[Federal Register Volume 64, Number 93 (Friday, May 14, 1999)]
[Rules and Regulations]
[Pages 26632-26651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12082]



[[Page 26631]]

_______________________________________________________________________

Part V





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 248 et al.



Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 
Certificate and Voucher Programs; Interim Rule

  Federal Register / Vol. 64, No. 93 / Friday, May 14, 1999 / Rules and 
Regulations  

[[Page 26632]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 248, 791, 792 and 982

[Docket No. FR-4428-I-01]
RIN 2577-AB91


Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 
Certificate and Voucher Programs

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule.

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

SUMMARY: This interim rule amends the regulations for the Section 8 
tenant-based rental voucher program. These amendments implement 
amendments of the United States Housing Act of 1937 by the Quality 
Housing and Work Responsibility Act of 1998 and related changes. The 
rule provides for the complete merger of the Section 8 tenant-based 
Certificate and Voucher programs, into a new Housing Choice Voucher 
Program.

DATES: Effective date: August 12, 1999. Comments due date: Comments on 
the interim rule and the proposed information collection requirements 
are due on or before: July 13, 1999.

ADDRESSES: Interested persons are invited to submit written comments 
regarding this interim rule to the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410. Comments 
should refer to the above docket number and title. A copy of each 
comment submitted will be available for public inspection and copying 
between 7:30 a.m. and 5:30 p.m. weekdays at the above address. 
Facsimile (FAX) comments will not be accepted.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and 
Indian Housing, Department of Housing and Urban Development, Room 4210, 
451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477 
(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. Section 8 Tenant-Based Program Statutory Provisions Implemented 
in this Rule

    This interim rule implements most of the Section 8 tenant-based 
program provisions contained in the Quality Housing and Work 
Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations 
Act; Pub. L. 105-276, approved October 21, 1998; 112 Stat. 2461) (the 
``1998 Act''). Section 502 of the 1998 Act states that a purpose of the 
legislation is ``consolidating the voucher and certificate programs for 
rental assistance under Section 8 of the United States Housing Act of 
1937 (the ``USH Act'' (42 U.S.C. 1437f)) into a single market-driven 
program that will assist in making tenant-based rental assistance under 
such section more successful at helping low-income families obtain 
affordable housing and will increase housing choice for low-income 
families.'' Of particular significance, this rule implements the merger 
of the Section 8 tenant-based certificate and voucher programs (section 
545 of the 1998 Act, amending 42 U.S.C. 1437f(o)).

A. Description of the Housing Choice Voucher Program implemented by 
this rule

    This rule implements provisions of the 1998 Act which will complete 
merger of the Section 8 certificate and voucher programs into a single 
new Section 8 voucher program (authorized under Section 8(o) of the USH 
Act, 42 U.S.C. 1437f(o)), entitled the Housing Choice Voucher Program. 
HUD has previously promulgated regulations (known as the ``conforming 
rule'') which combined and conformed rules for Section 8 tenant-based 
assistance to the extent permitted by prior law. The Housing Choice 
Voucher Program has features of the previously authorized certificate 
and voucher programs, plus new features. The following summarizes major 
features of the Housing Choice Voucher Program:
    1. Payment standards. The subsidy amount is based on a payment 
standard set by the Public Housing Agency (PHA) anywhere between 90% to 
110% of the HUD-published fair market rent (FMR). HUD may approve 
payment standards lower than 90% of FMR and payment standards higher 
than 110% of FMR. Prior HUD-approved area exception rents will continue 
to apply in the new voucher program (unless withdrawn or modified by 
HUD). HUD may require PHA payment standard changes because of incidence 
of high rent burdens (Section 8(o)(1)(B), (D) and (E) of the USH Act; 
42 U.S.C. 1437f(o)(1)(B), (D) and (E); 24 CFR 982.503).
    2. Tenant payment. A family renting a unit below the payment 
standard pays as gross rent the highest of: 30% of monthly adjusted 
income, 10% of monthly income (gross income), the welfare rent (in 
States where the welfare payment is adjusted in accordance with actual 
housing costs), or the PHA-established statutory minimum rent. There is 
no voucher ``shopping incentive'' (for a family that rents a unit below 
the payment standard). A family renting a unit above the payment 
standard pays the highest of 30% of monthly adjusted income, 10% of 
monthly income, the welfare rent, or minimum rent, plus any rent above 
the payment standard (Section 8(o)(2) (A) and (B) of the USH Act, 42 
U.S.C. 1437f(o)(2) (A) and (B); Sec. 982.506(b)).
    3. Maximum initial rent burden. A family must not pay more than 40% 
of adjusted income for rent when the family first receives Section 8 
tenant-based assistance for occupancy of a particular unit. This new 
requirement only applies for a family that initially receives tenant-
based assistance for occupancy of a unit after the effective date of 
this rule (called the ``merger date''). However, the maximum initial 
rent burden requirement is not applicable if the family stays in the 
same unit where the family initially received certificate or voucher 
assistance for occupancy of the unit before the effective date of this 
rule. The maximum initial rent burden requirement is applicable each 
time a participant moves to a new unit. (Section 8(o)(3) of the USH 
Act, 42 U.S.C. 1437f(o)(3); Sec. 982.508.)
    4. Income limits. Eligibility is limited to a:
    a. Very low-income family;
    b. Low-income family continuously assisted under the public 
housing, Section 23, or Section 8 programs;
    c. Low-income family that is a nonpurchasing tenant in certain 
homeownership programs;
    d. Low-income or moderate-income family that is displaced as a 
result of the prepayment of the mortgage or voluntary termination of an 
insurance contract on eligible low-income housing as defined at 24 CFR 
248.101; or
    e. Low-income family that meets PHA-specified criteria. (Section 
8(o)(4) of the USH Act, 42 U.S.C. 1437f(o)(4); Sec. 982.201(a)(1) of 
the regulations.)
    5. Applicant selection. PHA applicant selection preferences must be 
based on local housing needs and priorities. In determining the 
preferences, the PHA must use ``generally accepted data sources'' 
including public comments on the PHA plan and the Consolidated Plan. 
PHAs are urged to consider adopting admission preferences for victims 
of domestic violence (Section 8(o)(6)(A) of the USH Act, 42 U.S.C. 
1437f(o)(6)(A); Sec. 982.208).
    6. Optional PHA screening of applicants. Although the screening and 
selection of tenants will remain the function of the owner, the PHA may 
elect to screen applicants in accordance with any HUD requirements 
(Section

[[Page 26633]]

8(o)(6)(B) of the USH Act, 42 U.S.C. 1437f(o)(6)(B); 
Sec. 982.307(a)(1)).
    7. Optional PHA disapproval of owners. The PHA may refuse to enter 
into new Section 8 Housing Assistance Payment (HAP) contracts with 
owners who refuse (or have a history of refusing) to evict families for 
drug-related or violent criminal activity, or for activity that 
threatens the health, safety or right of peaceful enjoyment of the (1) 
premises by tenants, PHA employees or owner employees, or (2) the 
residences by neighbors (Section 8(o)(6)(C) of the USH Act, 42 U.S.C. 
1437f(o)(6)(C); Sec. 982.306(c)(5)).
    8. Initial lease term. The PHA may approve an initial lease term of 
less than 1 year if a lease of less than 1 year is prevailing local 
practice and the PHA determines that the shorter term will improve 
housing opportunities for the family (Section 8(o)(7)(A) of the USH 
Act, 42 U.S.C. 1437f(o)(7)(A); Sec. 982.309(a)).
    9. Lease form and content. The lease form must be in the standard 
form used in the locality by the owner. The lease must contain terms 
that are consistent with State and local law, and that apply generally 
to unassisted tenants in the same property. The HAP contract and the 
lease must contain the HUD prescribed tenancy addendum (Section 
8(o)(7)(B) and (F) of the USH Act, 42 U.S.C. 1437f(o)(7)(B) and (F); 
Sec. 982.308).
    10. HQS. Units must pass the federally established HQS or 
substitute local housing codes or codes adopted by PHAs. Substitute 
local housing codes or codes adopted by PHAs: (a) cannot severely 
restrict housing choice; and (b) must meet or exceed the HQS (unless 
HUD approves a lower standard that does not adversely affect the health 
or safety of families, and will significantly increase affordable 
housing access and expand housing opportunities) (Section 8(o)(8)(B) of 
the USH Act, 42 U.S.C. 1437f(o)(8)(B); Sec. 982.401(a)(4)).
    11. Fifteen calendar day initial HQS inspection deadline. PHAs with 
1,250 or fewer tenant-based Section 8 units must conduct initial HQS 
inspections within 15 days after receipt of an inspection request from 
the family and owner. PHAs with more than 1,250 tenant-based Section 8 
units must conduct initial HQS inspections within a ``reasonable 
period'' of the family's and owner's inspection request (Section 
8(o)(8)(C) of the USH Act, 42 U.S.C. 1437f(o)(8)(C); 
Sec. 982.305(b)(2)).
    12. PHA penalties for late payment of housing assistance to owners. 
In the future, the HAP contract will provide for penalties against the 
PHA for late payment of the housing assistance payment to the owner. 
Any late payment penalties may only be imposed in accordance with 
generally accepted practices in the local housing market governing 
penalties for late payment of rent by a tenant. For example, the PHA 
may be required to pay a late fee to an owner if the housing assistance 
payment is not paid by the tenth day of the month if it is local 
practice that an unassisted tenant is charged a late fee when the rent 
has not been paid in full by the tenth day of each month. A late 
payment fee may only be paid from the PHA's administrative fee income 
(including available amounts in the HA administrative fee reserve). The 
PHA is not obligated to pay any late fee if HUD determines that the 
late payment is due to factors beyond the control of the PHA (e.g., 
late receipt of the Section 8 funds from Treasury). The rule also 
provides that the PHA may add HAP contract provisions which define when 
the HAP payment by the PHA is deemed received by the owner (e.g., upon 
mailing by the PHA or actual receipt by the owner). (Section 
8(o)(10)(D) and (E) of the USH Act, 42 U.S.C. 1437f(o)(10)(D) and (E); 
Sec. 982.451(b)(5).)
    13. HQS inspections and rent reasonableness determinations for PHA-
owned units. The local government or another independent entity 
approved by HUD must conduct HQS inspections and rent reasonableness 
determinations for PHA-owned units leased by voucher holders. The PHA 
must pay any expenses associated with the performance of such 
inspections and rent determinations. The PHA and the independent agency 
may not charge the family any fee or charge for the services provided 
by the independent agency. The HA may use administrative fee income to 
compensate the independent agency for its services, but may not use 
other program receipts for this purpose (Section 8(o)(11) of the USH 
Act, 42 U.S.C. 1437f(o)(11); Sec. 982.352(b)).
    14. Subsidy amount for manufactured homeowners leasing pads. The 
subsidy amount for expenses associated with pad leasing by a mobile 
home owner are revised to mirror the subsidy calculation method for 
families leasing ``regular'' units (Section 8(o)(12) of the USH Act, 42 
U.S.C. 1437f(o)(12); Sec. 982.623).
    15. Income Targeting. Not less than 75% of new admissions to the 
tenant-based voucher assistance program must have incomes at or below 
30% of the area median income. Other admissions generally must be at or 
below 80% of the area median. If two or more PHAs have identical 
jurisdiction, those PHAs must jointly meet the targeting goals (section 
513 of the 1998 Act; Sec. 982.201(a)(2) of the regulations).
    16. Section 8 PHA definition. For the administration of tenant-
based assistance only, a ``PHA'' includes:
    a. A consortia of PHAs,
    b. A nonprofit entity administering certificates or vouchers under 
a contract with a PHA or HUD on enactment of the 1998 Act (on October 
21, 1998); or
    c. For any area outside the jurisdiction of a PHA that is 
administering a tenant-based program, or where HUD determines that such 
PHA is not administering the program effectively, a private non-profit 
entity or public body that would otherwise lack jurisdiction to 
administer the program in such area (section 546 of the 1998 Act; 
definition of ``public housing agency'' at Sec. 982.4 of the 
regulations).
    17. Section 8 ``endless lease'' and owner termination notices. The 
``endless lease'' provision and the 90-day owner termination notice are 
permanently repealed (section 549 of the 1998 Act; revisions to 
Secs. 982.310 and 982.454 ).
    18. Technical and conforming amendments including elimination of 
Section 8 SRO approvals. The requirements for a HUD determination of a 
significant demand for SROs, PHA and local government approval of SRO 
use, and a PHA and local government certification that the SRO meets 
local SRO health and safety standards have been eliminated (section 550 
of the 1998 Act; revisions to Sec. 982.602).
    19. Portability. The 1998 Act grants the statutory right of 
nationwide participant portability to the jurisdiction of any PHA that 
is administering the Section 8 voucher program. This right was 
previously established by HUD's program regulation. PHAs may opt to 
require applicants who were nonresidents at the time of application to 
live in the PHA's jurisdiction during the first year. PHAs must not 
issue a participant a new voucher for a portable move if the family has 
moved out of the family's unit in violation of the lease (section 553 
of the 1998 Act; Sec. 982.353).
    20. Elimination of ``take-one, take-all'' provision. The ``take-
one, take-all'' provision is permanently eliminated. This provision 
required that an owner who entered into a Section 8 HAP contract on 
behalf of any tenant in a multifamily housing project could not refuse 
to lease otherwise affordable units in all multifamily projects of the 
owner if the reason for the refusal was that the family was a 
certificate or voucher holder (section 554 of the 1998 Act permanently 
repeals Section 8(t) of the USH Act, 42 U.S.C. 1437f(t); this rule 
therefore removes the regulatory provision (prior Sec. 982.457) that 
recited the prior take-one-take-all statutory requirement).

[[Page 26634]]

    21. Intellectual property rights. The 1998 Act prohibits use of 
program receipts to indemnify PHA contractors or subcontractors against 
costs associated with any judgment of infringement of intellectual 
property rights (section 510 of the 1998 Act; Sec. 982.157).

B. Transition to the New Housing Choice Voucher Program

    The majority of changes necessary to merge the certificate and 
voucher programs into a single tenant-based program were accomplished 
by issuing the Section 8 certificate and voucher conforming rule 
published in three phases: in 1994, 1995, and 1998. The remaining 
significant differences between the certificate and voucher programs 
are the subsidy amount, the maximum allowable initial contract rent 
levels and contract rent adjustments. The treatment of these program 
differences in the transition of pre-merger certificates and pre-merger 
vouchers to the final merger of the two programs, as enacted by 
Congress, is addressed below.
    1. Requirement to only enter HAP contracts under the Housing Choice 
Voucher Program in the future, and treatment of outstanding pre-merger 
certificates. The new regulation becomes effective 90 days from 
publication of this rule. This date is called the ``merger date'' 
(Sec. 982.4).
    This rule provides that on and after the merger date, a PHA may 
only enter HAP contracts under the Housing Choice Voucher Program 
implemented by this rule. If an applicant family or a participant 
wishing to move has been issued a pre-merger certificate, the PHA may 
opt to: (a) let the family continue to search for housing during the 
term of the pre-merger certificate; or (b) issue the family a voucher 
under the Housing Choice Voucher Program for a new term.
    In any event, the PHA may only enter into HAP contracts under the 
Housing Choice Voucher Program on and after the merger date. Thus, an 
applicant or participant family who received a pre-merger certificate 
must be assisted under the Housing Choice Voucher Program if a tenant-
based HAP contract has not been executed on their behalf prior to the 
merger date.
    2. Treatment of pre-merger voucher assistance under the Housing 
Choice Voucher Program. On the merger date, participants in the pre-
merger voucher program automatically become participants in the Housing 
Choice Voucher Program. Existing voucher contracts provide that the 
housing assistance payment must be calculated in accordance with HUD 
requirements. However, the HAP contracts do not specify the amount of 
or method of computing the housing assistance payment.
    In accordance with Sec. 982.502 of the interim rule, the method of 
calculating subsidy under the Housing Choice Voucher Program is applied 
commencing at the effective date of the second regular reexamination of 
family income and composition on or after the merger date. Thus, a 
family receiving a shopping incentive under the pre-merger voucher 
program will continue to receive any shopping incentive for the pre-
merger unit until the family's second regular reexamination on or after 
the merger date. However, execution of a Housing Choice Voucher Program 
HAP contract may be deferred until the next time a HAP contract would 
otherwise be executed in accordance with program requirements.
    3. Conversion of pre-merger over-FMR certificates to vouchers under 
the Housing Choice Voucher Program. On the merger date, over-FMR 
tenancy participants in the pre-merger certificate program 
automatically become participants in the Housing Choice Voucher 
Program. Existing HAP contracts for an over-FMR tenancy provide that 
the housing assistance payment must be calculated in accordance with 
HUD requirements. However, the HAP contracts do not specify the amount 
of or method of computing the housing assistance payment. Consistent 
with Sec. 982.502 of this interim rule, the new method of calculating 
subsidy under the Housing Choice Voucher Program is applied commencing 
at the effective date of the second regular reexamination of family 
income and composition on or after the merger date.
    Conversion of an over-FMR tenancy certificate unit to the Housing 
Choice Voucher Program is not dependent upon execution of a Housing 
Choice Voucher Program HAP contract. Execution of a Housing Choice 
Voucher Program HAP contract may be deferred until the next time a HAP 
contract would otherwise be executed in accordance with program 
requirements.
    4. Conversion of pre-merger regular tenancy certificate assistance 
to voucher assistance under the Housing Choice Voucher Program. A 
regular tenancy certificate participant will automatically become a 
participant in the Housing Choice Voucher Program when the PHA executes 
a new HAP contract on their behalf on or after the merger date--whether 
for the same unit or for a new unit. The PHA must terminate assistance 
under any outstanding regular certificate HAP contract (entered before 
the merger date) at the effective date of the second regular 
reexamination of family income and composition on or after the merger 
date.
    All existing certificate tenancies must be converted to the Housing 
Choice Voucher Program (Sec. 982.502(d)). However, until conversion 
there is no change in pre-merger certificate program requirements for 
calculation of housing assistance payments, including annual 
adjustments and special adjustments to the contract rent 
(Secs. 982.507, 509, and 510 of the pre-merger regulations which are 
renumbered as Secs. 982.518, 982.519, and 982.520 in the Housing Choice 
Voucher Program regulations).

II. Section 8 Tenant-Based Program Statutory Provisions Not 
Included in This Rule

    This interim rule does not include every statutory change affecting 
the Section 8 tenant-based programs. A listing of the implementation 
method for tenant-based statutory provisions not included in this rule 
follows.

A. Part 5 and Part 984 Regulations Being Published Separately

    Other provisions of the 1998 Act affecting the Section 8 
certificate and voucher programs are being addressed in a separate 
proposed rule amending 24 CFRs parts 5 and 984. This rule was published 
in the Federal Register on April 30, 1999 (64 FR 23460) and includes 
the following provisions: the minimum rent requirements (section 507 of 
the 1998 Act); elimination of federal preferences (section 514 of the 
1998 Act); income targeting requirements (section 513 of the 1998 Act); 
elimination of Section 8 selection preference for public housing 
residents based on prior federal preference status (section 514 of the 
1998 Act); elimination of the admission preference for elderly, 
disabled and displaced persons before other single persons (section 
506(2)(A) of the 1998 Act); computer matching income verification 
information requirements (Section 8(o)(5)(A) of the USH Act, 42 U.S.C. 
1437f(o)(5)(A)); revisions to the definitions of annual income and 
adjusted income (section 508 of the 1998 Act); revision to the minimum 
FSS program size (section 509 of the 1998 Act); and tenant rent welfare 
sanctions (section 512 of the 1998 Act). Further, the regulatory 
conforming changes to reflect the statutory revisions to restrictions 
on assistance to noncitizens (section 592 of the 1998 Act) are being 
addressed in a separate final rule.

[[Page 26635]]

B. Section 8 Tenant-Based Homeownership Program

    Sections 545 and 555 of the 1998 Act provide that PHAs may opt to 
implement a Section 8 tenant-based homeownership program. HUD is 
issuing a separate proposed rule to implement the Section 8 tenant-
based homeownership program. The homeownership proposed rule was 
published in the Federal Register on April 30, 1999 (64 FR 23488).

C. Section 8 Tenant-Based Renewal Funds

    Section 556 of the 1998 Act requires HUD to establish the renewal 
funding process for tenant-based assistance in a regulation. Beginning 
October 1, 1998, HUD must renew expiring tenant-based Annual 
Contributions Contracts (ACCs) by applying a localized inflation factor 
to an allocation baseline that includes, at a minimum, ``amounts 
sufficient to ensure continued assistance for the actual number of 
families assisted on October 1, 1997, with appropriate upward 
adjustments for incremental assistance and additional families 
authorized subsequent to that date.'' HUD notice PIH 98-65 dated 
December 30, 1998 outlines the tenant-based renewal funding allocation 
policies for federal fiscal year 1999 assistance used to renew funding 
increments expiring between January 1, 1999 and December 31, 1999. 
Calendar year 2000 funding for the renewal of Section 8 certificate and 
voucher ACCs will be allocated pursuant to a negotiated final rule 
which will be published on or before October 21, 1999.

D. PHA Plan

    The PHA Plan interim rule (section 511 of the 1998 Act) was 
published in the Federal Register on February 18, 1999 (64 FR 8170).

E. Project-Based Vouchers

    Revisions to the rules for the project-based voucher/certificate 
program will be implemented in a future rulemaking (Section 8(o)(13) of 
the USH Act).

F. PHA Access to Criminal Conviction Records and Crime and Alcohol 
Abuse Provisions

    PHA access to criminal conviction records for Section 8 applicants 
and tenants (section 575 of the 1998 Act) and other crime and alcohol 
abuse provisions will be implemented through future rulemaking or 
guidance.

G. Other Miscellaneous Statutory Provisions

    Initial guidance on the 1998 Act provisions that are already 
effective was provided in notices published in the Federal Register on 
February 18, 1999 (64 FR 8192) and April 30, 1999 (64 FR 23344). HUD 
will continue to provide regulatory and other guidance, as appropriate, 
for all remaining provisions of the 1998 Act.

III. Public Participation in This Rulemaking

    HUD is issuing this interim rule under the statutory authority 
provided by section 559 of the 1998 Act. Section 559 provides that the 
Secretary of HUD ``shall issue such interim regulations as may be 
necessary to implement the amendments made by [the 1998 Act] which 
relate to Section 8(o) of the [USH Act].'' Section 559 also requires 
that before the final rule is published, HUD will seek the 
recommendations on the implementation of the new Housing Choice Voucher 
Program from organizations representing: (1) State or local PHAs; (2) 
Owners and managers of tenant-based housing assistance under Section 8 
of the USH Act; and (3) legal services organizations. Section 559 also 
requires HUD to convene not less than two public forums at which the 
persons or organizations making recommendations may express their views 
concerning the proposed disposition of their recommendations. The 
dates, times and locations of the first two public forums were 
announced in the Federal Register on April 27, 1999 (64 FR 22550).
    In addition to the general solicitation of public comments on this 
interim rule, HUD specifically seeks through this rulemaking 
recommendations on implementation of the Housing Choice Voucher Program 
from the four groups mentioned above: (1) State or local PHAs; (2) 
Owners and managers of tenant-based housing assistance under section 8 
of the USH Act; (3) families receiving tenant-based assistance under 
section 8 of the USH Act; and (4) legal services organizations.

IV. Justification for Interim Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. Part 10, however, provides that prior notice and 
public comment may be omitted if ``a statute expressly so authorizes'' 
(24 CFR 10.1). This interim rule implements those provisions of the 
1998 Act which complete the merger of the Section 8 certificate and 
voucher programs into a single new Section 8 voucher program 
(authorized under Section 8(o) of the USH Act, 42 U.S.C. 1437f(o)), 
entitled the Housing Choice Voucher Program. As noted above, section 
559 of the 1998 Act provides that the Secretary of HUD ``shall issue 
such interim regulations as may be necessary to implement the 
amendments made by [the 1998 Act] which relate to Section 8(o) of the 
[USH Act].'' Accordingly, HUD is issuing this interim rule for effect 
without prior notice and comment.
    HUD recognizes the value and necessity of public comment in the 
development of its regulations. HUD has therefore issued these 
regulations on an interim basis and has provided the public with a 60-
day comment period. Additionally, HUD has provided for a 90-day delayed 
effective date for this interim rule (in contrast to the customary 30-
day delayed effective date for most HUD rules), in order to afford PHAs 
additional time to prepare for the implementation of the interim rule. 
Further, HUD has scheduled three public forums to discuss 
implementation of the Housing Choice Voucher Program. HUD welcomes 
comment on the regulatory amendments made by this interim rule. Public 
comments will be addressed in the final rule.

V. Findings and Certifications

Paperwork Reduction Act

    (a) The proposed information collection requirements contained in 
this rule have been submitted to the Office of Management and Budget 
(OMB) for review, under section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. Chapter 35). 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.
    (b) In accordance with 5 CFR 1320.5(a)(1)(iv), HUD estimates that 
the total reporting and recordkeeping burden that will result from the 
proposed collection of information as follows:

BILLING CODE 4210-32-P

[[Page 26636]]

[GRAPHIC] [TIFF OMITTED] TR14MY99.095



[[Page 26637]]

[GRAPHIC] [TIFF OMITTED] TR14MY99.096



[[Page 26638]]

    (c) In accordance with 5 CFR 1320.8(d)(1), the Department is 
soliciting comments from members of the public and affected agencies 
concerning the proposed collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposal. Under the 
provisions of 5 CFR part 1320, OMB is required to make a decision 
concerning this collection of information between 30 and 60 days after 
today's publication date. Therefore, a comment on the information 
collection requirements is best assured of having its full effect if 
OMB receives the comment within 30 days of today's publication. This 
time frame does not affect the deadline for comments to the agency on 
the interim rule, however. Comments must refer to the rule by name and 
docket number (FR-4428) and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and 
Budget, New Executive Office Building, Washington, DC 20503
    and
Gerald J. Benoit, Office of Public and Indian Housing, Department of 
Housing and Urban Development, Room 4210, 451 Seventh Street, SW, 
Washington, DC 20410

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made in accordance with HUD regulations in 24 CFR part 50 that 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4223). The Finding 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, Room 10276, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This interim rule does not impose 
any Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of Unfunded Mandates Reform Act of 
1995.

Executive Order 12866

    The Office of Management and Budget (OMB) reviewed this interim 
rule under Executive Order 12866, Regulatory Planning and Review. OMB 
determined that this interim rule is a ``significant regulatory 
action,'' as defined in section 3(f) of the Order (although not 
economically significant, as provided in section 3(f)(1) of the Order). 
Any changes made to the interim rule subsequent to its submission to 
OMB are identified in the docket file, which is available for public 
inspection in the office of the Department's Rules Docket Clerk, Room 
10276, 451 Seventh Street, SW, Washington, DC 20410-0500.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) (the RFA), has reviewed and approved this interim rule 
and in so doing certifies that this rule would not have a significant 
economic impact on a substantial number of small entities. The reasons 
for HUD's determination are as follows:
    (1) A Substantial Number of Small Entities Will Not be Affected. 
The interim rule is exclusively concerned with public housing agencies 
that administer tenant-based housing assistance under Section 8 of the 
United States Housing Act of 1937. Specifically, the interim rule would 
establish requirements governing tenant-based assistance for an 
eligible family. Under the definition of ``Small governmental 
jurisdiction'' in section 601(5) of the RFA, the provisions of the RFA 
are applicable only to those few public housing agencies that are part 
of a political jurisdiction with a population of under 50,000 persons. 
The number of entities potentially affected by this rule is therefore 
not substantial.
    (2) No Significant Economic Impact. The interim regulatory 
amendments would not change the amount of funding available under the 
Section 8 voucher program. Accordingly, the economic impact of this 
rule will not be significant, and it will not affect a substantial 
number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official for HUD under 
section 6(a) of Executive Order 12612, Federalism, has determined that 
this rule will not have federalism implications concerning the division 
of local, State, and Federal responsibilities. No programmatic or 
policy change under this rule will affect the relationship between the 
Federal government and State and local governments.

Catalog of Domestic Assistance Numbers

    The Catalog of Domestic Assistance numbers for the programs 
affected by this interim rule are 14.146, 14.147, 14.850, 14.851, 
14.852, 14.855, 14.857, and 15.141.

List of Subjects

24 CFR Part 248

    Intergovernmental relations, Loan programs--housing and community 
development, Low and moderate income housing, Mortgage insurance, 
Reporting and recordkeeping requirements.

24 CFR Part 791

    Grant programs--housing and community development, Housing, Rent 
subsidies.

24 CFR Part 792

    Fraud, Grant programs--housing and community development, Rent 
subsidies, Reporting and recordkeeping requirements.

24 CFR Part 982

    Grant programs--housing and community development, Housing, Rent 
subsidies.

    For the reasons discussed in the preamble, HUD amends 24 CFR parts 
248, 791, 792, and 982 as follows:

PART 248--PREPAYMENT OF LOW INCOME HOUSING MORTGAGES

    1. The authority citation for part 248 continues to read as 
follows:

    Authority: 12 U.S.C. 1715l note, 4101 note, and 4101-4124; 42 
U.S.C. 3535(d).


Sec. 248.101  [Amended]

    2. Amend Sec. 248.101 as follows:

[[Page 26639]]

    a. In the definition of ``Adjusted income'' revise the references 
to ``Sec. 813.106'' and ``Sec. 813.102'' to read ``part 5''.
    b. In the definition of ``Fair market rent'', revise the reference 
to ``Sec. 882.102'' to read ``Sec. 982.4''; and
    c. In the definition of ``Low Income Families'', revise the 
reference to ``part 813'' to read ``part 5''.
    d. In the definition of ``Section 8 assistance'', after the words 
``880 through 887'', add the words ``and 982 and 983''.
    e. In the definition of ``Special Needs Tenants'' revise the 
reference to ``Sec. 812.2'' to read ``part 5''.
    f. In the definition of ``Very Low Income Families'', revise the 
reference to ``Sec. 813.102'' to ``part 5''.


Sec. 248.141   [Amended]

    3. Amend Sec. 248.141(c)(3) by removing the reference to 
``certificate and''.


Sec. 248.147   [Amended]

    4. In Sec. 248.147(e)(1), revise the references to ``parts 882 and 
887'' in the first and second sentences to read in each place ``part 
982''.
    5. Amend Sec. 248.165 as follows:
    a. Revise paragraph (a) as set forth below; and
    b. In paragraph (i), revise the reference to ``assistance under 
parts 882 or 887 of this title'' to read ``tenant-based assistance 
under the Housing Choice Voucher Program''.


Sec. 248.165  Assistance for displaced tenants.

    (a) Section 8 assistance. Each low income family that is displaced 
as a result of the prepayment of the mortgage, or voluntary termination 
of an insurance contract, on eligible low income housing shall, subject 
to the availability of funds, be offered the opportunity to receive 
tenant-based assistance under the Housing Choice Voucher Program in 
accordance with part 982 of this title.
* * * * *
    6. Revise Sec. 248.173(m)(2) to read as follows:


Sec. 248.173  Resident homeownership program.

* * * * *
    (m) * * *
    (2) Section 8 assistance. If a tenant decides not to purchase a 
unit, or is not qualified to do so, the Commissioner shall ensure that 
tenant-based assistance under the Housing Choice Voucher Program in 
accordance with part 982 of this title is available for use in that or 
another property by each tenant that meets the eligibility requirements 
thereunder.
* * * * *


Sec. 248.201   [Amended]

    7. Amend Sec. 248.201 as follows:
    a. In the definition of ``Low-income Families'', revise the 
reference to ``part 813'' to read ``part 5'';
    b. In the definition of ``Very Low Income Families'', revise the 
reference to ``under Sec. 813.102 of this title'' to read ``under 
section 3(b) of the 1937 Act (42 U.S.C. 1437a(b))''.

PART 791--ALLOCATIONS OF HOUSING ASSISTANCE FUNDS

    8. Revise the heading of part 791 to read as set forth above.
    9. The authority citation for part 791 continues to read as 
follows:

    Authority: 42 U.S.C. 1439 and 3535(d).

    10. Revise Sec. 791.101 to read as follows:


Sec. 791.101  Applicability and scope.

    This part describes the role and responsibility of HUD in 
allocation of budget authority (pursuant to section 213 of the Housing 
and Community Development Act of 1974 (42 U.S.C. 1439)) for housing 
assistance under the United States Housing Act of 1937 (Section 8 and 
public housing) and under section 101 of the Housing and Urban 
Development Act of 1965 (12 U.S.C. 1701s), and of budget authority for 
housing assistance under section 202 of the Housing Act of 1959 (12 
U.S.C. 1710q). This part does not apply to budget authority for the 
public housing operating fund or capital fund.
    11. Amend Sec. 791.102 as follows:
    a. Remove the definitions of ``Application for housing 
assistance'', ``Chief executive officer'', ``Household type'', 
``Housing type'', ``Local government'', ``Tenure type'', and ``Urban 
county'';
    b. Amend the definition of ``Allocation area'' by removing the 
reference to ``or Indian areas''; and
    c. Revise the definition of ``Public housing agency'' as set forth 
below.


Sec. 791.102  Definitions.

* * * * *
    Public housing agency (PHA). (1) Any State, county, municipality, 
or other governmental entity or public body which is authorized to 
administer a program under the 1937 Act (or an agency or 
instrumentality of such an entity).
    (2) In addition, for purposes of the program of Section 8 tenant-
based assistance under part 982 of this title, the term PHA also 
includes any of the following:
    (i) A consortia of housing agencies, each of which meets the 
qualifications in paragraph (1) of this definition, that HUD determines 
has the capacity and capability to efficiently administer the program 
(in which case, HUD may enter into a consolidated ACC with any legal 
entity authorized to act as the legal representative of the consortia 
members);
    (ii) Any other public or private non-profit entity that was 
administering a Section 8 tenant-based assistance program pursuant to a 
contract with the contract administrator of such program (HUD or a PHA) 
in effect on October 21, 1998; or
    (iii) For any area outside the jurisdiction of a PHA that is 
administering a tenant-based program, or where HUD determines that such 
PHA is not administering the program effectively, a private non-profit 
entity or a governmental entity or public body that would otherwise 
lack jurisdiction to administer the program in such area.

Subpart C--[Removed and Reserved]

    12. Remove and reserve subpart C.


Sec. 791.401  [Amended]

    13. In Sec. 791.401, revise the reference to ``Sec. 791.101(a)'' to 
read ``Sec. 791.101''.
    14. Amend Sec. 791.402 as follows:
    a. Remove paragraph (c)(2) and redesignate paragraph (c)(1) as 
paragraph (c); and
    b. Revise paragraph (d) as set forth below.


Sec. 791.402  Determination of low-income housing needs.

* * * * *
    (d) Based on the criteria in paragraphs (b) and (c) of this 
section, the Assistant Secretary for Policy Development and Research 
shall establish housing needs factors for each county and independent 
city in the field office jurisdiction, and shall aggregate the factors 
for such jurisdiction. The field office total for each factor is then 
divided by the respective national total for that factor. The resulting 
housing needs ratios under paragraph (b) of this section are then 
weighted to provide housing needs percentages for each field office, 
using the following weights: population--20 percent; poverty--20 
percent; housing overcrowding--10 percent; housing vacancies--10 
percent; substandard housing--20 percent; other objectively measurable 
conditions--20 percent. For the section 202 elderly program, the two 
criteria described in paragraph (c) of this section are weighted 
equally.
* * * * *

[[Page 26640]]

    15. Amend Sec. 791.403 to revise paragraphs (a) and (b)(1)(i) to 
read as follows:


Sec. 791.403  Allocation of housing assistance.

    (a) The total budget authority available for any fiscal year shall 
be determined by adding any available unreserved budget authority from 
prior fiscal years to any newly appropriated budget authority for each 
housing program.
    (b) * * *
    (1) * * *
    (i) Amendments of existing contracts, renewal of assistance 
contracts, assistance to families that would otherwise lose assistance 
due to the decision of the project owner to prepay the project mortgage 
or not to renew the assistance contract, assistance to prevent 
displacement or to provide replacement housing in connection with the 
demolition or disposition of public housing, assistance in support of 
the property disposition and loan management functions of the 
Secretary;
* * * * *
    16. Revise Sec. 791.404(c) to read as follows:


Sec. 791.404  Field Office allocation planning.

* * * * *
    (c) Determining the amount of budget authority. Where the field 
office establishes more than one allocation area, it shall determine 
the amount of budget authority to be allocated to each allocation area, 
based upon a housing needs percentage which represents the needs of 
that area relative to the field office jurisdiction. For each program, 
a composite housing needs percentage developed under Sec. 791.402 for 
those counties and independent cities comprising the allocation area 
shall be aggregated into allocation area totals.
* * * * *

PART 792--PUBLIC HOUSING AGENCY SECTION 8 FRAUD RECOVERIES

    17. Revise the heading of part 792 to read as set forth above.
    18. The authority citation for 24 CFR part 792 continues to read as 
follows:

    Authority: 42 U.S.C. 1437f note and 3535(d).

PART 792--[AMENDED]

    19. In part 792, revise all references to ``HA'' to read ``PHA''.
    20. Revise Sec. 792.101 to read as follows:


Sec. 792.101  Purpose.

    The purpose of this part is to encourage public housing agencies 
(PHAs) to investigate and pursue instances of tenant and owner fraud 
and abuse in the operation of the Section 8 housing assistance payments 
programs.


Sec. 792.102  [Amended]

    21. Amend Sec. 792.102 as follows:
    a. In paragraphs (a) and (b), revise the reference to ``an HA'' to 
read ``a PHA''.
    b. In paragraph (b), revise the reference to ``Sec. 882.216 or 
887.405'' to read ``Sec. 982.555 of this title''.
    22. Amend Sec. 792.103 as follows:
    a. Remove the definition of ``HA (Housing Agency)'';
    b. Add the definition of ``Public housing agency (PHA)'' in 
alphabetical order as set forth below; and
    c. In the definition of ``Repayment agreement'', revise the 
reference to ``an HA'' to read ``a PHA''.


Sec. 792.103  Definitions.

* * * * *
    Public housing agency (PHA). A public housing agency as defined in 
Sec. 791.102.
* * * * *


Sec. 792.202  [Amended]

    23. In Sec. 792.202(a)(1) and (a)(2), revise the reference to 
``Sec. 882.216 or 887.405'' to read ``Sec. 982.555 of this title''.

PART 982--SECTION 8 TENANT BASED ASSISTANCE: HOUSING CHOICE VOUCHER 
PROGRAM

    24. Revise the heading of part 982 to read as set forth above.
    25. The authority citation for part 982 continues to read as 
follows:

    Authority: 42 U.S.C. 1437f and 3535(d).

PART 982--[AMENDED]

    25a. In part 982, ``HA'' is removed and ``PHA'' is added in its 
place wherever it appears, and ``an HA'' is removed and ``a PHA'' is 
added in its place wherever it appears.
    26. Amend Sec. 982.1 as follows:
    a. Revise the section heading;
    b. Revise paragraphs (a)(1), (a)(2), and (a)(4);
    c. Amend paragraph (a)(3) by removing the reference to ``and is not 
based on the actual rent of the leased unit'';
    d. Amend paragraph (b)(1) by removing the reference to 
``certificate or''; and
    e. Revise paragraph (b)(2).
    The revisions read as follows:


Sec. 982.1  Programs: Purpose and structure.

    (a) General description. (1) In the HUD Housing Choice Voucher 
Program (Voucher Program) and the HUD certificate program, HUD pays 
rental subsidies so eligible families can afford decent, safe and 
sanitary housing. Both programs are generally administered by State or 
local governmental entities called public housing agencies (PHAs). HUD 
provides housing assistance funds to the PHA. HUD also provides funds 
for PHA administration of the programs. PHAs are no longer allowed to 
enter into contracts for assistance in the certificate program.
    (2) Families select and rent units that meet program housing 
quality standards. If the PHA approves a family's unit and tenancy, the 
PHA contracts with the owner to make rent subsidy payments on behalf of 
the family. A PHA may not approve a tenancy unless the rents is 
reasonable.
* * * * *
    (4)(i) In the certificate program, the subsidy for most families is 
the difference between the rent and 30 percent of adjusted monthly 
income.
    (ii) In the voucher program, the subsidy is based on a local 
``payment standard'' that reflects the cost to lease a unit in the 
local housing market. If the rent is less than the payment standard, 
the family generally pays 30 percent of adjusted monthly income for 
rent. If the rent is more than the payment standard, the family pays a 
larger share of the rent.
* * * * *
    (b) * * *
    (2) To receive tenant-based assistance, the family selects a 
suitable unit. After approving the tenancy, the PHA enters into a 
contract to make rental subsidy payments to the owner to subsidize 
occupancy by the family. The PHA contract with the owner only covers a 
single unit and a specific assisted family. If the family moves out of 
the leased unit, the contract with the owner terminates. The family may 
move to another unit with continued assistance so long as the family is 
complying with program requirements.


Sec. 982.2  [Amended]

    27. In Sec. 982.2(a), remove the word ``rental'' in both places it 
appears in the second sentence.
    28. Amend Sec. 982.4 as follows:
    a. Amend paragraph (a)(2) by removing the reference to ``Housing 
agency (HA)'';
    b. In paragraph (a)(4) revise the reference to ``utility allowance, 
and utility reimbursement'' to read ``utility allowance'';
    c. Amend paragraph (b) by removing the definitions of 
``Amortization payment'', ``Certificate'', ``Certificate or voucher 
holder'', ``Certificate program'',

[[Page 26641]]

``Contiguous MSA'', ``Contract authority'', ``Exception rent'', ``FMR/
exception rent limit'', ``Lease addendum'', ``Over-FMR tenancy'', 
``Regular tenancy'', ``Set-up charges'', ``Utility hook-up charge'', 
and ``Voucher program'';
    d. Amend paragraph (b) by revising the definitions of ``Payment 
standard'', and ``Tenant rent'';
    e. Amend paragraph (b) by removing the reference to ``certificate 
or'' from the definitions of the terms ``Receiving HA'' and 
``Suspension''; and
    f. Amend paragraph (b) by removing the phrase ``approval to lease a 
unit'' in the definition of ``Suspension'' and adding in its place 
``approval of the tenancy''.
    g. Amend paragraph (b) by adding, in alphabetical order, the 
definitions of the terms ``Merger date'', ``PHA plan'', ``Program'', 
``Program receipts'', ``Public housing agency (PHA)'', ``Residency 
preference'', ``Residency preference area'', ``Tenant rent'', and 
``Voucher holder''.


Sec. 982.4  Definitions.

* * * * *
    (b) * * *
    Merger date. August 12, 1999.
* * * * *
    Payment standard. The maximum monthly assistance payment for a 
family assisted in the voucher program (before deducting the total 
tenant payment by the family).
    PHA plan. The annual plan and the 5-year plan as adopted by the PHA 
and approved by HUD in accordance with part 903 of this chapter.
* * * * *
    Program. The Section 8 tenant-based assistance program under this 
part.
    Program receipts. HUD payments to the PHA under the consolidated 
ACC, and any other amounts received by the PHA in connection with the 
program.
    Public housing agency (PHA). PHA includes both:
    (1) Any State, county, municipality, or other governmental entity 
or public body which is authorized to administer the program (or an 
agency or instrumentality of such an entity), or
    (2) Any of the following:
    (i) A consortia of housing agencies, each of which meets the 
qualifications in paragraph (1) of this definition, that HUD determines 
has the capacity and capability to efficiently administer the program 
(in which case, HUD may enter into a consolidated ACC with any legal 
entity authorized to act as the legal representative of the consortia 
members);
    (ii) Any other public or private non-profit entity that was 
administering a Section 8 tenant-based assistance program pursuant to a 
contract with the contract administrator of such program (HUD or a PHA) 
on October 21, 1998; or
    (iii) For any area outside the jurisdiction of a PHA that is 
administering a tenant-based program, or where HUD determines that such 
PHA is not administering the program effectively, a private non-profit 
entity or a governmental entity or public body that would otherwise 
lack jurisdiction to administer the program in such area.
* * * * *
    Residency preference. A PHA preference for admission of families 
that reside anywhere in a specified area, including families with a 
member who works or has been hired to work in the area (``residency 
preference area'').
    Residency preference area. The specified area where families must 
reside to qualify for a residency preference.
* * * * *
    Tenant rent. For a tenancy in the certificate program: The total 
tenant payment minus any utility allowance.
* * * * *
    Voucher holder. A family holding a voucher with an unexpired term 
(search time).
* * * * *
    29. Revise Sec. 982.51(a) to read as follows:


Sec. 982.51  PHA authority to administer program.

    (a) The PHA must have authority to administer the program. The PHA 
must provide evidence, satisfactory to HUD, of its status as a PHA, of 
its authority to administer the program, and of the PHA jurisdiction.
* * * * *
    30. Amend Sec. 982.53 by revising paragraphs (b) and (c) and adding 
paragraph (d) to read as follows:


Sec. 982.53  Equal opportunity requirements.

* * * * *
    (b) Civil rights certification. The PHA must submit a signed 
certification to HUD that:
    (1) The PHA will administer the program in conformity with the Fair 
Housing Act, Title VI of the Civil Rights Act of 1964, section 504 of 
the Rehabilitation Act of 1973, and Title II of the Americans with 
Disabilities Act.
    (2) The PHA will affirmatively further fair housing in the 
administration of the program.
    (c) Obligation to affirmatively further fair housing. The PHA shall 
be considered in compliance with the obligation to affirmatively 
further fair housing if the PHA examines its programs or proposed 
programs, identifies any impediments to fair housing choice within 
those programs, addresses those impediments in a reasonable fashion in 
view of the resources available, works with the local jurisdiction to 
implement any of the local government's initiatives to affirmatively 
further fair housing that require the PHA's involvement, and maintains 
records reflecting these analyses and actions.
    (d) State law. Nothing in part 982 is intended to pre-empt 
operation of State laws that prohibit discrimination against a Section 
8 voucher-holder because of status as a Section 8 voucher-holder. 
However, such State laws shall not change or affect any requirement of 
this part, or any other HUD requirements for administration or 
operation of the program.
    31. Amend Sec. 982.54 as follows:
    a. Revise paragraphs (d)(1), (d)(2), (d)(14) and (d)(15);
    b. Remove paragraph (d)(16);
    c. Redesignate paragraphs (d)(17) through (d)(22) as paragraphs 
(d)(16) through (d)(21) respectively; and
    d. Add new paragraph (d)(27).
    The revisions and addition read as follows:


Sec. 982.54  Administrative plan.

* * * * *
    (d) * * *
    (1) Selection and admission of applicants from the PHA waiting 
list, including any PHA admission preferences, procedures for removing 
applicant names from the waiting list, and procedures for closing and 
reopening the PHA waiting list;
    (2) Issuing or denying vouchers, including PHA policy governing the 
voucher term and any extensions or suspensions of the voucher term. 
``Suspension'' means stopping the clock on the term of a family's 
voucher after the family submits a request for approval of the tenancy. 
If the PHA decides to allow extensions or suspensions of the voucher 
term, the PHA administrative plan must describe how the PHA determines 
whether to grant extensions or suspensions, and how the PHA determines 
the length of any extension or suspension;
* * * * *
    (14) The process for establishing and revising voucher payment 
standards;
    (15) The method of determining that rent to owner is a reasonable 
rent (initially and during the term of a HAP contract);
* * * * *

[[Page 26642]]

    (22) Procedural guidelines and performance standards for conducting 
required HQS inspections.
    32. In Sec. 982.101, revise paragraph (a) and paragraph (b)(2)(i) 
to read as follows:


Sec. 982.101  Allocation of funding.

    (a) Allocation of funding. HUD allocates available budget authority 
for the tenant-based assistance program to HUD field offices.
    (b) * * *
    (2) * * *
    (i) Funding retained in a headquarters reserve for purposes 
specified by law;
* * * * *
    33. Amend Sec. 982.103 by revising paragraph (a) and adding 
paragraph (c) to read as follows:


Sec. 982.103  HUD review of application.

    (a) Competitive funding under NOFA. For competitive funding under a 
NOFA, HUD must evaluate an application on the basis of the selection 
criteria stated in the NOFA, and must consider the PHA's capacity and 
capability to administer the program.
* * * * *
    (c) PHA disqualification. HUD will not approve any PHA funding 
application (including an application for competitive funding under a 
NOFA) if HUD determines that the PHA is disbarred or otherwise 
disqualified from providing assistance under the program.
    34. Amend Sec. 982.151 as follows:
    a. Amend paragraph (a)(1) by removing the reference to ``the 
maximum annual payment by HUD, and'';
    b. In paragraph (a)(2), revise the reference to ``certificate 
program and voucher program'' to read ``tenant-based assistance 
program''; and
    c. Revise paragraph (b) to read as follows:


Sec. 982.151  Annual contributions contract.

* * * * *
    (b) Budget authority. (1) Budget authority is the maximum amount 
that may be paid by HUD to a PHA over the ACC term of a funding 
increment. Before adding a funding increment to the consolidated ACC 
for a PHA program, HUD reserves budget authority from amounts 
authorized and appropriated by the Congress for the program.
    (2) For each funding increment, the ACC specifies the term over 
which HUD will make payments for the PHA program, and the amount of 
available budget authority for each funding increment. The amount to be 
paid to the PHA during each PHA fiscal year (including payment from the 
ACC reserve account described in Sec. 982.154) must be approved by HUD.
    35. Amend Sec. 982.152 by revising paragraphs (a)(1), (b)(1) and 
(c) to read as follows:


Sec. 982.152  Administrative fee.

    (a) Purposes of administrative fee. (1) HUD may approve 
administrative fees to the PHA for any of the following purposes:
    (i) Ongoing administrative fee;
    (ii) Costs to help families who experience difficulty finding or 
renting appropriate housing under the program;
    (iii) The following types of extraordinary costs approved by HUD:
    (A) Costs to cover necessary additional expenses incurred by the 
PHA to provide reasonable accommodation for persons with disabilities 
in accordance with part 8 of this title (e.g., additional counselling 
costs), where the PHA is unable to cover such additional expenses from 
ongoing administrative fee income or the PHA administrative fee 
reserve;
    (B) Costs of audit by an independent public accountant;
    (C) Other extraordinary costs determined necessary by HUD 
Headquarters;
    (iv) Preliminary fee (in accordance with paragraph (c) of this 
section);
    (v) Costs to coordinate supportive services for families 
participating in the family self-sufficiency (FSS) program.
* * * * *
    (b) Ongoing administrative fee. (1) The PHA ongoing administrative 
fee is paid for each program unit under HAP contract on the first day 
of the month. The amount of the ongoing fee is determined by HUD in 
accordance with Section 8(q)(1) of the 1937 Act (42 U.S.C. 
1437f(q)(1)).
* * * * *
    (c) Preliminary fee. (1) If the PHA was not administering a program 
of Section 8 tenant-based assistance prior to the merger date, HUD will 
pay a one-time fee in the amount of $500 in the first year the PHA 
administers a program. The fee is paid for each new unit added to the 
PHA program by the initial funding increment under the consolidated 
ACC.
    (2) The preliminary fee is used to cover expenses the PHA incurs to 
help families who inquire about or apply for the program, and to lease 
up new program units.
* * * * *
    36. Revise Sec. 982.154 to read as follows:


Sec. 982.154  ACC reserve account.

    (a) HUD may establish and maintain an unfunded reserve account for 
the PHA program from available budget authority under the consolidated 
ACC. This reserve is called the ``ACC reserve account'' (formerly 
``project reserve''). There is a single ACC reserve account for the PHA 
program.
    (b) The amount in the ACC reserve account is determined by HUD. HUD 
may approve payments for the PHA program, in accordance with the PHA's 
HUD-approved budget, from available amounts in the ACC reserve account.
    37. Amend Sec. 982.155 by revising the introductory text of 
paragraph (a) to read as follows:


Sec. 982.155  Administrative fee reserve.

    (a) The PHA must maintain an administrative fee reserve (formerly 
``operating reserve'') for the program. There is a single 
administrative fee reserve for the PHA program. The PHA must credit to 
the administrative fee reserve the total of:
* * * * *
    38. Amend Sec. 982.157 as follows:
    a. Revise paragraph (b)(1) introductory text as set forth below; 
and
    b. Add paragraph (c).


Sec. 982.157  Budget and expenditures.

* * * * *
    (b) PHA use of program receipts. (1) Program receipts must be used 
in accordance with the PHA's HUD-approved budget. Such program receipts 
may only be used for:
* * * * *
    (c) Intellectual property rights. Program receipts may not be used 
to indemnify contractors or subcontractors of the PHA against costs 
associated with any judgment of infringement of intellectual property 
rights.
    39. Revise Sec. 982.162(a)(3) to read as follows:


Sec. 982.162  Use of HUD-required contracts and other forms.

    (a) * * *
    (3) The tenancy addendum required by HUD (which is included both in 
the HAP contract and in the lease between the owner and the tenant).
* * * * *
    40. Amend Sec. 982.201 as follows:
    a. In paragraph (a), revise the reference to ``a program'' to read 
``the program'';
    b. Revise paragraphs (b) and (f)(2) as set forth below; and
    c. Remove the reference to ``certificate or'' in paragraphs (d)(1), 
(d)(2) and (e).


Sec. 982.201  Eligibility.

* * * * *
    (b) Income. (1) Income-eligibility. To be income-eligible, the 
applicant must

[[Page 26643]]

be a family in any of the following categories:
    (i) A ``very low income'' family;
    (ii) A low-income family that is ``continuously assisted'' under 
the 1937 Housing Act;
    (iii) A low-income family that meets additional eligibility 
criteria specified in the PHA administrative plan. Such additional PHA 
criteria must be consistent with the PHA plan and with the consolidated 
plans for local governments in the PHA jurisdiction;
    (iv) A low-income family that qualifies for voucher assistance as a 
non-purchasing family residing in a HOPE 1 (HOPE for public housing 
homeownership) or HOPE 2 (HOPE for homeownership of multifamily units) 
project. (Section 8(o)(4)(D) of the 1937 Act (42 U.S.C. 
1437f(o)(4)(D));
    (v) A low-income or moderate-income family that is displaced as a 
result of the prepayment of the mortgage or voluntary termination of an 
insurance contract on eligible low-income housing as defined in 
Sec. 248.101 of this title;
    (vi) A low-income family that qualifies for voucher assistance as a 
non-purchasing family residing in a project subject to a resident 
homeownership program under Sec. 248.173 of this title.
    (2) Income-targeting. (i) Not less than 75 percent of the families 
admitted to a PHA's tenant-based voucher program during the PHA fiscal 
year shall be targeted to families whose annual income does not exceed 
the following amounts as determined by HUD:
    (A) 30 percent of the area median income, with adjustments for 
smaller and larger families; or
    (B) A higher or lower percent of the area median income, if HUD 
determines that a higher or lower percent is necessary because of 
unusually high or low family incomes.
    (ii) Conversion of assistance for a participant in the PHA 
certificate program to assistance in the PHA voucher program does not 
count as an ``admission,'' and is not subject to targeting under 
paragraph (b)(2)(i) of this section.
    (iii) Admission of families as described in paragraphs (b)(1)(ii) 
or (b)(1)(v) of this section is not subject to targeting under 
paragraph (b)(2)(i) of this section.
    (iv) If two or more PHAs that administer section 8 tenant-based 
assistance have an identical jurisdiction, such PHAs shall be treated 
as a single PHA for purposes of targeting under paragraph (b)(2)(i) of 
this section. In such a case, the PHAs shall cooperate to assure that 
aggregate admissions by such PHAs comply with the targeting 
requirement. If such PHAs do not have a single fiscal year, HUD will 
determine which PHA's fiscal year is used for this purpose.
    (3) The annual income (gross income) of an applicant family is used 
both for determination of income-eligibility under paragraph (b)(1) of 
this section, and for targeting under paragraph (b)(2)(i) of this 
section.
    (4) The applicable income limit for issuance of a voucher when a 
family is selected for the program is the highest income limit (for the 
family unit size) for areas in the PHA jurisdiction. The applicable 
income limit for admission to the program is the income limit for the 
area where the family is initially assisted in the program. The family 
may only use the voucher to rent a unit in an area where the family is 
income eligible at admission to the program.
* * * * *
    (f) * * *
    (2) For description of the grounds for denying assistance because 
of action or inaction by the applicant, see Sec. 982.552(b) and (c) 
(requirement and authority to deny admission) and Sec. 982.553(a) 
(crime by family members).
    41. Amend Sec. 982.202 as follows:
    a. Remove paragraph (b)(1);
    b. Redesignate paragraphs (b)(2), (b)(3), and (b)(4) as paragraphs 
(b)(1), (b)(2), and (b)(3), respectively; and
    c. Revise the introductory text of the newly designated paragraph 
(b)(3) as set forth below; and
    d. Revise paragraph (d) as set forth below.


Sec. 982.202  How applicants are selected: General requirements.

* * * * *
    (b) * * *
    (3) Family characteristics. The PHA preference system may provide a 
preference for admission of families with certain characteristics from 
the PHA waiting list. However, admission to the program may not be 
based on:
* * * * *
    (d) Admission policy. 
    The PHA must admit applicants for participation in accordance with 
HUD regulations and other requirements, and with PHA policies stated in 
the PHA administrative plan and the PHA plan. The PHA admission policy 
must state the system of admission preferences that the PHA uses to 
select applicants from the waiting list, including any residency 
preference or other local preference.


Sec. 982.20  [Amended]

    42. In Sec. 982.203(b)(1), remove the words ``or Indian''.
    43. In Sec. 982.204, revise paragraph (b)(4), amend paragraph 
(b)(5) to remove the phrase ``ranking preference or'' and add a new 
paragraph (f) to read as follows:


Sec. 982.204  Waiting list: Administration of waiting list.

* * * * *
    (b) * * *
    (4) Qualification for any local preference;
* * * * *
    (f) Number of waiting lists. A PHA must use a single waiting list 
for admission to its Section 8 tenant-based assistance program. 
However, the PHA may use a separate single waiting list for such 
admissions for a county or municipality.


Sec. 982.205  [Amended]

    44. Amend Sec. 982.205 as follows:
    a. Remove paragraph (a);
    b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b), 
respectively;
    c. In newly designated paragraph (a)(2), revise all references to 
``project-based certificate program'' to read ``project-based voucher 
program'', and remove all references to ``or Indian'';
    d. In newly designated paragraph (b)(1), remove the reference to 
``or Indian''; and
    e. In newly designated paragraph (b)(3), revise the reference to 
``paragraph (c)(2)'' to read ``paragraph (b)(2)'', and remove the 
reference to ``both the certificate program and''.
    45. Amend Sec. 982.206 as follows:
    a. Revise paragraph (b)(2) as set forth below;
    b. Remove paragraph (c)(2); and
    c. Redesignate paragraph (c)(1) as paragraph (c).


Sec. 982.206  Waiting list: Opening and closing; Public notice.

* * * * *
    (b) * * *
    (2) If the waiting list is open, the PHA must accept applications 
from families for whom the list is open unless there is good cause for 
not accepting the application (such as denial of assistance because of 
action or inaction by members of the family) for the grounds stated in 
Secs. 982.552 and 982.553.
* * * * *
    46. Revise Sec. 982.207 to read as follows:


Sec. 982.207  Waiting list: Local preferences in admission to program.

    (a) Establishment of PHA local preferences. (1) The PHA may 
establish a system of local preferences for selection of families 
admitted to the program. PHA selection preferences must be described in 
the PHA administrative plan. The system of local

[[Page 26644]]

preferences must be consistent with the PHA plan (see part 903 of this 
title), and with the consolidated plans for local governments in the 
PHA jurisdiction.
    (2) The PHA system of local preferences must be based on local 
housing needs and priorities, as determined by the PHA. In determining 
such needs and priorities, the PHA shall use generally accepted data 
sources. The PHA shall consider public comment on the proposed public 
housing agency plan (as received pursuant to Sec. 903.17 of this 
chapter) and on the consolidated plan for the relevant jurisdiction (as 
received pursuant to part 91 of this title).
    (3) The PHA may limit the number of applicants that may qualify for 
any local preference.
    (b) Residency preferences. (1) If approved by HUD, the PHA may 
adopt a residency preference that establishes a county or municipality 
as a residency preference area. A PHA may not adopt a residency 
preference for an area smaller than a county or municipality.
    (2) A residency preference must apply to families with a member who 
works or who has been hired to work anywhere in a residency preference 
area. In applying the residency preference, such families must be 
treated like families that reside in the residency preference area.
    (3) A residency preference may not be based on how long the 
applicant has resided in or worked in the PHA jurisdiction or residency 
preference area.
    (c) Selection among families with preference. The PHA system of 
preferences may use either of the following to select among applicants 
on the waiting list with the same preference status:
    (1) Date and time of application; or
    (2) A drawing or other random choice technique.
    (d) Preference for person with disabilities. The PHA may give a 
preference for admission of families that include a person with 
disabilities. However, the PHA may not give a preference for admission 
of persons with a specific disability.
    (e) Verification of selection method. The method for selecting 
applicants from a preference category must leave a clear audit trail 
that can be used to verify that each applicant has been selected in 
accordance with the method specified in the administrative plan.
    47. Amend Sec. 982.301 as follows:
    a. In paragraph (b)(1), remove the reference to ``certificate or''; 
and
    b. Revise paragraphs (b)(2), (b)(5) and (b)(6) as set forth below.


Sec. 982.301  Information when family is selected.

* * * * *
    (b) * * *
    (2) How the PHA determines the amount of the housing assistance 
payment for a family, including:
    (i) How the PHA determines the payment standard for a family; and
    (ii) How the PHA determines the total tenant payment for a family.
* * * * *
    (5) The HUD-required ``tenancy addendum'' that must be included in 
the lease;
    (6) The form that the family uses to request PHA approval of the 
assisted tenancy, and an explanation of how to request such approval;
* * * * *
    48. Revise Sec. 982.302 to read as follows:


Sec. 982.302  Issuance of voucher; Requesting PHA approval of assisted 
tenancy.

    (a) When a family is selected, or when a participant family wants 
to move to another unit, the PHA issues a voucher to the family. The 
family may search for a unit.
    (b) If the family finds a unit, and the owner is willing to lease 
the unit under the program, the family may request PHA approval of the 
tenancy. The PHA has the discretion whether to permit the family to 
submit more than one request at a time.
    (c) The family must submit to the PHA a request for approval of the 
tenancy and a copy of the lease, including the HUD-prescribed tenancy 
addendum. The request must be submitted during the term of the voucher.
    (d) The PHA specifies the procedure for requesting approval of the 
tenancy. The family must submit the request for approval of the tenancy 
in the form and manner required by the PHA.


Sec. 982.303  [Amended]

    49. Amend Sec. 982.303 as follows:
    a. Revise the section heading to read ``Term of voucher'';
    b. Remove all references to ``certificate or''; and
    c. In paragraph (c), revise both references to ``request for lease 
approval'' to read ``request for approval of the tenancy''.
    50. Amend Sec. 982.305 as follows:
    a. Revise the section heading to read ``PHA approval of assisted 
tenancy'';
    b. In the introductory text of paragraph (a), revise the reference 
to ``to lease a dwelling unit'' to read ``of the assisted tenancy'';
    c. Remove paragraph (a)(5);
    d. Revise paragraphs (a)(3), (a)(4) and (b) as set forth below;
    e. In paragraphs (d) and (e), revise the references to ``to lease a 
unit'' to read ``of the assisted tenancy''.


Sec. 982.305  PHA approval of assisted tenancy.

    (a) * * *
    (3) The lease includes the tenancy addendum; and
    (4) The rent to owner is reasonable.
    (b) Actions before lease term. (1) All of the following must always 
be completed before the beginning of the initial term of the lease for 
a unit:
    (i) The PHA has inspected the unit and has determined that the unit 
satisfies the HQS;
    (ii) The landlord and the tenant have executed the lease (including 
the HUD-prescribed tenancy addendum); and
    (iii) The PHA has approved leasing of the unit in accordance with 
program requirements.
    (2)(i) The PHA must inspect the unit, determine whether the unit 
satisfies the HQS, and notify the family and owner of the 
determination:
    (A) In the case of a PHA with up to 1250 budgeted units in its 
tenant-based program, within fifteen days after the family and the 
owner submit a request for approval of the tenancy.
    (B) In the case of a PHA with more than 1250 budgeted units in its 
tenant-based program, within a reasonable time after the family submits 
a request for approval of the tenancy. To the extent practicable, such 
inspection and determination must be completed within fifteen days 
after the family and the owner submit a request for approval of the 
tenancy.
    (ii) The fifteen day clock (under paragraph (b)(2)(i)(A) or 
paragraph (b)(2)(i)(B) of this section) is suspended during any period 
when the unit is not available for inspection.
* * * * *
    51. Amend Sec. 982.306 as follows:
    a. In paragraph (a) and the introductory text of paragraph (b), 
revise the references to ``a unit'' to read ``an assisted tenancy'';
    b. In the introductory text of paragraph (c), revise the reference 
to ``to lease a unit from an owner'' to read ``of an assisted 
tenancy'';
    c. Revise paragraph (c)(3) as set forth below;
    d. Redesignate paragraphs (c)(5) and (c)(6) as paragraphs (c)(6) 
and (c)(7), respectively; and
    e. Add new paragraph (c)(5) as set forth below.


Sec. 982.306  PHA disapproval of owner.

* * * * *

[[Page 26645]]

    (c) * * *
    (3) The owner has engaged in any drug-related criminal activity or 
any violent criminal activity;
* * * * *
    (5) The owner has a history or practice of failing to terminate 
tenancy of tenants of units assisted under Section 8 or any other 
federally assisted housing program for activity by the tenant, any 
member of the household, a guest or another person under the control of 
any member of the household that:
    (i) Threatens the right to peaceful enjoyment of the premises by 
other residents;
    (ii) Threatens the health or safety of other residents, of 
employees of the PHA, or of owner employees or other persons engaged in 
management of the housing;
    (iii) Threatens the health or safety of, or the right to peaceful 
enjoyment of their residences, by persons residing in the immediate 
vicinity of the premises; or
    (iv) Is drug-related criminal activity or violent criminal 
activity; or
* * * * *
    52. In Sec. 982.307 revise the section heading and paragraph (a) to 
read as follows:


Sec. 982.307  Tenant screening.

    (a) PHA option and owner responsibility. (1) The PHA may opt to 
screen family behavior or suitability for tenancy. However, the PHA has 
no liability or responsibility to the owner or other persons for the 
family's behavior or the family's conduct in tenancy.
    (2) The owner is responsible for screening and selection of the 
family to occupy the owner's unit. At or before PHA approval of the 
tenancy, the PHA must inform the owner that screening and selection for 
tenancy is the responsibility of the owner.
    (3) The owner is responsible for screening of families on the basis 
of their tenancy histories. An owner may consider a family's background 
with respect to such factors as:
    (i) Payment of rent and utility bills;
    (ii) Caring for a unit and premises;
    (iii) Respecting the rights of other residents to the peaceful 
enjoyment of their housing;
    (iv) Drug-related criminal activity or other criminal activity that 
is a threat to the health, safety or property of others; and
    (v) Compliance with other essential conditions of tenancy.
* * * * *
    53. Revise Sec. 982.308 to read as follows:


Sec. 982.308  Lease and tenancy.

    (a) Tenant's legal capacity to enter lease. The tenant must have 
legal capacity to enter a lease under State and local law.
    (b) Owner lease. The tenant and owner must enter a lease for the 
unit. The HAP contract shall contain owner's certification that:
    (1) The lease between the tenant and the owner is in a standard 
form used in the locality by the owner and that is generally used for 
other unassisted tenants in the premises.
    (2) The terms and conditions of the lease are consistent with State 
and local law.
    (c) State and local law. The PHA may review the lease to determine 
if the lease complies with State and local law. The PHA may decline to 
approve the tenancy if the PHA determines that the lease does not 
comply with State or local law.
    (d) Utilities and appliances. The lease must specify what utilities 
and appliances are to be supplied by the owner, and what utilities and 
appliances are to be supplied by the family.
    (e) Reasonable rent. The rent to owner must be reasonable (see 
Sec. 982.507).
    (f) Tenancy addendum. The HAP contract form required by HUD shall 
include an addendum (the ``tenancy addendum''), that sets forth tenancy 
requirements for the program (in accordance with Secs. 982.308, 982.309 
and 982.310). All provisions of the HUD-required tenancy addendum must 
be added word-for-word to the owner's standard form lease that is used 
by the owner for unassisted tenants. The tenant shall have the right to 
enforce the tenancy addendum against the owner, and the terms of the 
tenancy addendum shall prevail over any other provisions of the lease.
    54. Revise Sec. 982.309 to read as follows:


Sec. 982.309  Term of assisted tenancy.

    (a) Initial term of lease. (1) Except as provided in paragraph 
(a)(2) of this section, the initial lease term must be for at least one 
year.
    (2) The PHA may approve a shorter initial lease term if the PHA 
determines that:
    (i) Such shorter term would improve housing opportunities for the 
tenant; and
    (ii) Such shorter term is the prevailing local market practice.
    (3) During the initial term of the lease, the owner may not raise 
the rent to owner.
    (4) The PHA may execute the HAP contract even if there is less than 
one year remaining from the beginning of the initial lease term to the 
end of the last expiring funding increment under the consolidated ACC.
    (b) Term of HAP contract. (1) The term of the HAP contract begins 
on the first day of the lease term and ends on the last day of the 
lease term.
    (2) The HAP contract terminates if any of the following occurs:
    (i) The lease is terminated by the owner or the tenant;
    (ii) The PHA terminates the HAP contract; or
    (iii) The PHA terminates assistance for the family.
    (c) Family responsibility. (1) If the family terminates the lease 
on notice to the owner, the family must give the PHA a copy of the 
notice of termination at the same time. Failure to do this is a breach 
of family obligations under the program.
    (2) The family must notify the PHA and the owner before the family 
moves out of the unit. Failure to do this is a breach of family 
obligations under the program.
    55. Amend Sec. 982.310 as follows:
    a. Revise paragraphs (a)(1) and (d)(1)(iv) as set forth below;
    b. In paragraph (d)(2), revise the reference to ``During the first 
year of the lease term'' to read ``During the initial lease term,''; 
and
    c. Remove paragraph (e)(3).


Sec. 982.310  Owner termination of tenancy.

    (a) * * *
    (1) Serious violation (including but not limited to failure to pay 
rent or other amounts due under the lease) or repeated violation of the 
terms and conditions of the lease;
* * * * *
    (d) * * *
    (1) * * *
    (iv) A business or economic reason for termination of the tenancy 
(such as sale of the property, renovation of the unit, or desire to 
lease the unit at a higher rental).
* * * * *
    56. Amend Sec. 982.352 by revising paragraph (b)(1) to read as 
follows:


Sec. 982.352  Eligible housing.

* * * * *
    (b) PHA-owned housing. (1) A unit that is owned by the PHA that 
administers the assistance under the consolidated ACC (including a unit 
owned by an entity substantially controlled by the PHA) may only be 
assisted under the tenant-based program if all the following conditions 
are satisfied:
    (i) The PHA must inform the family, both orally and in writing, 
that the

[[Page 26646]]

family has the right to select any eligible unit available for lease, 
and a PHA-owned unit is freely selected by the family, without PHA 
pressure or steering.
    (ii) The unit is not ineligible housing.
    (iii) During assisted occupancy, the family may not benefit from 
any form of housing subsidy that is prohibited under paragraph (c) of 
this section.
    (iv)(A) The PHA must obtain the services of an independent entity 
to perform the following PHA functions as required under the program 
rule:
    (1) To determine rent reasonableness in accordance with 
Sec. 982.507. The independent agency shall communicate the rent 
reasonableness determination to the family and the PHA.
    (2) To assist the family negotiate the rent to owner in accordance 
with Sec. 982.506.
    (3) To inspect the unit for compliance with the HQS in accordance 
with Sec. 982.305(a) and Sec. 982.405 (except that Sec. 982.405(e) is 
not applicable). The independent agency shall communicate the results 
of each such inspection to the family and the PHA.
    (B) The independent agency used to perform these functions must be 
approved by HUD. The independent agency may be the unit of general 
local government for the PHA jurisdiction (unless the PHA is itself the 
unit of general local government or an agency of such government), or 
may be another HUD-approved independent agency.
    (C) The PHA may compensate the independent agency from PHA ongoing 
administrative fee income for the services performed by the independent 
agency. The PHA may not use other program receipts to compensate the 
independent agency for such services. The PHA and the independent 
agency may not charge the family any fee or charge for the services 
provided by the independent agency.
* * * * *
    57. Amend Sec. 982.353 as follows:
    a. Revise paragraphs (b), (c)(2), and (d) as set forth below; and
    b. In paragraph (f), remove the references to ``contract rent 
(certificate program) or'' and ``(voucher program)''.


Sec. 982.353  Where family can lease a unit with tenant-based 
assistance.

* * * * *
    (b) Portability: Assistance outside the initial PHA jurisdiction. 
Subject to paragraph (c) of this section, and to Sec. 982.552 and 
Sec. 982.553, a voucher-holder or participant family has the right to 
receive tenant-based voucher assistance in accordance with requirements 
of this part to lease a unit outside the initial PHA jurisdiction, 
anywhere in the United States, in the jurisdiction of a PHA with a 
tenant-based program under this part. The initial PHA must not provide 
such portable assistance for a participant if the family has moved out 
of its assisted unit in violation of the lease.
* * * * *
    (c) * * *
    (2) The following apply during the 12 month period from the time 
when a family described in paragraph (c)(1) of this section is admitted 
to the program:
    (i) The family may lease a unit anywhere in the jurisdiction of the 
initial PHA;
    (ii) The family does not have any right to portability;
    (iii) The initial PHA may choose to allow portability during this 
period.
* * * * *
    (d) Income eligibility. (1) For admission to the program, a family 
must be income eligible in the area where the family initially leases a 
unit with assistance under the program.
    (2) If a portable family is a participant in the initial PHA 
Section 8 tenant-based program (either the PHA voucher program or the 
PHA certificate program), income eligibility is not redetermined when 
the family moves to the receiving PHA program under portability 
procedures.
    (3) Except as provided in paragraph (d)(2) of this section, a 
portable family must be income eligible for admission to the voucher 
program in the area where the family leases a unit under portability 
procedures.
* * * * *


Sec. 982.354  [Removed]

    58. Remove Sec. 982.354.
    59. Amend Sec. 982.355 as follows:
    a. Revise paragraphs (b), (c)(1) and (c)(6) as set forth below;
    b. Amend paragraph (c)(4) by removing the reference to ``or 
certificate'',
    c. In paragraph (c)(8), revise the reference to ``request for lease 
approval'' to read ``request for approval of the tenancy'' and remove 
the reference to ``certificate or'';
    d. In paragraph (d)(1), remove the two references to ``certificate 
or''; and
    e. In paragraph (d)(6), revise the word ``programs'' to read 
``program''.


Sec. 982.355  Portability: Administration by receiving PHA.

* * * * *
    (b) In the conditions described in paragraph (a) of this section, a 
PHA with jurisdiction in the area where the family wants to lease a 
unit must issue a voucher to the family. If there is more than one such 
PHA, the initial PHA may choose the receiving PHA.
    (c) Portability procedures. (1) The receiving PHA does not 
redetermine elibilibility for a portable family that was already 
receiving assistance in the initial PHA Section 8 tenant-based program 
(either the PHA voucher program or certificate program). However, for a 
portable family that was not already receiving assistance in the PHA 
tenant-based program, the initial PHA must determine whether the family 
is eligible for admission to the receiving PHA voucher program.
* * * * *
    (6) The receiving PHA must issue a voucher to the family. The term 
of the receiving PHA voucher may not expire before the expiration date 
of any initial PHA voucher. The receiving PHA must determine whether to 
extend the voucher term. The family must submit a request for approval 
of the tenancy to the receiving PHA during the term of the receiving 
PHA voucher.
* * * * *
    60. Revise Sec. 982.401(a)(4) to read as follows:


Sec. 982.401  Housing quality standards (HQS).

    (a) * * *
    (4)(i) In addition to meeting HQS performance requirements, the 
housing must meet the acceptability criteria stated in this section, 
unless variations are approved by HUD.
    (ii) HUD may approve acceptability criteria variations for the 
following purposes:
    (A) Variations which apply standards in local housing codes or 
other codes adopted by the PHA; or
    (B) Variations because of local climatic or geographic conditions.
    (iii) Acceptability criteria variations may only be approved by HUD 
pursuant to paragraph (a)(4)(ii) of this section if such variations 
either:
    (A) Meet or exceed the acceptability criteria; or
    (B) Significantly expand affordable housing opportunities for 
families assisted under the program.
    (iv) HUD will not approve any acceptability criteria variation if 
HUD believes that such variation is likely to adversely affect the 
health or safety of participant families, or severely restrict housing 
choice.
* * * * *
    61. Amend Sec. 982.402 as follows:
    a. Amend paragraph (a)(3) by removing the references to 
``certificate or'' and ``or certificate'';
    b. Revise paragraph (c) to read as follows:

[[Page 26647]]

Sec. 982.402  Subsidy standards.

* * * * *
    (c) Effect of family unit size-maximum subsidy in voucher program. 
The family unit size as determined for a family under the PHA subsidy 
standard is used to determine the maximum rent subsidy for a family 
assisted in the voucher program. For a voucher tenancy, the PHA 
establishes payment standards by number of bedrooms. The payment 
standard for a family shall be the lower of:
    (1) The payment standard amount for the family unit size; or
    (2) The payment standard amount for the unit size of the unit 
rented by the family.
* * * * *
    62. Amend Sec. 982.403 as follows:
    a. Revise the section heading to read ``Terminating HAP contract 
when unit is too small'';
    b. Remove paragraph (a)(1);
    c. Redesignate paragraphs (a)(2) and (a)(3) as paragraphs (a)(1) 
and (a)(2), respectively;
    d. Amend redesignated paragraph (a)(1) by removing the reference to 
``certificate or'';
    e. Amend paragraph (b)(2) by replacing the word ``certificate'' 
with ``voucher''.
    f. Amend paragraph (b)(4) by removing the phrase ``within the FMR/
exception rent limit''; and
    g. Revise the introductory text of redesignated paragraph (c) as 
set forth below.


Sec. 982.403  Terminating HAP contract when unit is too small.

* * * * *
    (c) Termination. When the PHA terminates the HAP contract under 
paragraph (a) of this section:
* * * * *
    63. Amend Sec. 982.405 as follows:
    a. Revise the section heading and paragraph (a) as set forth below; 
and
    b. Add paragraph (f) as set forth below.


Sec. 982.405  PHA initial and periodic unit inspection.

    (a) The PHA must inspect the unit leased to a family prior to the 
initial term of the lease, at least annually during assisted occupancy, 
and at other times as needed, to determine if the unit meets the HQS. 
(See Sec. 982.305(b)(2) concerning timing of initial inspection by the 
PHA.)
* * * * *
    (f) The PHA must adopt procedural guidelines and performance 
standards for conducting required HQS inspections. The PHA guidelines 
and standards must conform with practices utilized in the private 
housing market, and facilitate efficient administration of assistance 
under the program. The PHA administrative plan shall state the PHA 
guidelines and standards for conducting HQS inspections.
    64. Revise Sec. 982.451(b)(5) to read as follows:


Sec. 982.451  Housing assistance payments contract.

* * * * *
    (b) * * *
    (5)(i) The PHA must pay the housing assistance payment promptly 
when due to the owner in accordance with the HAP contract.
    (ii) The HAP contract shall provide for penalties against the PHA 
for late payment of housing assistance payments due to the owner under 
the contract, where such penalties are in accordance with generally 
accepted practices and law, as applicable in the local housing market, 
governing penalties for late payment of rent by a tenant. However, the 
PHA shall not be obligated to pay any late payment penalty if HUD 
determines that late payment by the PHA is due to factors beyond the 
PHA's control. The PHA may add HAP contract provisions which define 
when the HAP payment by the PHA is deemed received by the owner (e.g. 
upon mailing by the PHA or actual receipt by the owner).
    (iii) The PHA may only use the following sources to pay a late 
payment penalty from program receipts under the consolidated ACC: 
administrative fee income for the program; or the administrative fee 
reserve for the program. The PHA may not use other program receipts for 
this purpose.


Sec. 982.452  [Amended]

    65. Amend Sec. 982.452(b)(1) by removing the reference to 
``certificate-holder or''.


Sec. 982.453  [Amended]

    66. In Sec. 982.453(a)(5), revise the reference to ``drug-
trafficking'' to read ``drug-related criminal activity''.


Sec. 982.454  [Amended]

    67. Amend Sec. 982.454 by removing the last sentence.
    68. Revise Sec. 982.455 to read as follows:


Sec. 982.455  Automatic termination of HAP contract.

    The HAP contract terminates automatically 180 calendar days after 
the last housing assistance payment to the owner.
    69. Revise Sec. 982.456(b) to read as follows:


Sec. 982.456  Third parties.

* * * * *
    (b)(1) The family is not a party to or third party beneficiary of 
the HAP contract. Except as provided in paragraph (b)(2) of this 
section, the family may not exercise any right or remedy against the 
owner under the HAP contract.
    (2) The tenant may exercise any right or remedy against the owner 
under the lease between the tenant and the owner, including enforcement 
of the owner's obligations under the tenancy addendum (which is 
included both in the HAP contract between the PHA and the owner; and in 
the lease between the tenant and the owner.)
* * * * *


Secs. 982.457, 982.504, 982.505, 982.506, 982.508 and 
982.512  [Removed]

    70. Remove Secs. 982.457, 982.504, 982.505, 982.506, 982.508, and 
982.512.
    71. Revise the table of contents for Subpart K to read as follows:

Subpart K--Rent and Housing Assistance Payment

982.501  Overview.
982.502  Conversion to voucher program.
982.503   Voucher tenancy: Payment standard amount and schedule.
982.504   Voucher tenancy: Payment standard for family in 
restructured subsidized multifamily project.
982.505   Voucher tenancy: How to calculate housing assistance 
payment.
982.506   Negotiating rent to owner.
982.507   Rent to owner; Reasonable rent.
982.508   Rent to owner: Maximum rent at initial occupancy.
982.509   Rent to owner in subsidized projects.
982.513   Other fees and charges.
982.516  Family income and composition: Regular and interim 
examinations.
982.517  Utility allowance schedule.
982.518  Regular tenancy: How to calculate housing assistance 
payment.
982.519  Regular tenancy: Annual adjustment of rent to owner.
982.520  Regular tenancy: Special adjustment of rent to owner.
982.521  Regular tenancy: Rent to owner in subsidized project.

    72. Revise Sec. 982.501 to read as follows:


Sec. 982.501  Overview.

    (a) This subpart describes program requirements concerning the 
housing assistance payment and rent to owner. These requirements apply 
to the Section 8 tenant-based program.
    (b) There are two types of tenancies in the Section 8 tenant-based 
program:
    (1) A tenancy under the voucher program.
    (2) A tenancy under the certificate program (commenced before 
merger of the certificate and voucher programs on the merger date).

[[Page 26648]]

    (c) Unless specifically stated, requirements of this part are the 
same for all tenancies. Sections 982.503, 982.504, and 982.505 only 
apply to a voucher tenancy. Sections 982.518, 982.519, 982.520, and 
982.521 only apply to a tenancy under the certificate program.


Secs. 982.502, 982.503, 982.507, 982.509, 982.510, 982.511, and 
982.513  [Redesignated as Secs. 982.506, 982.507, 982.518, 982.519, 
982.520, 982.509 and 982.510, respectively]

    73. Redesignate Secs. 982.502, 982.503, 982.507, 982.509, 982.510, 
982.511, and 982.513 as Secs. 982.506, 982.507, 982.518, 982.519, 
982.520, 982.509, and 982.510, respectively.
    74. Add new Secs. 982.502, 982.503, 982.504, 982.505, and 982.508 
to read as follows:


Sec. 982.502  Conversion to voucher program.

    (a) New HAP contracts. On and after the merger date, the PHA may 
only enter into a HAP contract for a tenancy under the voucher program, 
and may not enter into a new HAP contract for a tenancy under the 
certificate program.
    (b) Over-FMR tenancy. If the PHA had entered into any HAP contract 
for an over-FMR tenancy under the certificate program prior to the 
merger date, on and after the merger date such tenancy shall be 
considered and treated as a tenancy under the voucher program, and 
shall be subject to the voucher program requirements under this part, 
including calculation of the voucher housing assistance payment in 
accordance with Sec. 982.505. However, Sec. 982.505(b)(2) shall not be 
applicable for calculation of the housing assistance payment prior to 
the effective date of the second regular reexamination of family income 
and compostion on or after the merger date.
    (c) Voucher tenancy. If the PHA had entered into any HAP contract 
for a voucher tenancy prior to the merger date, on and after the merger 
date such tenancy shall continue to be considered and treated as a 
tenancy under the voucher program, and shall be subject to the voucher 
program requirements under this part, including calculation of the 
voucher housing assistance payment in accordance with Sec. 982.505. 
However, Sec. 982.505(b)(2) shall not be applicable for calculation of 
the housing assistance payment prior to the effective date of the 
second regular reexamination of family income and composition on or 
after the merger date.
    (d) Regular certificate tenancy. The PHA must terminate program 
assistance under any outstanding HAP contract for a regular tenancy 
under the certificate program (entered prior to the merger date) at the 
effective date of the second regular reexamination of family income and 
composition on or after the merger date. Upon such termination of 
assistance, the HAP contract for such tenancy terminates automatically. 
The PHA must give at least 120 days written notice of such termination 
to the family and the owner, and the PHA must offer the family the 
opportunity for continued tenant-based assistance under the voucher 
program. The PHA may deny the family the opportunity for continued 
assistance in accordance with Secs. 982.552 and 982.553.


Sec. 982.503  Voucher tenancy: Payment standard amount and schedule.

    (a) Payment standard schedule. (1) HUD publishes the fair market 
rents for each market area in the United States (see part 888 of this 
title). The PHA must adopt a payment standard schedule that establishes 
voucher payment standard amounts for each FMR area in the PHA 
jurisdiction. For each FMR area, the PHA must establish payment 
standard amounts for each ``unit size.'' Unit size is measured by 
number of bedrooms (zero-bedroom, one-bedroom, and so on).
    (2) The payment standard amounts on the PHA schedule are used to 
calculate the monthly housing assistance payment for a family 
(Sec. 982.505).
    (3) The PHA voucher payment standard schedule shall establish a 
single payment standard for each unit size in an FMR area and, if 
applicable, in an exception payment standard area within an FMR area.
    (b) Establishing payment standard amounts. (1)(i) The PHA may 
establish the payment standard amount for a unit size at any level 
between 90 percent and 110 percent of the published FMR for that unit 
size. HUD approval is not required to establish a payment standard 
amount in that range (``basic range'').
    (ii) The PHA may establish a separate payment standard within the 
basic range for a designated part of an FMR area.
    (2) The PHA must request HUD approval to establish a payment 
standard amount that is higher or lower than the basic range. HUD has 
sole discretion to grant or deny approval of a higher or lower payment 
standard amount. Paragraph (c) of this section describes the 
requirements for approval of a higher payment standard amount 
(``exception payment standard amount'').
    (c) HUD approval of exception payment standard amount. (1) HUD 
discretion. At HUD's sole discretion, HUD may approve a payment 
standard amount that is higher than the basic range for a designated 
part of the fair market rent area (called an ``exception area''). HUD 
may approve an exception payment standard amount in accordance with 
this paragraph (c) of this section for all units, or for all units of a 
given unit size, leased by program families in the exception area. Any 
PHA with jurisdiction in the exception area may use the HUD-approved 
exception payment standard amount.
    (2) Above 110 percent of FMR to 120 percent of FMR. The HUD Field 
Office may approve an exception payment standard amount from above 110 
percent of the published FMR to 120 percent of the published FMR if 
such office determines that such approval is justified by either the 
median rent method or the 40th percentile rent as described below (and 
that such approval is also supported by an appropriate program 
justification in accordance with paragraph (c)(4) of this section).
    (i) Median rent method. In the median rent method, HUD determines 
the exception payment standard amount by multiplying the FMR times a 
fraction of which the numerator is the median gross rent of the 
exception area and the denominator is the median gross rent of the 
entire FMR area. In this method, HUD uses median gross rent data from 
the most recent decennial United States census, and the exception area 
may be any geographic entity within the FMR area (or any combination of 
such entities) for which median gross rent data is provided in 
decennial census products.
    (ii) 40th percentile rent method. In this method, HUD determines 
that the area exception rent equals the 40th percentile of rents to 
lease standard quality rental housing in the exception area. HUD 
determines the 40th percentile rent in accordance with the methodology 
described in Sec. 888.113 of this title for determining fair market 
rents. A PHA must present statistically representative rental housing 
survey data to justify HUD approval.
    (3) Above 120 percent of FMR. (i) At the request of a PHA, the 
Assistant Secretary for Public and Indian Housing may approve an 
exception payment standard amount for the total area of a county, PHA 
jurisdiction, or place if the Assistant Secretary determines that:
    (A) Such approval is necessary to prevent financial hardship for 
families;
    (B) Such approval is supported by statistically representative 
rental housing survey data to justify HUD approval in accordance with 
the methodology described in Sec. 888.113 of this title; and

[[Page 26649]]

    (C) Such approval is also supported by an appropriate program 
justification in accordance with paragraph (c)(4) of this section.
    (ii) For purposes of paragraph (c)(3) of this section, the term 
``place'' is an incorporated place or a U.S. Census designated place. 
An incorporated place is established by State law and includes cities, 
boroughs, towns, and villages. A U.S. Census designated place is the 
statistical counterpart of an incorporated place.
    (4) Program justification. (i) HUD will only approve an exception 
payment standard amount (pursuant to paragraph (c)(2) or paragraph 
(c)(3) of this section) if HUD determines that approval of such higher 
amount is needed either:
    (A) To help families find housing outside areas of high poverty, or
    (B) Because voucher holders have trouble finding housing for lease 
under the program within the term of the voucher.
    (ii) HUD will only approve an exception payment standard amount 
(pursuant to paragraph (c)(3) of this section) after six months from 
the date of HUD approval of an exception payment standard pursuant to 
paragraph (c)(2) of this section for the area.
    (5) Population. The total population of HUD-approved exception 
areas in an FMR area may not include more than 50 percent of the 
population of the FMR area.
    (6) Withdrawal or modification. At any time, HUD may withdraw or 
modify approval to use an exception payment standard amount.
    (7) Transition: Area exception rents approved prior to merger date. 
Subject to paragraph (c)(6) of this section, the PHA may establish an 
exception payment standard amount up to the amount of a HUD-approved 
area exception rent in effect at the merger date.
    (d) HUD review of PHA payment standard schedule. (1) HUD will 
monitor rent burdens of families assisted in a PHA's voucher program. 
If 40 percent or more of such families occupying units of any 
particular unit size pay more than 30 percent of adjusted income as the 
family's share, HUD will review the PHA payment standard amount for 
that unit size, and may require the PHA to establish an increased 
payment standard amount within the basic range.
    (2) Upon such HUD review, HUD may require the PHA to modify the 
payment standard amounts on the PHA payment standard schedule.


Sec. 982.504  Voucher tenancy: Payment standard for family in 
restructured subsidized multifamily project.

    (a) This section applies to tenant-based assistance under the 
voucher program if all the following conditions are applicable:
    (1) Such tenant-based voucher assistance is provided to a family 
pursuant to Sec. 401.421 of this title when HUD has approved a 
restructuring plan, and the participating administrative entity has 
approved the use of tenant-based assistance to provide continued 
assistance for such families. Such tenant-based voucher assistance is 
provided for a family previously receiving project-based assistance in 
an eligible project (as defined in Sec. 401.2 of this title) at the 
time when the project-based assistance terminates.
    (2) The family chooses to remain in the restructured project with 
tenant-based assistance under the program and leases a unit that does 
not exceed the family unit size;
    (3) The lease for such assisted tenancy commences during the first 
year after the project-based assistance terminates.
    (b) The initial payment standard for the family under such initial 
lease is the sum of the reasonable rent to owner for the unit plus the 
utility allowance for tenant-paid utilities. (Determination of such 
initial payment standard for the family is not subject to paragraphs 
(c)(1) and (c)(2) of Sec. 982.505. Except for determination of the 
initial payment standard as specifically provided in paragraph (b) of 
this section, the payment standard and housing assistance payment for 
the family during the HAP contract term shall be determined in 
accordance with Sec. 982.505.)


Sec. 982.505  Voucher tenancy: How to calculate housing assistance 
payment.

    (a) Use of payment standard. A payment standard is used to 
calculate the monthly housing assistance payment for a family. The 
``payment standard'' is the maximum monthly subsidy payment.
    (b) Amount of monthly housing assistance payment. The PHA shall pay 
a monthly housing assistance payment on behalf of the family that is 
equal to the lower of:
    (1) The payment standard minus the total tenant payment; or
    (2) The gross rent minus the total tenant payment.
    (c) Payment standard for family. (1) The payment standard is the 
lower of:
    (i) The payment standard amount for the family unit size; or
    (ii) The payment standard amount for the size of the dwelling unit 
rented by the family.
    (2) If the dwelling unit is located in an exception area, the PHA 
must use the appropriate payment standard amount for the exception 
area.
    (3) During the HAP contract term, the payment standard for a family 
is the higher of:
    (i) The initial payment standard (at the beginning of the HAP 
contract term), as determined in accordance with paragraphs (c)(1) and 
(c)(2) of this section, minus any amount by which the initial rent to 
owner exceeds the current rent to owner; or
    (ii) The payment standard, as determined in accordance with 
paragraphs (c)(1) and (c)(2) of this section, as determined at the most 
recent regular reexamination of family income and composition effective 
after the beginning of the HAP contract term.
    (4) At the next regular reexamination following a change in family 
size or composition that causes a change in family unit size during the 
HAP contract term, and for any examination thereafter during the term:
    (i) Paragraph (c)(3)(i) of this section does not apply; and
    (ii) The new family unit size must be used to determine the payment 
standard.


Sec. 982.508  Rent to owner: maximum rent at initial occupancy.

    At the time a family initially receives tenant-based assistance for 
occupancy of a dwelling unit, the family share may not exceed 40 
percent of the family's monthly adjusted income.


Sec. 982.509  [Amended]

    74a. Revise the section heading of newly designated Sec. 982.509 to 
read ``Rent to owner in subsidized projects.''
    75. Amend Sec. 982.516 as follows:
    a. Revise paragraph (d)(2) as set forth below;
    b. Amend paragraph (e) by removing the reference to ``and family 
unit size''; and
    c. Add paragraph (f) as set forth below.


Sec. 982.516  Family income and composition: Regular and interim 
examinations.

* * * * *
    (d) * * *
    (2) At the effective date of a regular or interim reexamination, 
the PHA must make appropriate adjustments in the housing assistance 
payment. (For a voucher tenancy, the housing assistance payment shall 
be calculated in accordance with Sec. 982.505. For a certificate 
tenancy, the housing assistance payment shall be calculated in 
accordance with Sec. 982.518.)
* * * * *
    (f) Accuracy of family income data. The PHA must establish 
procedures that

[[Page 26650]]

are appropriate and necessary to assure that income data provided by 
applicant or participant families is complete and accurate.
    76. Add Sec. 982.521 to read as follows:


Sec. 982.521  Regular tenancy: Rent to owner in subsidized project.

    For a certificate tenancy in an insured or non-insured Section 236 
project, a Section 515 project of the Rural Development Administration, 
a Section 202 project or a Section 221(d)(3) below market interest rate 
project, the rent to owner is the basic rental charge (as defined in 12 
U.S.C. 1715z-1(f)(1), minus any utility allowance for tenant-paid 
utilities). The rent to owner may not be adjusted by applying the 
published Section 8 annual adjustment factor, and a special adjustment 
may not be approved.


Sec. 982.551   [Amended]

    77. In Sec. 982.551, amend paragraph (b)(2) by removing the second 
sentence, and in paragraph (b)(3) remove the phrase ``and 24 CFR part 
813''.
    78. Amend Sec. 982.552 as follows:
    a. Amend paragraph (a)(2) to remove the phrase ``certificate or'';
    b. Revise paragraphs (b) and (c) as set forth below;
    c. Remove paragraphs (d) and (e); and
    d. Redesignate paragraph (f) as paragraph (d).


Sec. 982.552  PHA denial or termination of assistance for family.

* * * * *
    (b) Requirement to deny admission or terminate assistance. (1) 
During a reasonable time period determined by the PHA, the PHA may not 
admit a family to the program if any member of the family has been 
evicted from federally assisted housing for serious violation of the 
lease.
    (2) The PHA must terminate program assistance for a family evicted 
from housing assisted under the program for serious violation of the 
lease.
    (3) The PHA must deny admission to the program for an applicant, or 
terminate program assistance for a participant, if any member of the 
family fails to sign and submit consent forms for obtaining information 
in accordance with part 5, subparts B and F of this title.
    (4) The family must submit required evidence of citizenship or 
eligible immigration status. See part 5 of this title for a statement 
of circumstances in which the PHA must deny admission or terminate 
program assistance because a family member does not establish 
citizenship or eligible immigration status, and the applicable informal 
hearing procedures.
    (c) Authority to deny admission or terminate assistance. (1) 
Grounds for denial or termination of assistance. The PHA may at any 
time deny program assistance for an applicant, or terminate program 
assistance for a participant, for any of the following grounds:
    (i) If the family violates any family obligations under the program 
(see Sec. 982.551). See Sec. 982.553 concerning denial or termination 
of assistance for crime by family members.
    (ii) If any member of the family has ever been evicted from public 
housing.
    (iii) If a PHA has ever terminated assistance under the program for 
any member of the family.
    (iv) If any member of the family has committed fraud, bribery, or 
any other corrupt or criminal act in connection with any Federal 
housing program.
    (v) If the family currently owes rent or other amounts to the PHA 
or to another PHA in connection with Section 8 or public housing 
assistance under the 1937 Act.
    (vi) If the family has not reimbursed any PHA for amounts paid to 
an owner under a HAP contract for rent, damages to the unit, or other 
amounts owed by the family under the lease.
    (vii) If the family breaches an agreement with the PHA to pay 
amounts owed to a PHA, or amounts paid to an owner by a PHA. (The PHA, 
at its discretion, may offer a family the opportunity to enter an 
agreement to pay amounts owed to a PHA or amounts paid to an owner by a 
PHA. The PHA may prescribe the terms of the agreement.)
    (viii) If a family participating in the FSS program fails to 
comply, without good cause, with the family's FSS contract of 
participation.
    (ix) If the family has engaged in or threatened abusive or violent 
behavior toward PHA personnel.
    (x) If the family fails to fulfill its obligations under the 
Section 8 welfare-to-work voucher program.
    (2) PHA discretion to consider circumstances. In deciding whether 
to deny admission or terminate assistance because of action or failure 
to act by members of the family, the PHA has discretion to consider all 
of the circumstances in each case, including the seriousness of the 
case, the extent of participation or culpability of individual family 
members, and the effects of denial or termination of assistance on 
other family members who were not involved in the action or failure.
    (3) Exclusion of family members. In determining whether to deny 
admission or terminate assistance, the PHA may impose, as a condition 
of continued assistance for other family members, a requirement that 
family members who participated in or were culpable for the action or 
failure will not reside in the unit. The PHA may permit the other 
members of a participant family to continue receiving assistance.
* * * * *
    79. Amend Sec. 982.554 as follows:
    a. In paragraph (c)(4), remove the phrase ``certificate or'';
    b. Revise paragraph (c)(5) to read as follows:


Sec. 982.554  Informal review for applicant.

* * * * *
    (c) * * *
    (5) A PHA determination not to grant approval of the tenancy.
* * * * *


Sec. 982.555   [Amended]

    80. In Sec. 982.555, amend paragraph (b)(4) by removing the phrase 
``certificate or''.
    81. Revise Sec. 982.602 to read as follows:


Sec. 982.602  SRO: Who may reside in an SRO?

    A single person may reside in an SRO housing unit.
    82. Revise Sec. 982.604 to read as follows:


Sec. 982.604 SRO: Voucher housing assistance payment.

    (a) For a person residing in SRO housing, the payment standard is 
75 percent of the zero-bedroom payment standard amount on the PHA 
payment standard schedule. For a person residing in SRO housing in an 
exception area, the payment standard is 75 percent of the HUD-approved 
zero-bedroom exception payment standard amount.
    (b) The utility allowance for an assisted person residing in SRO 
housing is 75 percent of the zero bedroom utility allowance.
    83. In Sec. 982.608 revise the section heading and paragraph (a) to 
read as follows:


Sec. 982.608  Congregate housing: Voucher housing assistance payment.

    (a) Unless there is a live-in aide:
    (1) For a family residing in congregate housing, the payment 
standard is the zero-bedroom payment standard amount on the PHA payment 
standard schedule. For a family residing in congregate housing in an 
exception area, the payment standard is the HUD-approved zero-bedroom 
exception payment standard amount.
    (2) However, if there are two or more rooms in the unit (not 
including kitchen or sanitary facilities), the payment standard for a 
family residing in

[[Page 26651]]

congregate housing is the one-bedroom payment standard amount.
* * * * *
    84. Amend Sec. 982.613 as follows:
    a. Revise the section heading as set forth below;
    b. In paragraph (b)(2), revise the reference to ``Sec. 982.503'' to 
read ``Sec. 982.507''; and
    Revise paragraph (c) as set forth below.


Sec. 982.613  Group home: Rent and voucher housing assistance payment.

* * * * *
    (c) Payment standard. (1) Family unit size. (i) Unless there is a 
live-in aide, the family unit size is zero or one bedroom.
    (ii) If there is a live-in aide, the live-in aide must be counted 
in determining the family unit size.
    (2) The payment standard for a person who resides in a group home 
is the lower of:
    (i) The payment standard amount on the PHA payment standard 
schedule for the family unit size; or (ii) The pro-rata portion of the 
payment standard amount on the PHA payment standard schedule for the 
group home size.
    (iii) If there is a live-in aide, the live-in aide must be counted 
in determining the family unit size.
* * * * *
    85. Amend Sec. 982.617 as follows:
    a. Revise the section heading to read as set forth below;
    b. In paragraph (b)(2) revise the reference to ``Sec. 982.503'' to 
read ``Sec. 982.507''; and
    c. Revise paragraph (c) to read as follows:


Sec. 982.617  Shared housing: Rent and voucher housing assistance 
payment.

* * * * *
    (c) Payment standard. The payment standard for a family that 
resides in a shared housing is the lower of:
    (1) The payment standard amount on the PHA payment standard 
schedule for the family unit size; or
    (2) The pro-rata portion of the payment standard amount on the PHA 
payment standard schedule for the size of the shared housing unit.
* * * * *


Sec. 982.619  [Amended]

    86. Amend Sec. 982.619 as follows:
    a. In paragraph (b)(1), revise the reference to ``Sec. 982.503'' to 
read ``Sec. 982.507''; and
    b. In paragraph (b)(4), revise the reference to ``Sec. 982.509'' to 
read ``Sec. 982.519'' and revise the reference to ``Sec. 982.510'' to 
read ``Sec. 982.520''.
    87. Revise Sec. 982.623 to read as follows:


Sec. 982.623  Manufactured home space rental: Housing assistance 
payment.

    (a) Fair market rent. The FMR for a manufactured home space is 
determined in accordance with Sec. 888.113(e) of this title.
    (b) Housing assistance payment: For certificate tenancy. (1) During 
the term of a certificate tenancy (entered prior to the merger date), 
the amount of the monthly housing assistance payment equals the lesser 
of the amounts specified in paragraphs (b)(1)(i) or (b)(1)(ii) of this 
section:
    (i) Manufactured home space cost minus the total tenant payment.
    (ii) The rent to owner for the manufactured home space.
    (2) ``Manufactured home space cost'' means the sum of:
    (i) The amortization cost,
    (ii) The utility allowance, and
    (iii) The rent to owner for the manufactured home space.
    (c) Housing assistance payment for voucher tenancy. (1) There is a 
separate FMR for a family renting a manufactured home space. The FMR 
for rental of a manufactured home space is 30 percent of the published 
FMR for a two-bedroom unit (see FMR notices published by HUD pursuant 
to part 888 of this title).
    (2) The payment standard shall be determined in accordance with 
Sec. 982.505.
    (3) The PHA shall pay a monthly housing assistance payment on 
behalf of the family that is equal to the lower of:
    (i) The payment standard minus the total tenant payment; or
    (ii) The rent paid for rental of the real property on which the 
manufactured home owned by the family is located (``space rent'') minus 
the total tenant payment.
    (4) The space rent is the sum of the following as determined by the 
PHA:
    (i) Rent to owner for the manufactured home space;
    (ii) Owner maintenance and management charges for the space;
    (iii) The utility allowance for tenant-paid utilities.

    Dated: April 21, 1999
Andrew Cuomo,
Secretary.
[FR Doc. 99-12082 Filed 5-13-99; 8:45 am]
BILLING CODE 4210-32-P