999 Broadway, Suite 3390, Denver, CO; telephone (303) 675-1600 (this 
is not a toll-free number). Hearing or speech-impaired individuals may 
access this number via TTY by calling the toll-free Federal Information 
Relay Service at 1-800-877-8339.
    Indian tribes or tribally designated housing entities with specific 
questions relating to the preparation of Indian Housing Plans as 
required by this notice may call their Area Office of Native American 
Programs for assistance in resolving their questions. The telephone 
numbers and addresses for these Offices appear in Question 7 of this 
notice.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

    The Native American Housing Assistance and Self-Determination Act 
of 1996 (Pub. L. 104-330, approved October 26,1996) (NAHASDA) 
reorganizes the system of Federal housing assistance to Native 
Americans by eliminating several separate programs of assistance and 
replacing them with a single block grant program. Beginning on October 
1, 1997, the first day of the 1998 fiscal year (FY), a single block 
grant program replaced assistance previously authorized under:
    1. The United States Housing Act of 1937 (1937 Act);
    2. The Indian Housing Child Development Program under Section 518 
of the Cranston-Gonzalez National Affordable Housing Act (12 U.S.C. 
1701z-6 note);
    3. The Youthbuild Program under subtitle D of title IV of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12899 et 
seq.);
    4. The Public Housing Youth Sports Program under section 520 of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 11903a);
    5. The HOME Investment Partnerships Program under title II of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12721 et 
seq.); and
    6. Housing assistance for the homeless under title IV of the 
Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11361 et seq.) 
and the Innovative Homeless Demonstration Program under section 2(b) of 
the HUD Demonstration Act of 1993 (42 U.S.C. 11301 note).
    In addition to simplifying the process of providing housing 
assistance, the purpose of NAHASDA is to provide Federal assistance for 
Indian tribes in a manner that recognizes the right of tribal self-
governance.
    Section 106 of NAHASDA sets out the general procedure for the 
implementation of the new Indian housing block grant (IHBG) program. 
The procedure described is a two-step process. First, section 106(a) 
requires the publication of a notice in the Federal Register not later 
than 90 days from enactment of NAHASDA. The purpose of the notice is to 
establish any requirements necessary for the transition from the 
provision of assistance for Indian tribes and Indian housing 
authorities under the 1937 Act and other related provisions of law to 
the provision of assistance in accordance with NAHASDA.
    Secondly, section 106(b) requires that HUD issue final regulations 
implementing NAHASDA no later than September 1, 1997. Further, section 
106(b)(2)(A) of NAHASDA provides that all regulations required under 
NAHASDA be issued in accordance with the procedures of the Negotiated 
Rulemaking Act of 1990 (5 U.S.C. 561-570). Accordingly, the Secretary 
of HUD established the Native American Housing Assistance & Self-
Determination Negotiated Rulemaking Committee to negotiate and develop 
a proposed rule implementing NAHASDA. This proposed rule was published 
on July 2, 1997 (62 FR 35718).

II. The January 27, 1997 Transition Notice and the July 2, 1997 
Proposed Rule

    On January 27, 1997 (62 FR 3972), HUD published the transition 
notice required by section 106(a) of NAHASDA. As directed by section 
106(a), the January 27, 1997 notice requested public comment on the 
transition requirements and invited nominations for membership on the 
negotiated rulemaking committee. The January 27, 1997 notice described 
in detail the transition requirements and the establishment of the 
negotiated rulemaking committee.
    The public comment period on the transition notice expired on 
February 27, 1997. Twelve comments were submitted on the transition 
requirements. Additionally, sixteen nominations for negotiated 
rulemaking committee membership were received. In several cases, the 
public comments raised issues more appropriately addressed in the 
proposed rule implementing NAHASDA, rather than in the transition 
requirements. Accordingly, the proposed rule addresses many of the 
public comments received on the January 27, 1997 transition notice.
    Section III. of this notice presents a summary of the significant 
issues raised by the public commenters on the January 27, 1997 
transition requirements and HUD's responses to these comments. Where 
appropriate, readers are referred to the provisions of the July 2, 1997 
proposed rule that address the issue raised by the commenter.
    The July 2, 1997 rule contains a detailed description of the 
proposed regulatory requirements and the negotiated rulemaking process. 
The public comment deadline on the proposed rule was August 18, 1997. 
All comments will be considered in the development of the final rule.

[[Page 4077]]

III. Discussion of Public Comments on the January 27, 1997 
Transition Requirements

Indian Housing Plan Submission Date of June 1, 1997 Is Not Reasonable

    Comment. Eight of the commenters objected to the June 1, 1997 IHP 
submission deadline established by the January 27, 1997 notice. The 
commenters believed that this date would not provide sufficient time 
for relevant tribal input in the development of the IHP. Specifically, 
it would not have allowed housing authorities (HAs) to adequately 
compile local and regional data and develop a quality, comprehensive 
housing plan.
    Several of these commenters suggested alternate IHP submission 
dates. For example, five commenters objected to the submission of an 
IHP prior to the development of regulations implementing NAHASDA. Three 
of the commenters suggested that HUD extend the IHP submission deadline 
to August 1, 1997. This date is based on section 103 of NAHASDA, which 
provides HUD with a 60-day period to review an IHP submitted by a tribe 
or its TDHE. Since NAHASDA becomes effective on October 1, 1997, this 
alternate August date would provide HUD with a 60-day review period 
prior to the statute's effective date.
    Response. HUD has addressed the concerns raised by these 
commenters. On February 24, 1997 (62 FR 8258), HUD published a notice 
in the Federal Register extending the IHP submission deadline to 
November 3, 1997. With the publication of the proposed rule, many 
commenters indicated that the deadline did not provide sufficient time 
to prepare an IHP. Also, it is not expected the regulations 
implementing NAHASDA will be effective by November 3, 1997. Therefore, 
it is unreasonable to expect a recipient to submit a plan prior to 
publication date of the program regulations.
    Based on the above, this transition notice is establishing new IHP 
submission dates for Fiscal Year 1998 only. An IHP can be submitted no 
earlier than the publication date of the final regulations implementing 
NAHASDA and no later than July 1, 1998. The July 1, 1998, date is 
necessary in order to provide for a 60-day review period by the Office 
of Native American Program (ONAP) field staff and reservation of funds 
prior to September 30, 1998. The final regulations will establish IHP 
submission dates for all future years.

October 1, 1997 Implementation Date is Premature

    Section 107 of NAHASDA states that ``[e]xcept as otherwise 
expressly provided in this Act, this Act * * * shall take effect on 
October 1, 1997.'' Four of the commenters expressed concern about the 
short statutory deadline for the implementation of NAHASDA. The 
commenters believe that additional time is necessary for the successful 
implementation of this new program.
    One of these commenters suggested that HUD use the waiver authority 
granted in section 101(b)(2) of NAHASDA to waive the requirement for an 
IHP submission in FY 1998, in order to permit HUD and affected Indian 
tribes adequate time to develop comprehensive final regulations 
implementing NAHASDA. This commenter also suggested that the Negotiated 
Rulemaking Committee develop interim regulations to put in place for FY 
1998 to guide tribes in the administration of block grants during this 
interim period, rather than racing to complete regulations by October 
1, 1997.
    Response. The Negotiated Rulemaking Committee has developed a work 
schedule which it believes provides for the effective implementation of 
NAHASDA in a timely manner.

IHP Should Be Format Driven Rather Than Forms Driven

    Comment. One commenter urged that HUD not implement the IHP 
requirement by prescribing a series of forms. The commenter believes 
that a forms driven approach will stifle innovation and increase 
administrative burden. This commenter fears that beneficial information 
might be omitted from the IHP if the tribe or its TDHE is unable to 
make it fit into a prescribed HUD form. Further, each planning 
innovation could potentially require an updated or new form. 
Accordingly, the commenter suggested that HUD maximize the flexibility 
available to tribes and their TDHEs by merely requiring that the IHP 
follow a certain format.
    Response. The Negotiated Rulemaking Committee has considered this 
comment in the development of the proposed regulations. Interested 
readers should refer to the proposed requirements of 24 CFR part 1000, 
subpart C, which would govern IHP submission requirements.

Cooperation Agreement Requirement May Prevent the Receipt of Funding

    Comment. The January 27, 1997 notice requires that the IHP include 
a certification that the tribe or its TDHE has entered into, or has 
begun negotiations to enter into, a local cooperation agreement with 
the governing body of the locality within which any affordable housing 
to be assisted with grant amounts will be situated (62 FR 3974). One 
commenter expressed concern that this requirement may prevent a tribe 
or its TDHE from receiving funding in situations where, through no 
fault of the housing entity or the affected tribal members, such an 
agreement cannot be negotiated before grant funds are needed to 
maintain existing housing. The commenter noted that the cooperation 
agreement requirement is set forth in NAHASDA section 101(b). The 
commenter supported amendments to NAHASDA which would permit HUD to 
waive the requirement for a cooperation agreement.
    Response. The Negotiated Rulemaking Committee considered this 
public comment in the development of the proposed rule. Interested 
readers should consult the preamble to the July 2, 1997 proposed rule, 
which discusses the requirement for a local cooperation agreement and 
highlights this issue for public comment (See 62 FR 35728).

Concerns Regarding Tax Exemption and Reimbursement Requirements

    Comment. The January 27, 1997 notice requires that the cooperation 
agreement discussed above provide that the tribe or its TDHE is exempt 
from all real or personal property taxes. The tribe or TDHE, however, 
must compensate the relevant political subdivision for the costs of 
providing governmental services (such as police and fire protection). 
Alternatively, if the tribe or its TDHE is not tax exempt, the 
cooperation agreement must provide for the reimbursement of the tribe 
or TDHE. The reimbursement amount will be equal to the difference 
between the tax amount and the costs of providing governmental 
services. (62 FR 3974.)
    One commenter expressed reservations about this requirement. The 
commenter noted that a tribe or its TDHE may initiate a program to 
provide off-reservation housing within its area of operation. In these 
cases, a city council or board of supervisors may have to approve a 
cooperation agreement. The commenter wrote that under State law the 
council or board may lack the statutory authority to exempt a 
particular housing unit from real or personal property taxes imposed by 
state statute. If the combination of those taxes exceed the cost of 
providing governmental services, the affected city or county may be 
unable or unwilling to

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remit the difference in cash or tax remission.
    The commenter suggested that HUD address this concern by keeping 
the requirement for a cooperation agreement separate from the tax 
exemption requirement. The commenter wrote that NAHASDA treats the 
local cooperation agreement requirement and the tax exemption 
requirement in separate subsections (See NAHASDA sections 101(c) and 
(d).) The certification required in the January 27, 1997 notice folds 
these requirements together, making the tax exemption requirements the 
contents of the cooperation agreements. The commenter noted that a 
cooperation agreement could address subjects other than tax exemptions 
and a tribe could comply with the tax exemption requirements without 
necessarily having an agreement with a local jurisdiction.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the July 2, 1997 proposed rule. 
Interested readers should consult the preamble to the proposed rule, 
which discusses the tax exemption requirement and requests additional 
public comment on this issue (See 62 FR 35728).

Negotiated Rulemaking Committee Should Develop Budget Scenarios

    Comment. Section 102 of NAHASDA requires that the IHP include an 
operating budget. One commenter questioned the ability of a tribe or 
its TDHE to develop a budget prior to FY 1998 appropriations. This 
commenter recommended that the Negotiated Rulemaking Committee develop 
budget information to assist tribes and their TDHEs in the preparation 
of the IHPs. The commenter noted that IHAs have an advantage in 
estimating probable allocation amounts based on historical allocations 
and awards. However, some tribes (especially those currently served by 
an umbrella housing authority) considering whether or not to submit an 
IHP may have very little to work from.
    Response. The Negotiated Rulemaking Committee considered this issue 
in the development of the proposed rule. Interested readers should 
refer to the July 2, 1997 proposed regulatory requirements. Further, 
section 302(d) of NAHASDA speaks to funding levels under the Act.

Transition Notice Should Establish Streamlined IHP Requirements for 
Small Tribes and Small TDHEs

    Comment. Section 102(f)(1) of NAHASDA permits the Secretary to 
``waive any [IHP] requirements * * * that the Secretary determines are 
burdensome or unnecessary for'' small tribes and small TDHEs. One 
commenter questioned why the transition notice had not established such 
streamlined IHP requirements for these tribes and housing entities.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the proposed rule. The proposed rule 
provides that there are no separate IHP requirements for small Indian 
tribes. The IHP requirements set forth in proposed 24 CFR part 1000, 
subpart C are minimal. Further, HUD has general authority under section 
101 of NAHASDA to waive IHP requirements when an Indian tribe cannot 
comply with IHP requirements due to circumstances beyond its control. 
The waiver authority under section 101 provides flexibility to address 
the needs of every Indian tribe, including small Indian tribes.

Transition Requirements Should Reference Statutory Review Criteria

    Comment. Section 103 of NAHASDA provides that the Secretary of HUD 
shall conduct a limited review of each Indian housing plan to ensure 
that the plan complies with the NAHASDA submission requirements for 
IHPs. One commenter believes that the January 27, 1997 notice should 
have provided an interpretation of the phrase ``limited review.'' 
Section 103 of NAHASDA also establishes a 60-day deadline for review of 
an IHP. Further, this section requires that the Secretary of HUD 
provide an explanation to the tribe or TDHE if the Secretary finds the 
IHP deficient. The commenter believes these statutory review 
requirements should also have been referenced in the January 27, 1997 
notice.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the proposed rule. Interested readers 
should refer to proposed 24 CFR part 1000, subpart C, which would 
govern IHP submission procedures (including the process for HUD review 
of IHPs and IHP amendments).

Concerns Regarding TDHE Designation

    Comment. Section 102 of NAHASDA provides that an IHP may be 
submitted by an Indian tribe or, if specifically empowered by the 
recognized tribal government, by the TDHE. The January 27, 1997 notice 
provided that if ``a tribe does not specifically authorize an entity to 
act as its tribally designated housing entity, the tribe's * * * HA 
under the United States Housing Act of 1937, if there is one on the 
date of NAHASDA's enactment, is the tribe's [default] TDHE'' (62 FR 
3973).
    One of the commenters believes that this provision violates the 
principle of tribal self-governance. First, the provision would 
delegate to the HA the authority to administer the block grant even if 
the tribe has not taken any affirmative step to designate the HA as its 
TDHE. Secondly, the January 27, 1997 notice fails to specify the 
timeframe in which a tribe would lose the important right to designate 
the TDHE. Further, the provision is unclear as to whether the IHP 
developed by an HA acting as the default TDHE must still be reviewed 
and approved by the tribe.
    Response. HUD agrees with the commenter that the transition 
requirements must reflect the right of tribal self-governance and the 
unique relationship between the government of the United States and the 
governments of Indian tribes. This notice makes the appropriate 
revisions to the January 27, 1997 transition notice. The notice 
clarifies that NAHASDA section 102(d) requires that a tribe identify 
its TDHE, if any, in its IHP. Specifically, when an IHP is submitted on 
behalf of a tribe by its TDHE, the IHP must contain a certification by 
the recognized tribal government that either (1) the tribe has had an 
opportunity to review the IHP and has authorized its submission by the 
TDHE, or (2) the tribe has delegated to the TDHE the authority to 
submit an IHP without prior review by the tribe. This certification 
must be included in the IHP, even in those cases where the tribe's HA 
under the United States Housing Act of 1937 is serving as the tribe's 
default TDHE.

``Broad Discretion'' of Section 204 of NAHASDA Should Be Referenced

    Comment. Section 204(a) of NAHASDA provides:
    (a) Subject to * * * [program requirements] and the Indian 
housing plan for an Indian tribe, the recipient for that tribe shall 
have--
    (1) the discretion to use grant amounts for affordable housing 
activities through equity investments, interest-bearing loans or 
advances, noninterest bearing loans or advances, interest subsidies, 
leveraging of private investments, or any other form of assistance 
that the Secretary has determined to be consistent with the purposes 
of this Act; and
    (2) the right to establish the terms of assistance.

    One commenter interprets section 204(a) very broadly and 
recommended that the January 27, 1997 notice be amended to reference 
the ample discretion it believes this statutory provision grants to a 
tribe or its TDHE.

[[Page 4079]]

Specifically, the commenter requested that HUD clarify that grant 
recipients have the discretion to use grant amounts for affordable 
housing activities using the alternatives expressly set out in NAHASDA 
(e.g., equity investments, interest-bearing loans or advances, etc.). 
The commenter believes that only in the case of ``any other form of 
assistance'' not expressly enumerated in section 204 does NAHASDA 
authorize the Secretary to determine whether the assistance is 
consistent with the purposes of the Act.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the July 2, 1997 proposed rule. 
Interested readers should refer to proposed 24 CFR part 1000, subpart 
B, which would govern eligible affordable housing activities.

Exceptions to Low-Income Eligibility Requirements Should Be Identified

    Comment. Section 201 of NAHASDA provides that, except under certain 
specified circumstances, ``eligible housing activities under this Act 
shall be limited to low-income Indian families on Indian reservations 
and other Indian areas.'' One of the commenters suggested that the 
January 27, 1997 notice should be amended to identify the exceptions to 
this general rule.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the proposed regulations. Interested 
readers are referred to proposed 24 CFR part 1000, subpart B, which 
would govern eligible affordable housing activities (including the 
provision of assistance to non low-income families).

Grant Agreement Process Should Be Identified

    Comment. One commenter believes that the January 27, 1997 notice 
does not seem to anticipate or require the development of a grant 
agreement with the tribes. The commenter worried that the notice did 
not provide sufficient information regarding the grant agreements and 
the block grant process. For example, the IHP must contain goals and 
objectives to be accomplished during 1998. The commenter wondered 
whether these activities would be binding on the tribe through the 
grant agreement. The commenter recommended that HUD identify the grant 
agreement document or the process of developing the grant agreement as 
early as possible.
    Response. The Negotiated Rulemaking Committee considered this 
comment in the development of the proposed rule. Interested readers 
should consult the proposed regulatory requirements for additional 
detail.

IV. Revised Effective Date for Section 701(c) of NAHASDA

    Section 701(c) of NAHASDA establishes a new requirement for the 
Indian Housing Loan Guarantee Program (also called the Section 184 
Program) under section 184 of the Housing and Community Development Act 
of 1992 (12 U.S.C. 1515z-13a). Specifically, section 701(c) provides 
that Indian tribes wishing to participate in the Section 184 program 
must submit an IHP that provides for the use of Section 184 loan 
guarantees.
    In order to prevent any interruption in the processing of Section 
184 loan guarantees, HUD must establish an effective date for section 
701(c) that takes into account the timeframes for submission and HUD 
review of IHPs. The January 27, 1997 transition notice established an 
effective date of October 1, 1997 for section 701(c), based on an IHP 
submission deadline of June 1, 1997. As described above, HUD is 
extending the IHP deadline date to no earlier than the publication date 
of the final regulations implementing NAHASDA and no later than July 1, 
1998. This notice conforms the effective date for section 701(c) to the 
IHP deadline extension. Specifically, this notice amends the January 
27, 1997 notice by establishing an effective date of November 3, 1998 
for purposes of NAHASDA section 701(c).

V. Technical Correction to the January 27, 1997 Notice

    The January 27, 1997 notice incorrectly designated the paragraph 
listing the certifications as paragraph (d) of Question and Answer 3. 
The paragraph should have been designated as paragraph (e). This notice 
makes the necessary correction.

VI. Additional Transition Requirements

    The January 27, 1997 notice stated that HUD may also issue a 
supplemental notice with additional transition guidance and 
requirements. Accordingly, additional guidance and requirements for the 
treatment of housing, activities and funding under programs repealed by 
NAHASDA are included in this notice. For the convenience of all parties 
involved with NAHASDA, this notice presents the requirements of the 
January 27, 1997 notice, amended as discussed in sections IV. and V. of 
this notice, above, and the additional transition requirements in a 
single, consolidated document. The additional requirements follow the 
same Question and Answer format established in the January 27, 1997 
notice and begin with Question 10 in this notice. If there are any 
inconsistencies between the requirements in this notice and any final 
rule issued under NAHASDA, the requirements of the rule shall govern.

VII. Findings and Certifications

Paperwork Reduction Act Statement

    The information collection requirements contained in this notice 
have been approved by the Office of Management and Budget under the 
Paperwork Reduction Act of 1995 and assigned control number 2577-0218. 
An agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection displays 
a valid control number.

Regulatory Planning and Review

    This notice 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 notice 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, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410-0500.

Executive Order 12612, Federalism

    The General Counsel has determined, as the Designated Official for 
HUD under section 6(a) of Executive Order 12612, Federalism, that the 
policies contained in this notice 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 notice only establishes temporary transition requirements for the 
initial participation by Indian tribes in a new statutory program

Environmental Review

    A Finding of No Significant Impact with respect to the environment 
was made at the time of development of the January 27, 1997 notice in 
accordance with HUD regulations at 24 CFR Part 50, which implement 
section 102(2)(C) of the National Environmental Policy Act of 1969. 
That Finding of No Significant Impact remains applicable to this notice 
and is available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the Office of the Rules Docket Clerk, Office of General 
Counsel,

[[Page 4080]]

Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410-0500.

Transition Requirements for the Native American Housing Block Grant 
Program

    Question 1. How is funding made available under NAHASDA?
    Answer 1. Under NAHASDA, funding is made available for affordable 
housing activities on an annual basis, and is distributed each fiscal 
year according to an allocation formula on behalf of Indian tribes who 
submit an Indian Housing Plan (IHP) that is reviewed and approved by 
HUD. Unlike other programs, NAHASDA funds are not awarded on a 
competitive basis in which applications are given scores and are then 
funded in rank order so that only the highest scoring applications are 
funded. Every tribe, or entity designated by a tribe, that submits an 
IHP which complies with the necessary requirements is awarded a block 
grant which is a share of the available funds. The size of the share is 
determined by the allocation formula. The award is called a block grant 
because the recipient receives a single ``block'' of funds that may be 
used for any eligible affordable housing activities in accordance with 
the tribe's IHP.
    Question 2. Who may submit an IHP to apply for a block grant?
    Answer 2. An IHP may be submitted by an Indian tribe or, if 
specifically empowered by the recognized tribal government, by the 
tribally designated housing entity for the tribe. A tribally designated 
housing entity (TDHE) is an entity other than the tribal government 
which is authorized by the Indian tribe to receive the block grant 
amounts and provide assistance according to the requirements of 
NAHASDA.
    NAHASDA section 102(d) requires that a tribe identify its TDHE, if 
any, in its IHP. Specifically, when an IHP is submitted on behalf of a 
tribe by its TDHE, the IHP must contain a certification by the 
recognized tribal government that either: (1) the tribe has had an 
opportunity to review the IHP and has authorized its submission by the 
TDHE; or (2) the tribe has delegated to the TDHE the authority to 
submit an IHP without prior review by the tribe. This certification 
must be included in the IHP, even in those cases where the tribe's HA 
under the United States Housing Act of 1937 is serving as the tribe's 
default TDHE.
    An IHP submitted by a TDHE may cover more than one Indian tribe, 
but only if the IHP contains the certification described in the 
paragraph above from each tribe covered by the IHP. This option 
provides additional flexibility by permitting several tribes to agree 
to have their affordable housing activities administered by a single 
TDHE for reasons of greater economy or increased efficiency, or for any 
other reason.
    Question 3. What information must be included in an IHP?
    Answer 3. Each IHP shall be in a form prescribed by HUD and every 
IHP consists of two parts, a 5-year plan and a 1-year plan, each of 
which is discussed separately below. The NAHASDA final rule may also 
contain additional plan requirements.
    The 5-year plan must contain the following information for the 5-
year period beginning with the fiscal year (FY) for which the plan is 
submitted (for the first IHP submission under the transition 
requirements of this notice, the five fiscal years covered are 1998, 
1999, 2000, 2001 and 2002):
    (a) Mission Statement--A general statement of the mission of the 
Indian tribe to serve the housing needs of the low-income families in 
the jurisdiction of the Indian tribe during the 5-year period.
    (b) Goals and Objectives--A statement of the goals and objectives 
of the Indian tribe to enable the tribe to serve the needs identified 
in the Mission Statement during the 5-year period.
    (c) Activities Plan--An overview of the housing activities, 
including the NAHASDA-eligible affordable housing activities, planned 
during the 5-year period with an analysis of the manner in which the 
activities will enable the tribe to meet its mission, goals, and 
objectives.
    The 1-year plan must contain the following information relating to 
the upcoming fiscal year (FY 1998 for purposes of the first IHP 
submission under the transition requirements of this notice):
    (a) Goals and Objectives--A statement of the goals and objectives 
to be accomplished during FY 1998, including the NAHASDA-eligible 
affordable housing activities.
    (b) Statement of Needs--A statement of the housing needs of the 
low-income Indian families residing in the jurisdiction of the Indian 
tribe and the means by which such needs will be addressed during FY 
1998, including:
    (1) A description of the estimated housing needs and the need for 
assistance for the low-income Indian families in the jurisdiction, 
including a description of the manner in which the geographical 
distribution of assistance is consistent with the geographical needs 
and needs for various categories of housing assistance; and
    (2) A description of the estimated housing needs for all Indian 
families in the jurisdiction.
    (c) Financial Resources--An operating budget for the recipient that 
includes:
    (1) An identification and a description of the financial resources 
reasonably available to the recipient to carry out the NAHASDA-eligible 
affordable housing activities described in the IHP, including an 
explanation of the manner in which amounts made available will leverage 
additional resources; and
    (2) The uses to which such resources will be committed, including 
eligible affordable housing activities and administrative expenses. 
(Section 101(h) of NAHASDA requires HUD, by regulation, to authorize 
each recipient to use a percentage of any grant amounts received for 
any reasonable administrative and planning expenses of the recipient 
relating to carrying out NAHASDA and activities assisted with such 
amounts, which may include costs for salaries of individuals engaged in 
administering and managing affordable housing activities assisted with 
grant amounts and expenses of preparing an IHP. This regulation will be 
developed by the negotiated rulemaking committee who will be proposing 
to HUD the percentage of grant amounts to be used for planning and 
administrative expenses.
    (d) Affordable Housing Resources--A statement of the affordable 
housing resources currently available and to be made available during 
FY 1998, including:
    (1) A description of the significant characteristics of the housing 
market in the tribe's jurisdiction, including the availability of 
housing from other public sources, private market housing, and the 
manner in which such characteristics influence the decision of the 
recipient to use grant amounts for rental assistance, production of new 
units, acquisition of existing units, or rehabilitation of units;
    (2) A description of the structure, coordination, and means of 
cooperation between the recipient and any other governmental entities 
in the development, submission, or implementation of housing plans, 
including a description of the involvement of private, public, and 
nonprofit organizations and institutions, and the use of loan 
guarantees under section 184 of the Housing and Community Development 
Act of 1992, and other housing assistance provided by the Federal 
Government for Indian tribes, including loans, grants, and mortgage 
insurance;
    (3) A description of the manner in which the plan will address the 
needs

[[Page 4081]]

identified in the Statement of Needs in the 1-year plan required by 
paragraph (b), above;
    (4) A description of the manner in which the recipient will protect 
and maintain the viability of housing owned and operated by the 
recipient that was developed under a contract between HUD and an Indian 
housing authority pursuant to the United States Housing Act of 1937;
    (5) A description of any existing and anticipated homeownership 
programs and rental programs to be carried out during FY 1998, and the 
requirements and assistance available under such programs;
    (6) A description of any existing and anticipated housing 
rehabilitation programs necessary to ensure the long-term viability of 
the housing to be carried out during FY 1998, and the requirements and 
assistance available under such programs;
    (7) A description of all other existing or anticipated housing 
assistance provided by the recipient during FY 1998, including 
transitional housing, homeless housing, college housing, supportive 
services housing, and the requirements and assistance available under 
such programs;
    (8) A description of any housing to be demolished or disposed of, 
and a timetable for such demolition or disposition;
    (9) A description of the manner in which the recipient will 
coordinate with tribal and State welfare agencies to ensure that 
residents of such housing will be provided with access to resources to 
assist in obtaining employment and achieving self-sufficiency;
    (10) A description of the requirements established by the recipient 
to promote the safety of residents of such housing, facilitate the 
undertaking of crime prevention measures, allow resident input and 
involvement, including the establishment of resident organizations, and 
allow for the coordination of crime prevention activities between the 
recipient and tribal and local law enforcement officials; and
    (11) A description of the entity that will carry out the activities 
under the IHP, including the organizational capacity and key personnel 
of the entity.
    (e) Certifications of compliance--The IHP must include the 
following certifications:
    (1) A certification that the recipient will comply with title II of 
the Civil Rights Act of 1968 in carrying out activities funded by 
NAHASDA, to the extent that such title is applicable, and other 
applicable Federal statutes, including Section 504 of the 
Rehabilitation Act of 1973;
    (2) A certification that the recipient will maintain adequate 
insurance coverage for housing units that are owned and operated or 
assisted with grant amounts;
    (3) A certification that policies are in effect and are available 
for review by HUD and the public governing:
    (i) The eligibility, admission, and occupancy of families for 
housing assisted with grant amounts;
    (ii) Rents charged, including the methods by which rents or 
homebuyer payments are determined, for housing assisted with grant 
amounts;
    (iii) The management and maintenance of housing assisted with grant 
amounts provided under this Act;
    (4) If an IHP is submitted on behalf of a tribe by its tribally 
designated housing entity (TDHE), the IHP must contain a certification 
by the recognized tribal government that either:
    (i) The tribe has had an opportunity to review the IHP and has 
authorized its submission by the TDHE, or
    (ii) The tribe has delegated to the TDHE the authority to submit an 
IHP without prior review by the tribe;
    (5) If an IHP that covers more than one Indian tribe is submitted 
by a TDHE, each tribe covered by the IHP must submit as part of the IHP 
the certification described in paragraph (4), immediately above;
    (6) A certification that the governing body of the locality within 
which any affordable housing to be assisted with the grant amounts will 
be situated has entered into, or has begun negotiations, which must be 
completed before any award of NAHASDA funds can be made, to enter into, 
a local cooperation agreement with the recipient for the tribe 
providing that:
    (i) The affordable housing assisted with grant amounts received by 
the recipient (exclusive of any portions not assisted with amounts 
provided under NAHASDA) is exempt from all real and personal property 
taxes levied or imposed by any State, tribe, city, county, or other 
political subdivision; and
    (ii) The recipient makes annual payments of user fees to compensate 
such governments for the costs of providing governmental services, 
including police and fire protection, roads, water and sewerage 
systems, utilities systems and related facilities, or payments in lieu 
of taxes to such taxing authority, in an amount equal to the greater of 
$150 per dwelling unit or 10 percent of the difference between the 
shelter rent and the utility cost, or such lesser amount as:
    (A) Is prescribed by State, tribal, or local law;
    (B) Is agreed to by the local governing body in the local 
cooperation agreement; or
    (C) The recipient and the local governing body agree in the local 
cooperation agreement that such user fees or payments in lieu of taxes 
shall not be made; or
    (iii) If the affordable housing assisted with grant amounts 
received by the recipient (exclusive of any portions not assisted with 
amounts provided under NAHASDA) is not exempt from all real and 
personal property taxes levied or imposed by any State, tribe, city, 
county, or other political subdivision, that the tribe, State, city, 
county, or other political subdivision in which the affordable housing 
development is located contributes, in the form of cash or tax 
remission, the amount by which the taxes paid with respect to the 
development exceed the amounts prescribed in section (6)(ii) of the 1-
year plan requirements, above.
    Question 4. What are the affordable housing activities that are 
eligible for funding under NAHASDA?
    Answer 4. Affordable housing activities are activities to develop 
or to support affordable housing for rental or homeownership, or to 
provide housing services with respect to affordable housing, for the 
benefit of low-income Indian families on Indian reservations and other 
Indian areas. In the case of a low-income family residing in a dwelling 
unit assisted with NAHASDA grant amounts, affordable housing is housing 
for which the monthly rent or homebuyer payment (as applicable) does 
not exceed 30 percent of the family's monthly adjusted income. Eligible 
affordable housing activities are described below in sections (a) 
through (k) of this answer:
    (a) Indian Housing Assistance--The provision of modernization or 
operating assistance for housing previously developed or operated 
pursuant to a contract between HUD and an Indian housing authority.
    (b) Development--The acquisition, new construction, reconstruction, 
or moderate or substantial rehabilitation of affordable housing, which 
may include real property acquisition, site improvement, development of 
utilities and utility services, conversion, demolition, financing, 
administration and planning, and other related activities. Affordable 
housing includes permanent housing for homeless persons who are persons 
with disabilities, transitional housing, and single room occupancy 
housing.

[[Page 4082]]

    (c) Housing Services--The provision of housing-related services for 
affordable housing, such as housing counseling in connection with 
rental or homeownership assistance, establishment and support of 
resident organizations and resident management corporations, energy 
auditing, activities related to the provision of self-sufficiency and 
other services, and other services related to assisting owners, 
tenants, contractors, and other entities, participating or seeking to 
participate in other housing activities assisted with grant amounts.
    (d) Housing Management Services--The provision of management 
services for affordable housing, including preparation of work 
specifications, loan processing, inspections, tenant selection, 
management of tenant-based rental assistance, and management of 
affordable housing projects.
    (e) Crime Prevention and Safety Activities--The provision of 
safety, security, and law enforcement measures and activities 
appropriate to protect residents of affordable housing from crime.
    (f) Rental Assistance--The provision of tenant-based rental 
assistance.
    (g) Model Activities--Housing activities under model programs that 
are designed to carry out the purposes of NAHASDA and are specifically 
approved by HUD as appropriate for such purpose.
    (h) Administrative Expenses--A percent of grant amounts, to be 
determined in the final rule, may be used for any reasonable 
administrative and planning expenses of a recipient relating to 
carrying out NAHASDA and activities assisted with such amounts, 
including costs for salaries of individuals engaged in administering 
and managing affordable housing activities assisted with grant amounts 
and the expenses of preparing an IHP.
    Question 5. How may grant amounts be used to carry out eligible 
activities?
    Answer 5. In addition to being used to directly pay for eligible 
activities, grant amounts may be used for affordable housing activities 
through equity investments, interest-bearing loans or advances, 
noninterest-bearing loans or advances, interest subsidies, leveraging 
of private investments, or any other form of assistance that HUD 
determines to be consistent with the purposes of NAHASDA. This answer 
is provided from section 204--``Types of Investments''--of NAHASDA. 
Guidance on the types of investments permissible under section 204 of 
NAHASDA will be provided in the final regulations.
    Question 6. When must the IHP required by these transition 
requirements be submitted?
    Answer 6. An IHP must be received by HUD no earlier than the 
publication date of the final regulations implementing NAHASDA and no 
later than July 1, 1998 in order to be considered for FY 1998 funding. 
Question 53, below, also addresses this issue.
    Question 7. Where must an IHP be submitted?
    Answer 7. All IHPs must be submitted to the local Area Office of 
Native American Programs as follows:

------------------------------------------------------------------------
   Tribes and IHAs located                    ONAP address              
------------------------------------------------------------------------
East of the Mississippi River  Eastern/Woodlands Office of Native       
 (including all of Minnesota)   American Programs, 5P, Metcalfe Federal 
 and Iowa.                      Building, 77 West Jackson Boulevard,    
                                Chicago, Illinois 60604-3507, (312) 353-
                                1282 or (800) 735-3239, TTY Numbers: 1- 
                                800-927-9275 or 312-886-3741.           
Louisiana, Missouri, Kansas,   Southern Plains Office of Native American
 Oklahoma, and Texas except     Programs, 6.IPI, 500 West Main Street,  
 for Yseleta del Sur.           Suite 400, Oklahoma City, Oklahoma      
                                73012, (405) 553-7520, 553-7480.        
Colorado, Montana, Nebraska,   Northern Plains Office of Native American
 North Dakota, South Dakota,    Programs, 8P, First Interstate Tower    
 Utah and Wyoming.              North, 633 17th Street, Denver, Colorado
                                80202-3607, (303) 672-5462, TTY Number: 
                                303-844-6158.                           
Arizona, California, New       Southwest Office of Native American      
 Mexico, Nevada, and Yseleta    Programs, 9EPI, Two Arizona Center, 400 
 del Sur in Texas.              North Fifth Street, Suite 1650, Phoenix,
                                Arizona 85004-2361, (602) 379-4156, TTY 
                                Number: 602-379-4461, or Albuquerque    
                                Division of Native American Programs,   
                                9EPIQ, Albuquerque Plaza, 201 3rd       
                                Street, NW, Suite 1830, Albuquerque, New
                                Mexico 87102-3368, (505) 766-1372, TTY  
                                Number: None.                           
Idaho, Oregon, and Washington  Northwest Office of Native American      
                                Programs, 10PI, 909 First Avenue, Suite 
                                300, Seattle, Washington 98104-1000,    
                                (206) 220-5270, TTY Number: (206) 220-  
                                5185.                                   
Alaska.......................  Alaska Office of Native American         
                                Programs, 10.1PI, 949 East 36th Avenue, 
                                Suite 401, Anchorage, Alaska 99508-4399,
                                (907) 271-4633, TTY Number: (907) 271-  
                                4328.                                   
------------------------------------------------------------------------

    Question 8. May an IHA continue to remain subject to the 1937 Act, 
and convert to a PHA?
    Answer 8. No, because the purpose and result of NAHASDA is the 
exclusion of IHAs from the definition of a PHA as of September 30, 
1997. After September 30, 1997, there may be IHAs that want to remain 
subject to the 1937 Act, but the consequence of NAHASDA section 501 is 
to make it impossible, after September 30, 1997, for an IHA to be 
considered a PHA. Further, section 502(b) provides that any IHA housing 
developed or operated under the 1937 Act must be considered and 
maintained as affordable housing for purposes of NAHASDA, and precludes 
the continued application of title I of the 1937 Act to IHAs after 
September 30, 1997. Question 30, below, also addresses this issue.
    Question 9. What happens to grants already made under the homeless, 
Youthbuild and Indian HOME programs?
    Answer 9. These grants continue to be governed by the statutes 
authorizing the programs as those statutes read on September 30, 1997 
and by the grant agreements. After completion of the funded activities, 
the grants will be closed out in accordance with their program 
requirements and grant agreements. Questions 37 and 38, below, also 
address this issue.

General Impact on Housing and Funding

    Question 10. On October 1, 1997, the Native American Housing 
Assistance and Self-Determination Act of 1996 (NAHASDA) legislation 
becomes effective. How does this impact the provision of housing 
assistance to Native Americans?
    Answer 10. NAHASDA terminates provision of housing assistance under 
the United States Housing Act of 1937, as amended, (1937 Act) and 
creates a new program of grants made directly to Indian tribes. The new 
Indian Housing Block Grant (IHBG) is intended to provide greater 
flexibility to tribes in determining how to address their housing needs 
for low-income individuals within their jurisdiction.

[[Page 4083]]

Tribes assume a responsibility to maintain current housing stocks 
developed under the 1937 Act.
    Question 11. Does the change in governing legislation affect who 
owns housing developed or assets and funds held by IHAs?
    Answer 11. No. While IHA funds and assets become subject to the 
requirements of NAHASDA on October 1, 1997, the ownership of the 
housing funds and assets are not affected. Grants made to IHAs and the 
assets of IHAs continue to belong to the IHA. IHAs that are created by 
tribal ordinance are subject to the authority of the tribe. Tribes must 
review their existing ordinances and other documents affecting the 
organization and legal commitments of the tribe and its IHA to 
determine how to transfer funds and assets of the IHA to the tribe or 
its newly established tribally designated housing entity (TDHE).

Effect on 1937 Act Housing

    Question 12. What happens to public housing units owned and 
operated by IHAs?
    Answer 12. All units owned by IHAs become ineligible for assistance 
under the 1937 Act as of October 1, 1997. Public housing units owned 
and operated by IHAs are considered Indian housing units and become 
subject to NAHASDA on October 1, 1997.
    Question 13. What happens to existing 1937 Act units if tribes in 
those jurisdictions do not or cannot submit an IHP?
    Answer 13. NAHASDA does not provide the statutory authority for HUD 
to grant NAHASDA grant funds to an IHA, tribe or to a default TDHE 
which cannot obtain a tribal certification, if the requisite IHP is not 
submitted by a tribe or is determined to be out of compliance by HUD. 
There may be circumstances where this may happen, and in those cases, 
other methods of tribal, federal or private market support may have to 
be sought to maintain and operate those 1937 Act units.
    Question 14. Should the public housing stock owned by IHAs be 
reflected in the current assisted stock element of the IHBG formula 
under NAHASDA?
    Answer 14. Yes.
    Question 15. Will the housing units in the current development 
pipeline be allowed to increase the 1937 Act count for NAHASDA formula 
purposes?
    Answer 15. Yes. Upon completion of housing units currently in the 
development pipeline, HUD should be notified to adjust the information 
reflected in the formula for existing 1937 Act units operated by the 
IHA or recipient. The notification should take the same form as the 
current notification for Date of Full Availability under the Indian 
Housing program.
    Question 16. What process would a tribe or TDHE follow in order to 
admit over-income families to a vacant unit developed under the 1937 
Act or for new units developed under the 1937 Act which will be counted 
as Current Assisted Stock under the IHBG Formula?
    Answer 16. Since the 1937 Act no longer applies to these units and 
the NAHASDA final rule will only address the procedures for admitting 
over-income families when using the recipient's annual grant amount, 
there is a need to develop procedures for these units.
    For units to be developed after September 30, 1997, with funds 
provided under the 1937 Act, a recipient may use up to 10% of its funds 
available from 1937 Act programs to admit families whose income fall 
within 80 to 100% of median income without HUD approval. HUD approval 
is required if a recipient plans to use more than 10% of its 1937 Act 
funds for such assistance or to provide housing for families over 100% 
of median income.
    For vacancies in homeownership programs where the units were under 
management as of September 30, 1997, occupancy by families whose income 
falls within 80 to 100% of median income may not exceed 10% of the 
dwelling units in the project or 5 dwelling units, whichever is 
greater, without HUD approval. HUD approval is required if a recipient 
plans to admit more than this amount in a project or to provide housing 
for families over 100% of median income.
    Question 17. Can an IHA or recipient develop additional units with 
funds provided through the 1937 Act and have the extra units included 
in the IHBG formula?
    Answer 17. No. While developing the maximum number of affordable 
housing units is encouraged, housing units over the number specified in 
the original grant approval will not be included in the total number of 
units developed with 1937 Act funds.
    Question 18. Can an IHA be a NAHASDA sub-grantee of the tribe or 
TDHE for the purpose of maintaining housing developed under the 1937 
Act?
    Answer 18. Yes. Additionally, an IHA could be a sub-grantee for the 
purpose of developing and managing housing with NAHASDA funds.

Effect on 1937 Act Funding

    Question 19. Must an IHA (or its successor entity) use grant funds 
provided under the 1937 Act for the original purpose after October 1, 
1997?
    Answer 19. No. Funds provided to an IHA under the 1937 Act can be 
used for any activity eligible under NAHASDA. An IHA (or its successor 
entity) must honor existing contracts the IHA has entered into with 
others prior to NAHASDA; however, an IHA may reprogram the use of funds 
for eligible activities subject to written notification to HUD.
    Question 20. Will Indian housing authorities (IHA), tribes or 
tribally designated housing entities (TDHE) be eligible to apply for 
assistance under any programs covered by the 1937 Act?
    Answer 20. No. Section 501 of NAHASDA repealed Title II of the 1937 
Act and made Titles I and III inapplicable to Indian housing after 
September 30, 1997. Therefore, as of October 1, 1997, IHAs and tribes 
are ineligible for funding for the following programs:

--New development
--Modernization (both the Comprehensive Improvement Assistance Program 
and the Comprehensive Grant Program including the disaster/emergency 
reserve)
--Operating subsidy
--HOPE for Public and Indian Housing Homeownership
--Indian Housing Childhood Development
--Section 8

    Question 21. Will any operating subsidy be provided to IHAs after 
October 1, 1997?
    Answer 21. Yes. The Fiscal Year (FY) 1997 appropriation for 
operating subsidy under Section 9 of the 1937 Act covers IHAs fiscal 
years beginning (FYB) January 1, 1997 and ending December 31, 1997; FYB 
April 1, 1997 and ending March 31, 1998; FYB July 1, 1997 and ending 
June 30, 1998; and FYB October 1, 1997 and ending September 30, 1998. 
IHAs are eligible for funds appropriated prior to FY 98, and therefore, 
operating subsidy will be provided for the time periods stated in this 
paragraph.
    After September 30, 1997, financial assistance may not be provided 
under the 1937 Act unless such assistance is provided from amounts made 
available for FY 97 and pursuant to a commitment entered into before 
September 30, 1997, therefore, all operating budgets for these periods 
must have been approved prior to September 30, 1997 in order to be 
eligible for funding. Operating budget adjustments or revisions after 
October 1, 1997, cannot be processed.

[[Page 4084]]

    Question 22. If an IHA has unobligated or unexpended funds in any 
of the programs listed in Answer 19, how are they handled?
    Answer 22. Any unobligated/unexpended funds which were approved for 
new development, modernization, operations or HOPE can now be used for 
any eligible NAHASDA activity. Section 8 contracts remain in effect and 
the program is still governed by the 1937 Act and the existing contract 
provisions.
    Question 23. What is the definition of ``obligated'' as it relates 
to the development and modernization programs?
    Answer 23. Obligated means the cumulative amount of modernization 
or development commitments entered into by the housing authority; i.e., 
contract execution for contract labor, materials or services; start and 
continuation of physical work by force account labor; and start and 
continuation of administrative expenses. Contract execution means 
execution of the contract by both the housing authority and the 
contractor. For force account work, all funds for a group of 
sequentially-related physical work items are considered obligated when 
the first work item is started, such as kitchen cabinet replacement 
followed by kitchen floor replacement, but only where funds continue to 
be expended at a reasonable rate. Where one force account physical work 
item is started and is not sequentially related to other physical work 
items, such as site improvements and kitchen remodeling, then only the 
funds for the one physical work item started are considered obligated.
    Question 24. Does an IHA need to enter into a new grant agreement 
with HUD covering the use of existing 1937 Act grant funds?
    Answer 24. In most instances, the requirement limiting use of grant 
funds to eligible NAHASDA activities is self-implementing and does not 
require a new grant agreement between HUD and the IHA. However, in 
instances where a grant was never placed under annual contributions 
contract or where a tribe or other organization becomes the successor 
entity to an IHA, a grant agreement is required to obligate funds to 
the IHA or to establish the tribe or other organization as the 
successor entity to access IHA funds held by HUD.
    Question 25. What Federal requirements apply after September 30, 
1997 to funds provided under the 1937 Act?
    Answer 25. Funds are subject to applicable Federal requirements 
which include but are not limited to:
     procurement requirements as listed under 24 CFR part 85 or 
as specified in the grantee's HUD approved procurement policy;
     environmental requirements as listed under 24 CFR part 58;
     labor requirements of Sec. 104(b) of NAHASDA;
     tenant or homebuyer selection requirements contained in 
the grantee's HUD approved admissions policy or which comply with 
Sections 203, 205 and 207(b) of NAHASDA;
     financial controls requirements specified at 24 CFR Part 
85.
    Question 26. Do the Federal requirements listed in Question 25 
apply to IHAs if they are not designated as a TDHE?
    Answer 26. Yes.
    Question 27. Are there any reporting requirements after September 
30, 1997 for grant funds provided under the 1937 Act?
    Answer 27. Yes. When a recipient includes funds provided to an IHA 
in its IHP, reporting is included in the Annual Report and fiscal audit 
requirements under NAHASDA.
    When funds provided to an IHA are not included in a recipient's 
IHP, reporting requirements in effect on September 30, 1997, continue 
to apply until the close-out of the grant activity or until the IHA 
notifies HUD and HUD acknowledges that the grant funds have been 
reprogrammed for eligible activities which support the regular 
operation of the IHA. This requirement applies only to categorical 
grants provided for specific purposes such as development or 
modernization grants and not to regular operating activities of the 
IHA. Please note that the modernization reporting requirements have 
been simplified and guidance has been provided to tribes, TDHEs, IHAs 
and Area ONAPs.
    Question 28. What audit requirements apply to grants funded under 
the 1937 Act?
    Answer 28. IHAs (or their successor entities) are responsible for 
providing HUD with audits of program activities in accordance with OMB 
Circulars A-128 and A-133 for any period prior to October 1, 1997, the 
effective date of NAHASDA. Notice PIH 97-30 (HA) provides the 
compliance supplement for annual audits of Indian housing authorities. 
This requirement includes any overdue audits. Additionally, any grant 
not included by the recipient in its IHP is subject to these audit 
requirements for the grant activity until all grant activities are 
completed and the grant is closed.
    Question 29. What process does an IHA (or its successor entity) 
follow to close grants originally funded with 1937 Act monies?
    Answer 29. Where grant activities are essentially completed and the 
IHA and HUD are in the process of closing the grant, the procedures for 
establishing actual grant costs in effect as of September 30, 1997, for 
the grant program are to be followed. This includes the requirement for 
audit verification of expenditures and final financial settlement 
between the IHA and HUD. Upon completion of the final financial 
settlement, HUD will adjust its financial records to reflect the actual 
cost of the grant.
    Where grant activities are not completed, final settlement 
procedures are dependent upon whether the NAHASDA recipient assumes 
control of the grant funding. If the recipient does not assume 
responsibility for funds provided by the 1937 Act, procedures for 
closing grants are the same as stated in the above paragraph. Where the 
NAHASDA recipient assumes control of the grant funding, close-out 
procedures established for NAHASDA grants are to be followed even if a 
significant portion of the grant activities are completed prior to 
October 1, 1997.
    Question 30. If an IHA wants to remain subject to the 1937 Act 
after October 1, 1997, can it be converted to a PHA?
    Answer 30. No. To be eligible for Indian Housing under the 1937 
Act, tribal and state enabling legislation allowed for the creation of 
housing authorities for the express benefit of Indians. IHAs that were 
created for the benefit of Indians are ineligible for funding under the 
1937 Act after October 1, 1997. They cannot choose to be converted to 
PHAs.

Effect on ACCs

    Question 31. Does the repeal of the 1937 Act terminate existing 
Annual Contributions Contracts (ACCs)?
    Answer 31. Section 502(b) of NAHASDA states that Indian housing 
developed pursuant to an ACC ``shall not be subject to any provision of 
[the 1937 Act] or any [ACC] or other agreement pursuant to such Act.'' 
Based on this language, existing ACCs are terminated with two 
exceptions (bond financed projects and Section 8) which are explained 
below in Questions 32 and 33.
    Question 32. Can HUD continue funding for bond-financed projects in 
which the bonds were secured by ACCs?
    Answer 32. Section 507 of NAHASDA addresses bond-financed projects. 
Annual contributions can be made by HUD, consistent with Section 507, 
to continue payments to trustees on behalf

[[Page 4085]]

of holders of bonds issued, and outstanding, in connection with the 
development of Indian housing projects.

Section 8

    Question 33. Are Section 8 ACCs terminated?
    Answer 33. No. Section 503 of NAHASDA governs the provision of 
Section 8 rental assistance for units for which a contract was entered 
into before October 1, 1997. This section states that after September 
30, 1997, financial assistance for rental housing assistance may not be 
provided to an IHA or TDHE, unless such assistance is provided pursuant 
to a contract for such assistance before October 1, 1997. Any such 
assistance shall be governed by the provisions of the 1937 Act and the 
provisions of such contract.
    In other words, if an existing Section 8 contract does not expire 
until after October 1, 1997, funding will continue to be provided until 
the expiration date of the contract. This may be as late as fiscal year 
(FY) 2000. The program is to be operated in accordance with the 
existing ACC and HAP contract.
    Question 34. What will happen to any remaining Section 8 operating 
reserves after the Section 8 contracts expire?
    Answer 34. Section 8 operating reserves will remain with the entity 
administering the Section 8 program. Once the contract expires, the 
reserves shall be used for eligible activities under NAHASDA.
    Question 35. What will happen to any remaining Section 8 program or 
project reserves?
    Answer 35. Section 8 program or project reserves are those funds 
held by HUD to fund monthly housing assistance payments. When the 
contract expires, any remaining funds will remain with the Department.
    Question 36. If a Tribe or TDHE chooses not to continue a Section 8 
program after the current contract expires, is there a requirement to 
notify program participants of its intent to discontinue the program?
    Answer 36. Yes, IHAs administering Section 8 rental certificates 
and rental voucher programs for which the ACC term will expire after 
September 30, 1997, must immediately notify Section 8 participants 
(including families that have exercised the portability provisions of 
the Section 8 program and have not been absorbed by the receiving 
housing authority) that their Section 8 assistance will end upon 
expiration of the ACC in accordance with the Housing Assistance Payment 
(HAP) contract, part B, Subpart 6, Paragraph iv.
    Owners of Section 8 moderate rehabilitation units must also be 
notified that after September 30, 1997, HAP contracts will not be 
renewed upon the expiration of their current HAP contracts. Owners 
should be advised that they must provide written notice of the 
impending HAP contract expiration to each Section 8 family 180 days 
before the contract expires. A copy of the written notice must also be 
sent to the appropriate housing authority in accordance with Section 
8(c)(9) of the 1937 Act, as amended. See PIH Notice 97-50, ``Expiration 
of Section 8 Annual Contributions Contracts between the Department of 
Housing and Urban Development and Indian housing authorities'' dated 
September 19, 1997, for further guidance.

Programs Under the Cranston-Gonzalez National Affordable Housing 
Act or the Stewart B. McKinney Homeless Assistance Act

    Question 37. Will IHAs or tribes be eligible for programs funded 
under the Cranston-Gonzalez National Affordable Housing Act or the 
Stewart B. McKinney Homeless Assistance Act?
    Answer 37. No. As of October 1, 1997, IHAs or tribes are no longer 
eligible for the following programs:

--Youth Sports
--Youthbuild
--HOME (Although tribes or IHAs are not eligible as direct grantees for 
HOME funds, States may choose to fund them if the needs of the tribes 
are reflected in the State's Consolidated Plan.)
--Housing Assistance for the Homeless which includes: Comprehensive 
Homeless Assistance Plan; Emergency Shelter Grants; Supportive Housing 
Programs; Safe Havens for Homeless Individuals Demonstration Program; 
Shelter Plus Care; Rural Homeless Housing Assistance; and Innovative 
Homeless Demonstration.

    Question 38. If an IHA or tribe has unobligated or unexpended funds 
in any of the programs listed in Question 37, how are they handled?
    Answer 38. Youth Sports, Youthbuild, HOME and the Housing 
Assistance for the Homeless Programs continue to be governed by the 
provisions of the statutes in effect at the time of funding. The 
program shall continue to be operated under existing program 
provisions. After completion of the funded activities, the grants will 
be closed out in accordance with their program requirements and grant 
agreements.
    Question 39. What will happen to the Drug Elimination Program?
    Answer 39. Section 704 of NAHASDA amends the Public and Assisted 
Housing Drug Elimination Act of 1990 to exclude IHAs as eligible 
applicants. However, TDHEs are now eligible applicants. The language in 
NAHASDA does not include tribes as eligible applicants.

Other Programs and Funds

    Question 40. Will tribes be eligible for the Economic Development 
and Supportive Services (EDSS) Program?
    Answer 40. The EDSS program is created by annual appropriations. 
The appropriation language currently makes IHAs and public housing 
agencies eligible for this program. Continued eligibility for IHAs will 
depend on future appropriation language. The language will need to be 
changed to include tribes and TDHEs. For those with existing EDSS 
grants, the program should continue to be operated under existing 
program provisions.
    Question 41. Is the same true for the Tenant Opportunity Program 
(TOP) as for the EDSS Program under Question 40?
    Answer 41. Yes.
    Question 42. What happens to rental and homeownership operating 
reserves, mutual help equity accounts under the Mutual Help 
Homeownership Opportunity Program, earned home payment accounts under 
the Turnkey III programs and proceeds from the sale of homeownership 
units?
    Answer 42. These funds can now be used for any eligible NAHASDA 
activity subject to any conditions imposed by the contract or agreement 
between the IHA and the homebuyer.
    Question 43. Do tenant leases and homeownership agreements for the 
Mutual Help and Turnkey III Programs remain in effect?
    Answer 43. Yes. For the rental program, leases remain in effect 
until the lease term expires. At that time, the tribe, TDHE, or IHA 
operate the units under the regulations governing NAHASDA. For 
homeownership programs, the agreements remain in effect until the 
contract term expires or modifications may be made to the agreement if 
these changes are acceptable to both parties. Modifications to the 
agreement must be in accordance with NAHASDA.
    Question 44. What happens to tenant accounts receivables?
    Answer 44. Since the terms of the rental leases and homeownership 
agreements remain in effect, the tenant accounts receivable are still 
due based on current program requirements. New policies regarding 
payment requirements for units developed under NAHASDA can be adopted 
by the tribe or TDHE.

[[Page 4086]]

Other Pre-NAHASDA Requirements

    Question 45. What happens to the current regulations governing the 
Indian housing program, 24 CFR 950?
    Answer 45. As of October 1, 1997, the regulations are cancelled.
    Question 46. What cash management and investment policies and 
procedures are in effect as of October 1, 1997?
    Answer 46. Current procedures outlined in PIH Notice 96-33 (HA), 
extended by Notice 97-41 (HA) dated July 21, 1997, titled ``Required HA 
Cash Management and Investment Policies and Procedures'' will continue 
to apply until the effective date of the NAHASDA final regulation.
    Question 47. Are IHAs responsible for resolving audit findings 
which were issued pursuant to activities prior to October 1, 1997?
    Answer 47. Yes. Audit findings are open until closed. Findings that 
are based on operating policies or procedures can be resolved between 
an IHA (or its successor entity) and HUD by identifying such findings 
and agreeing that the correction of deficiencies is no longer required 
by statute or regulation. Findings that are not based on operating 
policies or procedures such as instances of fraud, criminal activities 
or ineligible program activities including repayment of any outstanding 
amounts due the Department, must be resolved between the IHA (or its 
successor entity) and HUD before the audit finding can be closed.
    Question 48. Will financial statements be required when the IHA's 
FY ends?
    Answer 48. The requirement to submit financial statements ended on 
September 30, 1997.
    Question 49. Will the tribe or TDHE be required to submit the 
Multifamily Tenant Characteristic Reports, HUD 50058, as of 10-1-97?
    Answer 49. As of October 1, 1997, the HUD 50058 does not need to be 
submitted for the rental and homeownership programs. The form is still 
required for the Section 8 program until the contract term expires.
    Question 50. Will LOCCS access to funds be changed for IHAs on 
October 1, 1997?
    Answer 50. No. LOCCS access to funds will be modified only if a 
recipient assumes responsibility for a grant. At that time, HUD must be 
notified of the change in responsibility so that access to the grant 
funds can be provided to the recipient.
    LOCCS provides for the disbursement of funds by certain line items 
contained in program budgets. Since budgets are no longer required, the 
Area ONAP will enter the entire grant amount under account 1500 when 
they establish a project in LOCCS. This will obviate the need to 
provide budget information to the Area ONAP. For grants already 
established in LOCCS, the grantee can request the Area ONAP to transfer 
funds to line 1500 to enable access to the funds. The request to 
transfer funds can be in writing or by telephone.
    Question 51. If an IHA is declared ``high risk'' under the 
provisions of 24 CFR 950.135, will this designation continue as of 
October 1, 1997?
    Answer 51. No. There is no basis or authority for allowing the 
designation of ``high risk'' to continue because this designation was 
based on failure to comply with the 1937 Act, implementing regulations 
or the ACC. Regulations are being developed under NAHASDA which will 
outline corrective action under the new program.
    Question 52. Are cooperation agreements transferable to a successor 
agency without requiring any action on the agreement by the local 
government or the successor agency?
    Answer 52. Cooperation agreements may be transferable to a 
successor agency by their terms. However, it is also possible that the 
agreement is not transferable in which case a new agreement would have 
to be negotiated. Generally, if the current IHA becomes the TDHE, a new 
agreement is not needed because the designation of the IHA as a TDHE 
does not create a new legal entity. However, an IHA's cooperation 
agreement does not automatically become the Tribe's.

New Program Under NAHASDA

    Question 53. What is the IHP submission deadline?
    Answer 53. On January 27, 1997, a transition notice was published 
in the Federal Register which established the original IHP deadline 
submission date of June 1, 1997. Based on public comment, this date was 
later amended to extend the deadline to November 3, 1997. With the 
publication of the proposed rule, many commenters indicated that the 
deadline did not provide sufficient time to prepare an IHP. Therefore, 
it is unreasonable to expect a recipient to submit a plan prior to 
publication date of the program regulations.
    Based on the above, this transition notice is establishing new IHP 
submission dates for Fiscal Year 1998 only. An IHP can be submitted no 
earlier than the publication date of the final regulations implementing 
NAHASDA and no later than July 1, 1998. The July 1, 1998, date is 
necessary in order to provide for a 60-day review period by Office of 
Native American Program (ONAP) field staff and reservation of funds 
prior to September 30, 1998. The final regulations will establish IHP 
submission dates for all future years.
    Question 54. Will ONAP develop a model IHP as an example or guide 
for tribes or TDHEs? Is so, will it be available in a diskette format?
    Answer 54. A draft IHP format has been developed and submitted to 
the Office of Management and Budget (OMB) for approval. This form was 
also mailed to all tribes and IHAs in August 1997.
    To assist with the submission of the IHP, the Department is 
offering three ways in which to submit the IHP. The first is via the 
Internet. It is anticipated that this will be the easiest method and it 
will also provide you with on-line resources such as reviewing plan 
status. You may also develop your plan using a diskette which contains 
a template of the IHP in a Microsoft Word 6.0 format. Once completed, 
this diskette is submitted to the Area ONAP. The diskette and internet 
instructions were sent to all eligible recipients on July 24, 1997. Of 
course, a hard copy of the plan will also be accepted for the first 
several years of the program.
    Question 55. Are costs incurred prior to the receipt of a FY 1998 
Indian Housing Block Grant (IHBG) which are related to the development 
and preparation of an IHP (including the challenge of data) eligible 
for reimbursement from an IHBG?
    Answer 55. Yes. Under the provisions of paragraph 32 of OMB 
Circular A-87, pre-award planning and administrative costs incurred by 
a recipient which are directly related to the development and 
preparation of its IHP (including the challenge of data) will be 
considered eligible IHBG expenditures under the following conditions:
    (a) The costs would have been allowable if they had been incurred 
after the date of the award of the IHBG; and,
    (b) The costs do not exceed more than 20% of the recipient's 
anticipated FY 1998 IHBG (or such other amounts approved in the IHP).
    Question 56. Can an IHA which currently represents more than one 
tribe be designated by more than one tribe as their TDHE?
    Answer 56. Yes.
    Question 57. If a TDHE represents more than one tribe, do 
individual IHPs need to be submitted?
    Answer 57. If a TDHE has been designated by more than one Indian

[[Page 4087]]

tribe, the TDHE can submit a separate IHP for each Indian tribe or it 
may submit a single IHP that covers two or more tribes. However, the 
IHP must contain a separate certification in accordance with Section 
102(d) of NAHASDA and the IHP Tables when requested by such tribes.
    Question 58. What happens if a tribe had two IHAs as of September 
30, 1996?
    Answer 58. Tribes which had established and were operating two IHAs 
as of September 30, 1996, under the 1937 Act shall be allowed to form 
and operate two TDHEs under NAHASDA. Nothing in this section shall 
affect the allocation of funds otherwise due to a tribe under the 
formula.
    Question 59. Who is considered as a tribe in Alaska?
    Answer 59. The definition of Federally recognized tribe in NAHASDA 
reads: ``The term `federally recognized tribe' means any Indian tribe, 
band, nation, or other organized group or community of Indians, 
including any Alaska Native village or regional or village corporation 
as defined in or established pursuant the Alaska Native Claims 
Settlement Act, that is recognized as eligible for the special programs 
and services provided by the United States to Indians because of their 
status as Indians pursuant to the Indian Self-Determination and 
Education Assistance Act of 1975.''

    Authority: Section 106 of the Native American Housing Assistance 
and Self-Determination Act of 1996 (NAHASDA) (Pub. L. 104-330, 
approved October 26, 1996).

    Dated: January 15, 1998.
Kevin Emanuel Marchman,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 98-1939 Filed 1-26-98; 8:45 am]
BILLING CODE 4210-33-P