[Federal Register Volume 64, Number 191 (Monday, October 4, 1999)]
[Rules and Regulations]
[Pages 53868-53869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25733]



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Part V





Department of Housing and Urban Development





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24 CFR Part 882



Section 8 Moderate Rehabilitation Program; Executing or Terminating 
Leases on Moderate Rehabilitation Units When the Remaining Term of the 
Housing Assistance Payments (HAP) Contract is for Less Than One Year; 
Interim Rule

  Federal Register / Vol. 64, No. 191 / Monday, October 4, 1999 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 882

[Docket No. FR-4472-I-01]
RIN 2577-AB98


Section 8 Moderate Rehabilitation Program; Executing or 
Terminating Leases on Moderate Rehabilitation Units When the Remaining 
Term of the Housing Assistance Payments (HAP) Contract is for Less Than 
One Year

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

ACTION: Interim rule.

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SUMMARY: The current program regulations for the Section 8 Moderate 
Rehabilitation Program state that the initial lease term between an 
owner and a family must be for at least one year. The regulation is 
silent on the requisite lease term when the Housing Assistance Payments 
(HAP) contract term expires in less than one year. The purpose of this 
interim rule is to implement the statutory language that requires that 
any initial lease term not extend beyond the term of the HAP contract. 
This interim rule also revises the program regulation to allow an owner 
and a public housing agency (PHA) to mutually agree to terminate a unit 
from the HAP contract if a unit becomes vacant and the term of the HAP 
contract is for less than one year.

DATES: Effective Date: November 3, 1999.
    Comments Due Date: December 3, 1999.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Office of General Counsel, Rules Docket Clerk, Room 
10276, U.S. Department of Housing and Urban Development, Washington, DC 
20410-0500. FAX comments will not be accepted. Communications should 
refer to the above docket number and title. A copy of each 
communication submitted will be available for public inspection and 
copying on weekdays between 7:30 a.m. and 5:30 p.m. (eastern time) at 
the above address.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Director, Real 
Estate and Housing Performance Division, Office of Public and Assisted 
Housing Delivery, Room 4210, U.S. Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-5000; 
telephone: (202) 708-0477 (this is not a toll-free number). Persons 
with hearing or speech impairments may access this number via TTY by 
calling the toll-free Federal Information Relay Service at (800) 877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background

a. General

    Section 8(d)(1)(B)(i) of the United States Housing Act of 1937 (42 
U.S.C. 1437f) requires that the initial lease between the tenant and 
the owner be for at least one year or the term of the HAP contract, 
whichever is shorter. In most cases, Section 8 Moderate Rehabilitation 
dwelling leases will terminate concurrently with Housing Assistance 
Payments (HAP) contract expirations. In some cases, however, a dwelling 
lease may end prior to the expiration of the Moderate Rehabilitation 
HAP contract. A lease may end as a result of (1) an action by an owner 
to terminate tenancy in accordance with the lease addendum and program 
regulations; (2) a tenant's action to terminate the lease agreement; or 
(3) an action by a housing authority to terminate the family from the 
program for failure to comply with the family's obligations under the 
Statement of Family Responsibility and the owner chooses to terminate 
the lease with the family.
    Section 882.403(d) of the program regulations at 24 CFR part 882 
provides, in pertinent part, that the initial lease between the family 
and owner must be for at least one year. If a lease agreement ends with 
less than twelve months remaining on the HAP contract, Sec. 882.403(d) 
effectively prohibits an owner from reoccupying the unit with a new 
family. Thus, Section 8 Moderate Rehabilitation owners may lose rental 
income on units because the remaining term of the HAP contract is for 
less than twelve months and Sec. 882.512(a) prohibits an owner from 
occupying a unit under a HAP contract with an ineligible family (i.e. a 
family other than one participating in the Section 8 Moderate 
Rehabilitation program). The statutory language supersedes the limited 
regulatory language and requires PHAs to allow owners to enter into 
initial leases with assisted families for less than one year provided 
the lease does not extend beyond the term of the HAP contract.

b. Reoccupying a Unit for Less Than One Year

    When a unit becomes vacant, and less than twelve months remain on 
the HAP contract, the lease agreement must clearly state that the lease 
is for less than one year and provide the date on which the HAP 
contract and Section 8 Moderate Rehabilitation assistance will 
terminate. Families renting Moderate Rehabilitation units with 
contracts that have terms of less than one year must be informed at 
their Section 8 briefing that when the Moderate Rehabilitation HAP 
contract expires, the units will be replaced with Section 8 tenant-
based vouchers (in cases where the Moderate Rehabilitation HAP contract 
is not renewed in accordance with HUD procedures) and that they must 
find a suitable unit in which to relocate upon expiration of the 
Moderate Rehabilitation HAP contract or remain in the unit with tenant-
based rental voucher assistance if the owner wishes to participate in 
the Section 8 rental voucher program.

c. Mutual Agreement To Terminate

    If less than one year remains on the HAP contract and a unit 
becomes vacant, an owner and a PHA may mutually agree to terminate the 
unit from the HAP contract. An owner who will not be eligible for a one 
year HAP contract renewal or who does not wish to renew his Moderate 
Rehabilitation HAP contract, may choose to terminate the HAP contract 
on the vacant unit and rent to a market-rate tenant rather than execute 
an assisted lease for less than one year. An owner may possibly choose 
this course when, for example, costs involved in preparing the unit for 
a new assisted tenancy for less than twelve months would be greater 
than costs associated with terminating the assisted unit and renting to 
a market-rate tenant.
    If an owner agrees to terminate the vacant unit from the HAP 
contract, the housing authority must amend the HAP contract to reflect 
the reduced number of units. Both the housing authority and owner must 
sign and date the amendment. The housing authority should attach the 
amendment to the original HAP contract. In addition, the housing 
authority must send a copy of the HAP contract amendment to the Section 
8 Financial Management Center (FMC). Upon receipt of the amendment, the 
Section 8 FMC will enter the change into HUDCAPS.

d. This Interim Rule

    For the reasons set forth above, Sec. 882.403(d) is revised to 
permit an initial lease for at least one year or the term of the HAP 
contract, whichever is shorter. If the initial term of the lease is for 
less than one year because the remaining term of the HAP contract is 
for less than one year, the Owner and the PHA may mutually agree to 
terminate the unit from the HAP contract. The provision that any 
renewal

[[Page 53869]]

or extension of the lease term may not extend beyond the remaining term 
of the HAP contract remains unchanged.

e. Justification for Interim Rule

    In general, the Department publishes a rule for public comment 
before issuing a rule for effect, in accordance with its own 
regulations on rulemaking at 24 CFR part 10. Part 10, however, provides 
in Sec. 10.1 for exceptions from that general rule where the Department 
finds good cause to omit advance notice and public participation. The 
good cause requirement is satisfied when the prior public procedure is 
``impracticable, unnecessary, or contrary to the public interest.''
    The Department finds that good cause exists to publish this interim 
rule for effect without first soliciting public comment. To require 
public comment first would be impracticable and contrary to the public 
interest. In keeping with the statute, this rule allows leases for 
terms of less than twelve months where the remaining term of the HAP 
contract is less than twelve months. It also permits the Owner and the 
PHA to mutually agree to terminate a unit from the HAP contract where 
the remaining term of the HAP contract is for less than one year. The 
existing rule would continue a prohibition that would prevent an owner 
from reoccupying a vacant unit with a new family.

II. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
for this rule has been made in accordance with HUD regulations at 24 
CFR part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding of No 
Significant Impact is available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office 
of the General Counsel, U.S. Department of Housing and Urban 
Development, Room 10276, 451 Seventh Street, SW, Washington, DC 20410.

Federalism Impact

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule do not have significant impact on States or 
their political subdivisions, or the relationship between the Federal 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. As a result, 
the rule is not subject to review under the Order. The rule merely 
provides an exception to allow leases for terms of less than twelve 
months under the Moderate Rehabilitation Program.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1532) (UMRA) establishes requirements for Federal agencies to assess 
the effects of their regulatory actions on State, local, and tribal 
governments, and on the private sector. The Secretary, in accordance 
with UMRA, has reviewed this rule before publication and by approving 
it has determined that it does not impose any Federal mandates on any 
State, local, or tribal governments, or on the private sector that will 
result in the expenditure of State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule will not have a significant 
impact on a substantial number of small entities, because it does not 
place major burdens on housing authorities or housing owners. The rule 
merely provides an exception to allow leases for terms of less than 
twelve months under the Moderate Rehabilitation Program. Nevertheless, 
the Department is sensitive to the fact that the uniform application of 
requirements on entities of differing sizes often places a 
disproportionate burden on small entities. The Department, therefore, 
is soliciting alternatives for compliance from small entities.

List of Subjects for 24 CFR Part 882

    Grant programs--housing and community development, Homeless, Lead 
poisoning, Manufactured homes, Rent subsidies, Reporting and 
recordkeeping requirements.

    Accordingly, 24 CFR part 882 is amended as follows:

PART 882--SECTION 8 MODERATE REHABILITATION PROGRAM

    1. The authority citation for part 882 continues to read as 
follows:

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

    2. Revise paragraph (d) of Sec. 882.403 to read as follows:


Sec. 882.403  ACC, housing assistance payments contract, and lease.

* * * * *
    (d) Term of Lease. (1) The initial lease between the family and the 
Owner must be for at least one year or the term of the HAP contract, 
whichever is shorter. In cases where there is less than one year 
remaining on the HAP contract, the owner and the PHA may mutually agree 
to terminate the unit from the HAP contract instead of leasing the unit 
to an eligible family.
    (2) Any renewal or extension of the lease term for any unit must in 
no case extend beyond the remaining term of the HAP contract.

    Dated: August 13, 1999.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-25733 Filed 10-1-99; 8:45 am]
BILLING CODE 4210-33-P