[Federal Register Volume 64, Number 177 (Tuesday, September 14, 1999)]
[Rules and Regulations]
[Pages 49656-49659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23895]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4428-C-03]
RIN 2577-AB91


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

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

ACTION: Correction.

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SUMMARY: This document makes various corrections to HUD's May 14, 1999 
interim rule amending the regulations for the Section 8 tenant-based 
rental voucher program. The interim rule implemented most of the 
Section 8 tenant-based program provisions contained in the Quality 
Housing and Work Responsibility Act of 1998 (the ``Public Housing 
Reform Act''). Of particular significance, the May 14, 1999 interim 
rule implemented section 545 of the Public Housing Reform Act. Section 
545 provides for the complete merger of the Section 8 tenant-based 
Certificate and Voucher programs. The purpose of this document is to 
make

[[Page 49657]]

various corrections to the May 14, 1999 interim rule.

DATES: Effective Date: October 1, 1999.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Director, Real 
Estate and Housing Performance Division, 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, 
extension 4069 (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. HUD's May 14, 1999 Interim Rule

    On May 14, 1999 (64 FR 26632), HUD published for public comment an 
interim rule amending the regulations for the Section 8 tenant-based 
rental voucher program.
    The interim rule implemented most of the Section 8 tenant-based 
program provisions contained in the Quality Housing and Work 
Responsibility Act of 1998 (Pub.L. 105-276, approved October 21, 1998; 
112 Stat. 2461) (the ``Public Housing Reform Act''). Of particular 
significance, the May 14, 1999 interim rule implemented section 545 of 
the Public Housing Reform Act, which provides for the complete merger 
of the Section 8 tenant-based Certificate and Voucher programs. 
Accordingly, the May 14, 1999 established a new merged program known as 
the Housing Choice Voucher program.
    HUD had 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 new 
Housing Choice Voucher program has features of the previously 
authorized certificate and voucher programs plus new features, as 
described in the preamble to the interim rule.
    The May 14, 1999 interim rule provided for a 90-day delayed 
effective date for the interim rule (in contrast to the customary 30-
day delayed effective date for most HUD rules issued for effect), in 
order to afford public housing agencies (PHAs) additional time to 
prepare for the implementation of the interim rule. The interim was 
scheduled to become effective on August 12, 1999.
    On August 11, 1999 (64 FR 43613), HUD published a notice in the 
Federal Register delaying the effective date of the May 14, 1999 
interim rule until October 1, 1999. HUD decided to delay the effective 
date in order to provide decided to delay the effective date until 
October 1, 1999, to allow PHAs more time to prepare for implementation 
of the Housing Choice Voucher Program and to allow PHAs to revise their 
computer software to accommodate the new subsidy formula.

II. This Document

    The purpose of this document is to make various corrections to the 
May 14, 1999 interim rule. The major corrections made by this document 
are as follows:
    1. Definition of ``merger date.'' The definition of ``merger date'' 
in Sec. 982.4 is corrected to specify that this term means October 1, 
1999, the delayed effective date of the interim voucher merger rule 
pursuant to HUD's August 11, 1999 Federal Register notice.
    2. Use of ``family size'' to determine initial eligibility. Section 
982.201(b)(4) is corrected to specify that the PHA must use the income 
limit ``for the family size'' to determine initial eligibility at 
admission to the program. The published rule incorrectly indicated that 
the PHA should use the ``family unit size'' for this purpose (emphasis 
supplied). ``Family unit size'' is used to determine the appropriate 
unit size and maximum subsidy for a family, not to determine 
eligibility for admission to the program.
    3. Screening of family behavior. Section 982.307(a)(1) of the 
published rule provides that the PHA may opt to screen ``family 
behavior'' or suitability for tenancy. This provision is intended to 
implement section 8(o)(6)(B) of the United States Housing Act of 1937 
(42 U.S.C. 1437f(o)(6)(B)) (the ``1937 Act''), as amended by section 
545 of the Public Housing Reform Act, which provides that a PHA ``may 
elect to screen applicants for the program. . . .'' The interim rule is 
corrected:
     To clarify, as originally intended (see the interim rule 
preamble discussion at 64 FR 26632), that Sec. 982.307(a)(1) is only 
intended to authorize PHA screening of program applicants, not to 
authorize PHA screening of a program participant seeking to move to 
another unit (either within the PHA jurisdiction or under portability 
procedures) (Sec. 982.307(a)(1)).
     To specify that such PHA screening of program applicants 
must be ``in accordance with policies stated in the PHA administrative 
plan'' (Sec. 982.307(a)(1)).
     To add a reference to such PHA screening in the regulation 
that lists PHA policies that must be included in the administrative 
plan (Sec. 982.54(d)(23)).
     To add a conforming provision which clarifies that the PHA 
may at any time deny program assistance for an applicant in accordance 
with the PHA administrative plan policy on screening of applicants for 
family behavior or suitability for tenancy (Sec. 982.552(e)).
    4. Approval of acceptability criteria variations. Section 
982.401(a)(4)(iii)(A) is revised to correct the description of 
requirements for approval of acceptability criteria variations in 
accordance with section 8(o)(8)(B) of the 1937 Act. The corrected rule 
specifies that HUD may approve variations that meet or exceed the 
``performance requirements,'' which describe minimum program Housing 
Quality Standards (HQS) requirements.
    5. Payment standard amount and schedule. Section 982.503 is 
corrected:
     By adding a new paragraph (b)(1)(iii)) to specify that a 
PHA may establish a higher payment standard within the basic range 
(between 90 percent and 110 percent of the published Fair Market Rent 
(FMR)) when required as a reasonable accommodation for a family that 
includes a person with disabilities.
     By adding the term ``upper range'' (in redesignated 
Sec. 982.503(c)(2)(i)) to refer to the interval from 110 percent to 120 
percent of the published FMR.
     By adding new paragraph (c)(2)(ii) to specify that the HUD 
field office may approve PHA establishment of a payment standard in the 
``upper range'' when required as a reasonable accommodation for a 
family that includes a person with disabilities.
    6. Payment standard used to calculate subsidy in an exception area. 
Section 982.505(c)(2) is corrected to clarify that the payment standard 
used to calculate the subsidy for a dwelling unit located in an 
exception area is calculated in accordance with Sec. 982.503, which 
describes the process for establishing the payment standard for an 
exception area.
    7. Title of Sec. 982.508. The title of Sec. 982.508 is revised to 
clarify that this section specifies the maximum ``family share'' 
(defined as gross rent minus the amount of the housing assistance 
payment) at initial occupancy, rather than the maximum ``rent to 
owner,'' as suggested by the original title.
    8. Description of amortization cost. Section 982.623(b)(3) is 
corrected by restoring the description of ``amortization cost,'' which 
is used to calculate the amount of assistance for a manufactured home 
space rental under the pre-merger certificate program (for a tenancy 
commenced before the ``merger date''). This provision was inadvertently 
deleted by the interim rule.
    9. FMR for manufactured home space. Section 982.623 is corrected by 
consolidating two paragraphs

[[Page 49658]]

concerning determination of the FMR for a manufactured home space 
(Sec. 982.623(c)(1)).
    Accordingly, in the interim rule captioned ``Section 8 Tenant-Based 
Assistance; Statutory Merger of Section 8 Certificate and Voucher 
Programs,'' FR Document 99-12082, beginning at 64 FR 26632, in the 
issue of Friday, May 14, 1999, the following corrections are made:
    1. On page 26641, in the first column, the definition of ``Merger 
date'' in Sec. 982.4 is corrected to read as follows:


Sec. 982.4  Definitions.

* * * * *
    (b) * * *
    Merger date. October 1, 1999.
* * * * *
    2. On page 26641, in the third column, regulatory amendment 31 is 
corrected to read as follows:
    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), (d)(18), (d)(19), (d)(20), 
(d)(21) and (d)(22) as paragraphs (d)(16), (d)(17), (d)(18), (d)(19), 
(d)(20) and (d)(21) respectively;
    d. Revise newly designated paragraphs (d)(20) and (d)(21); and
    e. Add paragraphs (d)(22) and (d)(23).
    The revisions and additions 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);
* * * * *
    (20) Restrictions, if any, on the number of moves by a participant 
family (see Sec. 982.314(c));
    (21) Approval by the Board of Commissioners or other authorized 
officials to charge the administrative fee reserve;
    (22) Procedural guidelines and performance standards for conducting 
required HQS inspections; and
    (23) PHA screening of applicants for family behavior or suitability 
for tenancy.


Sec. 982.201  [Corrected]

    3. On page 26643, in the second column, Sec. 982.201(b)(4) is 
corrected by revising the reference to ``(for the family unit size)'' 
to read ``(for the family size)''.
    4. On page 26645, in the first column, Sec. 982.307(a)(1) is 
corrected to read as follows:


Sec. 982.307  Tenant screening.

    (a) PHA option and owner responsibility. (1) The PHA has no 
liability or responsibility to the owner or other persons for the 
family's behavior or suitability for tenancy. However, the PHA may opt 
to screen applicants for family behavior or suitability for tenancy. 
The PHA must conduct any such screening of applicants in accordance 
with policies stated in the PHA administrative plan.
* * * * *


Sec. 982.401  [Corrected]

    5. On page 26646, in the third column, Sec. 982.401(a)(4)(iii)(A) 
is corrected by revising the reference to ``Acceptability criteria'' to 
read ``Performance requirements''.
    6. On page 26648, in the second and third columns, Sec. 982.503 is 
corrected by adding paragraph (b)(1)(iii) and revising paragraph (c)(2) 
to read as follows:


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

* * * * *
    (b) * * *
    (1) * * *
    (iii) The PHA may establish a higher payment standard within the 
basic range if required as a reasonable accommodation for a family that 
includes a person with disabilities.
    (c) * * *
    (2) Above 110 percent of FMR to 120 percent of FMR. (i) 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 (upper range) 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).
    (A) 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.
    (B) 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.
    (ii) The HUD Field Office may approve an exception payment standard 
amount within the upper range if required as a reasonable accommodation 
for a family that includes a person with disabilities.
* * * * *
    7. On page 26649, in the third column, Sec. 982.505(c)(2) is 
corrected to read as follows:


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

* * * * *
    (c) * * *
    (2) If the dwelling unit is located in an exception area, the PHA 
must use the appropriate payment standard amount established by the PHA 
for the exception area in accordance with Sec. 982.503.
* * * * *
    8. On page 26649, in the third column, the section heading for 
Sec. 982.508 is corrected to read as follows:


Sec. 982.508  Maximum family share at initial occupancy.

* * * * *
    9. On page 26650, in the third column, Sec. 982.552 is corrected by 
adding paragraph (e) to read as follows:

[[Page 49659]]

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

* * * * *
    (e) Applicant screening. The PHA may at any time deny program 
assistance for an applicant in accordance with the PHA policy, as 
stated in the PHA administrative plan, on screening of applicants for 
family behavior or suitability for tenancy.
    10. On page 26651, in the second and third columns, Sec. 982.623 is 
corrected as follows:
    a. Remove paragraph (a);
    b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b), 
respectively;
    c. Add paragraph (a)(3); and
    c. Revise newly designated paragraph (b)(1).


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

    (a) * * *
    (3) Amortization cost. (i) The amortization cost may include debt 
service to amortize cost (other than furniture costs) included in the 
purchase price of the manufactured home. The debt service includes the 
payment for principal and interest on the loan. The debt service amount 
must be reduced by 15 percent to exclude debt service to amortize the 
cost of furniture, unless the PHA determines that furniture was not 
included in the purchase price.
    (ii) The amount of the amortization cost is the debt service 
established at time of application to a lender for financing purchase 
of the manufactured home if monthly payments are still being made. Any 
increase in debt service due to refinancing after purchase of the home 
is not included in amortization cost.
    (iii) Debt service for set-up charges incurred by a family that 
relocates its home may be included in the monthly amortization payment 
made by the family. In addition, set-up charges incurred before the 
family became an assisted family may be included in the amortization 
cost if monthly payments are still being made to amortize such charges.
    (b) Housing assistance payment for voucher tenancy. (1) There is a 
separate FMR for a family renting a manufactured home space. The FMR 
for a manufactured home space is determined in accordance with 
Sec. 888.113(e) of this title. The FMR for rental of a manufactured 
home space is generally 30 percent of the published FMR for a two-
bedroom unit (see FMR notices published by HUD pursuant to part 888).
* * * * *
    Dated: September 8, 1999.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-23895 Filed 9-13-99; 8:45 am]
BILLING CODE 4210-33-P