[Federal Register Volume 63, Number 191 (Friday, October 2, 1998)]
[Notices]
[Pages 53084-53085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26387]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4170-N-18]
RIN 2577-AB74


Indian Housing Block Grant Program: Notice of Additional 
Transition Requirements--Cost Limits for Former 1937 Act Development 
Projects

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

ACTION: Notice of additional transition requirements--Cost limits for 
former 1937 Act development projects.

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SUMMARY: This notice provides a grace period, up to January 1, 1999, in 
which a tribe or tribally designated housing entity (TDHE) may choose 
to use the Dwelling Construction and Equipment costs under the Indian 
Housing Block Grant (IHBG) Program or a calculated Total Development 
Cost (TDC) limitation. The purpose of this grace period is to allow for 
a smooth transition and avoid hardship for tribes and TDHEs that have 
progressed substantially in developing housing designs under the United 
States Housing Act of 1937 (1937 Act) and are nearing construction 
start.

EFFECTIVE DATE: October 2, 1998.

FOR FURTHER INFORMATION CONTACT: Bruce Knott, 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.

SUPPLEMENTARY INFORMATION:

I. Background

    The Native American Housing Assistance and Self-Determination Act 
of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) was enacted on October 26, 
1996, and took effect on October 1, 1997. NAHASDA requires HUD to make 
grants on behalf of Indian tribes to carry out affordable housing 
activities. A final rule to implement NAHASDA and establish the IHBG 
Program was

[[Page 53085]]

published on March 12, 1998, (63 FR 12334), with an effective date of 
April 13, 1998.
    In the final NAHASDA regulations, the committee that crafted the 
portion on limitation of construction costs wanted to design as much 
flexibility into the program as possible, yet still ensure that 
affordable housing standards were being maintained. Because of this, 
the decision was made to discontinue Total Development Cost (TDC) 
limits, used under the 1937 Act development program, as TDCs limited 
soft costs as well as the actual construction costs. Historically, the 
TDCs were developed by first determining the actual costs of 
construction (hard costs) and then multiplying by a factor to include 
funds for soft costs. These hard costs, known as Dwelling Construction 
and Equipment (DC&E) costs, were what the committee chose as a standard 
of ensuring that construction costs remained within a modest design and 
gave the tribes flexibility in other costs associated with development 
of housing. This standard is established at 24 CFR 1000.156 of the 
NAHASDA regulations.
    Under the 1937 Act program, there are some instances where tribes 
may have realized savings in the planning or administration of 
developing housing, permitting them to utilize a portion of these soft 
cost funds for construction purposes. If tribes have progressed 
substantially in developing housing designs under the 1937 Act and are 
nearing construction start, changing to a DC&E cost limitation under 
NAHASDA may pose a hardship. This was not the intent of the committee 
and therefore, HUD is implementing a ``grace'' period, up to January 1, 
1999, in which a tribe or TDHE may elect to use TDC limits rather than 
DC&E costs, to allow for a smooth transition in these situations.

II. Transition Development Cost Questions and Answers

    The following questions and answers are designed to assist in 
understanding these development cost transition provisions.
    Question #1: My project, funded under the 1937 Act, is almost ready 
to go to bid. Must I use the new DC&Es?
    Answer #1: No. You may choose to use either the DC&Es, or a 
calculated TDC limitation. To determine a calculated TDC, multiply the 
applicable DC&E amount, determined pursuant to 24 CFR 1000.156, by 
1.75. Apply this figure in the same manner that previous TDC limits 
were utilized, that is, all hard and soft costs combined must come in 
within the TDC limit. This method does not require that a variance 
request be submitted to the Area Office of Native American Programs 
(AONAP), but documentation showing that this procedure was followed 
must be maintained in your files for at least three years.
    Question #2: We were able to save money on planning and 
administration and designed plans under the 1937 Act development 
program that allocated more funds into the actual construction. Because 
of this we don't fit within the NAHASDA DC&Es. May we use calculated 
TDCs?
    Answer #2: Assuming that these designs are within modest standards 
and the intent of NAHASDA and that the project is out to bid or reached 
construction start by January 1, 1999, you may use calculated TDC 
maximums.
    Question 3#: My project is under construction right now. Must I 
change to DC&E cost limits?
    Answer #3: No. The documents that were approved prior to 
construction start are still in effect.
    Question #4: We haven't designed the project that we want to build 
with funds that were originally made available under 1937 Act. Which 
system do we use, DC&Es or calculated TDCs?
    Answer #4: You will use the DC&Es. The calculated TDCs are to be 
used only in circumstances where a tribe has substantially completed 
work toward construction start or work start under force account and 
will be out for bid solicitation or have started construction by 
January 1, 1999.
    Question #5: We are planning our project with NAHASDA funds that 
are not former 1937 Act funds. Which system of cost limits should we 
use?
    Answer #5: All projects utilizing such NAHASDA funds use the DC&E 
cost limits and guidelines outlined in Notice PIH 98-29 (HA).

    Authority: 25 U.S.C. 4116(a).

    Dated: September 25, 1998.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 98-26387 Filed 10-1-98; 8:45 am]
BILLING CODE 4210-33-P