[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Notices]
[Pages 3605-3610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-999]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4633-N-01]


Revisions to PHA Project-Based Assistance Program; Initial 
Guidance

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

ACTION: Notice.

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SUMMARY: The HUD Appropriations Act for Fiscal Year 2001 amends the 
existing laws that govern the amount of tenant-based housing choice 
voucher funding that may be used for project-based assistance. HUD 
plans to issue a rule revising the project-based program regulations at 
24 CFR part 983 in accordance with the new law. However, many of the 
statutory changes do not involve or require agency discretion on 
implementation of the new law, and are immediately effective. This 
notice provides guidance to public housing agencies (PHAs) and other 
interested members of the public on those provisions that are effective 
immediately, and identifies statutory changes that require further 
rulemaking.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and

[[Page 3606]]

Indian Housing, Department of Housing and Urban Development, 451 
Seventh Street, SW, Room 4210, Washington, DC 20410; telephone (202) 
708-0477 (this is not a toll-free number). Persons with hearing or 
speech impairments may access these numbers via TTY by calling the 
Federal Information Relay Service at (800) 877-8339.
    Rod Solomon, Deputy Assistant Secretary for Policy, Program and 
Legislative Initiatives, Office of Public and Indian Housing, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Room 4116, Washington, DC 20410; telephone (202) 708-0713 (this is not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Introduction

    On October 27, 2000, the President signed into law the Fiscal Year 
2001 Departments of Veterans Affairs and Housing and Urban Development 
and Independent Agencies Appropriations Act (Pub. Law 106-377, 114 
Stat. 1441) (``Appropriations Act''). Section 232 of the Appropriations 
Act substantially revises the provisions of the U.S. Housing Act of 
1937 that govern the authority of a PHA to designate a portion of its 
available tenant-based voucher funds for project-based assistance (see 
42 U.S.C. 1473f(o)(13) (as amended by ``Section 232'' of the 
Appropriations Act). The Conference Report on the Appropriations Act 
stated that the statutory changes to the project-based voucher program 
are intended to make project-basing of voucher assistance more 
flexible.
    Consistent with legislative intent, it is also HUD's objective to 
make the project-based voucher program more flexible and more workable, 
and to help PHAs, owners, and eligible families in need of housing take 
immediate advantage of the new statutory features.
    This notice provides information on the requirements of the new law 
for eligible families, PHAs, owners and other interested members of the 
public. The notice identifies which elements of the new project-basing 
law are effective immediately, and states how the law is to be 
implemented pending issuance of revised program regulations. The notice 
also identifies elements of the new law that must be implemented by 
rulemaking.

Section I: Important Changes to the Project-Based Program

    The important changes made by section 232 of the Appropriations Act 
to the project-based program include:
     Existing housing. Prior law granted a PHA authority to 
project-base a portion of its available tenant-based funding only for 
(1) newly constructed units, or (2) rehabilitated units. Section 232 
provides that a PHA may also use tenant-based funding to attach 
assistance to existing units.
     Percent limit. Under prior law, the number of units that a 
PHA could project-base was capped at the number supported by 15 percent 
of the total funding available to the PHA under its consolidated Annual 
Contributions Contract (ACC) for tenant-based assistance. The new law 
raises this cap to 20 percent of the funding available, and 
consequently to 20 percent of the baseline number of units in the PHA's 
voucher program. A PHA may now utilize funding for project-basing up to 
this new percent limit.
     PHA Plan and deconcentration goals. The new law integrates 
the project-based voucher option with the PHA Plan requirements. A PHA 
may enter into a housing assistance payments (HAP) contract to provide 
project-based voucher assistance only if the HAP contract is consistent 
with the PHA Plan (see 42 U.S.C. 1437c-1, implemented at 24 CFR part 
903). Consistency with the PHA Plan means that there are circumstances 
indicating that project-basing of the units, rather than tenant-basing 
of the same amount of assistance, is an appropriate option. In 
addition, project-basing must be consistent with the statutory goals of 
``deconcentrating poverty and expanding housing and economic 
opportunities.''
     Partially assisted buildings. The new law places a new cap 
of 25 percent on the number of dwelling units in any one building that 
may have project-based voucher assistance. However, the following types 
of housing are exempt from this cap: project-based dwelling units in 
single family properties and dwelling units specifically for elderly 
families, disabled families (as defined in 5 CFR 5.403(b)), or families 
receiving supportive services.
     Family choice to move with continued assistance. The 
family choice requirement has two components, a ``mobility'' component 
and a ``continued assistance'' component.
     Mobility. The HAP contract must provide that a family may 
move out of a project-based unit after 12 months.
     Continued assistance. If a family moves out of its 
project-based unit at any time after the first year of assisted 
occupancy, the PHA must offer the family available tenant-based rental 
assistance, either under the voucher program or under another 
comparable form of tenant-based assistance as will be defined in HUD 
regulations. Such alternative tenant-based assistance must be 
comparable to assistance under the voucher program in terms of income, 
assistance, rent contribution, affordability and other requirements.
     Contract term. HUD's present regulations only permit a PHA 
to provide project-based assistance within funding currently available 
under the ACC. Since voucher funding has recently been provided in one-
year increments, PHAs have been permitted to enter into HAP contracts 
for the same period. Section 232 provides that the HAP contract between 
the PHA and the owner may be for a term of up to 10 years, although 
payments under that contract are subject to the future availability of 
appropriations and future availability of funding under the ACC.
     Extension of contract term. Section 232 revised the former 
statutory provision on extension of the HAP contract term (former 42 
U.S.C. 1437f(o)(13)(B)). The new law provides that the PHA may contract 
with the owner of a project-based unit to extend the term of the HAP 
contract for such period as the PHA determines appropriate to achieve 
long-term affordability of the housing or to expand housing 
opportunities. All HAP contract extensions, however, must be contingent 
upon the future availability of appropriated funds.
     Maximum initial gross rent, rent to owner and rent 
adjustments. The new law provides that the HAP contract shall establish 
gross rents that do not exceed 110 percent of the established Fair 
Market Rent (``FMR''), or any HUD-approved ``exception payment 
standard'' (i.e., a payment standard amount (for the PHA's tenant-based 
voucher program) that exceeds 110 percent of the published FMR) for the 
area where the project is located. In addition, if a unit has been 
allocated a low-income housing tax credit under the Internal Revenue 
Code of 1986 at 26 U.S.C. 42, but is not located in a ``qualified 
census tract'' under that law, the rent to owner may be established at 
any level that does not exceed the rent charged for comparable units in 
the same building that receive the tax credit but do not have 
additional rental assistance.
    The new law provides that a HAP contract between the PHA and an 
owner must provide for adjustments of rent to owner during the contract 
term, and the adjusted rents must be reasonable in comparison with 
rents charged for comparable units in the private, unassisted local 
market. The statutory maximum rent limits apply both to the 
establishment of the initial rent to owner (as defined in 24 CFR 982.4) 
at

[[Page 3607]]

the beginning of the HAP contract term, and to adjustments of rent to 
owner during the HAP contract term.
    Within the limitations mentioned above, the initial gross rent to 
owner may differ from payment standard amounts for the PHA's tenant-
based voucher program. However, just as in the regular tenant-based 
program, and in the project-based program under prior law, the initial 
and adjusted rent to owner must be reasonable in relation to rents 
charged in the private market for comparable unassisted units (see 42 
U.S.C. 1437(f)(o)(10)(A), 24 CFR 982.507, and the ``reasonable rent'' 
element of SEMAP, 24 CFR 985.3(b)).
     Tenant selection. Section 232 revises and substantially 
codifies the tenant selection process for project-based voucher units. 
The new law states that the PHAs may place applicants referred by 
owners on the PHA's waiting list in accordance with the PHA's local 
waiting list policies and selection preferences.
    As under the current program regulations, a PHA may not penalize 
applicants who reject an offer of a project-based unit or who are 
rejected by the owner of the housing. The PHA must maintain such 
applicant in the same position on the tenant-based assistance list as 
if an offer had not been made. In accordance with existing admission 
requirements, PHAs may establish selection preferences for project-
based units that are consistent with the selection preferences in the 
PHA Plan.
    As under the current program regulations, the PHA may elect to 
establish a separate waiting list for project-based voucher assistance, 
or to use a single common list for admission to the PHA's tenant-based 
and project-based assistance programs. If the PHA chooses to maintain a 
separate waiting list for project-based units, all PHA tenant-based 
assistance waiting list families who want project-based units must be 
permitted to place their names on the separate list.
    The new law provides that admission to the project-based voucher 
program is subject to the same statutory income targeting requirement 
as the tenant-based program (42 U.S.C. 1437n(b)), instead of the 
individual project income targeting requirement that applies to other 
Section 8 project-based assistance (42 U.S.C. 1437n(c)(3)). The income 
targeting requirement provides, in general, that in any PHA fiscal 
year, at least 75% of the families admitted to a PHA's voucher program 
(which would include project-based voucher assistance) must be families 
whose annual income does not exceed 30 percent of median income for the 
area, as determined by HUD (see HUD definition of ``extremely low 
income families'' at 24 CFR 5.603).
     Unit inspection and housing quality standards. Units 
assisted with tenant-based or project-based voucher assistance must 
meet or exceed housing quality standards (HQS) established by HUD (42 
U.S.C. 1437f(o)(8)). Section 232 states that the same HUD-prescribed 
HQS standards apply to project-based voucher assistance as apply to 
tenant-based voucher assistance (42 U.S.C. 1437f(o)(13)(F)).
    Before and during the term of assistance, units are inspected for 
compliance with the HQS. In general, the same statutory PHA inspection 
requirements apply to project-based voucher assistance as to the 
tenant-based voucher program (42 U.S.C. 1437f(o)(8) and 
1437f(o)(13)(F)). As in the tenant-based voucher program, a PHA must 
inspect 100 percent of project-based voucher units before entering into 
the HAP contract, and may only enter into a HAP contract for units that 
fully comply with the HQS. There is, however, a change in the annual 
HQS inspection requirements for the project-based voucher program. In 
the tenant-based program--where each unit is assisted under a separate 
HAP contract for each individual assisted family--the PHA must inspect 
each assisted unit annually. The new law provides that in the project-
based voucher program, a PHA is not required to inspect each assisted 
unit in a project annually, thus allowing annual inspection of a 
representative sample of the project-based voucher units in a project.
     Vacant units. The new law permits a PHA, at its 
discretion, to continue providing assistance for a unit that becomes 
vacant (after commencement of assisted occupancy by a family) for up to 
a maximum of 60 days. Such payments may only be made if the vacancy is 
not the fault of the owner, and the owner takes ``every reasonable 
action'' to minimize the likelihood and extent of vacancies.

Section II. New Statutory Provisions That Are Non-Discretionary and 
Effective Immediately

    This section provides guidance regarding implementation of 
provisions on project-basing in Section 232 of the Appropriations Act 
that are immediately effective. Except where this notice specifies 
otherwise, the present project-based regulations at 24 CFR part 983 
continue to apply to newly constructed and substantially rehabilitated 
housing and now also apply to existing housing. Upon determination of 
good cause and subject to statutory limitations, HUD may waive any 
provision of this notice and the applicable project-based regulations 
in accordance with 5 CFR 5.110. Nothing in this notice affects the 
rights of owners and participants under existing contracts in HUD's 
Section 8 project-based certificate program. In the event of changes to 
this notice in future rulemaking concerning the project-based voucher 
program, HUD will take into account actions taken in compliance with 
this notice.
     Authorization to provide project-based vouchers for 
existing housing. Consistent with the project-based statute before 
amendment by Section 232, present regulations at 24 CFR part 983 only 
authorize project-based voucher assistance for newly constructed or 
rehabilitated units. Section 232 now also authorizes project-based 
assistance for existing housing. In accordance with the new law, a PHA 
may now enter HAP contracts that attach project-based voucher 
assistance to existing housing units that fully meet the housing choice 
voucher program HQS (see 24 CFR 982.401) but that would not have 
qualified for project-basing as newly constructed or rehabilitated 
units.
    A housing unit will be considered an ``existing unit'' for purposes 
of the project-based voucher program if, at the time of the PHA's 
written notice of selection of the project for project-based 
assistance, the units require a maximum expenditure of less than $1,000 
per assisted unit (including the unit's prorated share of any work to 
be accomplished on common areas or systems) to comply with the HQS.

A. Inapplicability of Certain Current Part 983 Regulations to New 
Commitments of Project-Based Vouchers

    24 CFR 983.3 (c) and (d) of the present regulation, which are 
designed to assure that commitments of project-based assistance do not 
exceed amounts currently appropriated and available under the ACC, are 
inapplicable because the new law authorizes PHAs to enter into project-
based HAP contracts for up to ten years, subject to the future 
availability of appropriations. In addition, the maximum percentage 
limit for project-based assistance has been raised to twenty percent of 
the baseline number of units in the PHA's voucher program.
    24 CFR 983.4, HUD review of PHA plans to attach assistance to 
units, is inapplicable.
    24 CFR 983.9(a) implemented the prior statutory prohibition of 
project-based assistance for units to be

[[Page 3608]]

constructed or rehabilitated with U.S. Housing Act funds. This 
requirement is eliminated in the new law. Consequently section 983.9(a) 
is no longer applicable.
    24 CFR 983.151(b) and (c), on term and renewal of HAP contracts, 
have been modified as described in this notice. The maximum potential 
term is now 10 years, subject to the future availability of 
appropriations and future availability of funding under the PHA's ACC. 
The PHA will determine the initial HAP contract term. The new law 
allows PHAs to determine the appropriate period for an extension, 
whereas previously (within the constraints imposed by available funding 
under a current ACC), HUD decided whether and for what period to 
approve renewals of expiring HAP contracts.
    24 CFR 983.203(a)(6) is inapplicable, and 983.203(d)(3)'s 
declaration that a family that moves does not have any right to 
continued assistance is inapplicable.

B. Inapplicability of Certain Current Regulations to Project-Based 
Assistance for Housing in Existing Structures

    The provisions of the present regulation that restrict assistance 
to newly constructed or rehabilitated units (see 24 CFR 983.7(b)(1) and 
(2)) do not apply to project-based voucher assistance for housing in an 
existing structure in accordance with Section 232 and this notice. In 
addition, the following regulatory provisions of 24 CFR part 983 do not 
apply to project-based assistance for housing in an existing structure:
    Site and neighborhood standards at Sec. 983.6;
     Rehabilitation requirements at section 983.8;
     Requirements for minimizing displacement because of 
rehabilitation in section 983.10(a);
     Subpart B--Owner Application Submission to Agreement, 
except 24 CFR 983.51, which is discussed further below; and
     Subpart C--Agreement and New Construction or 
Rehabilitation Period, except the provisions of paragraphs 983.103(d) 
regarding notification of vacancies and 983.104(c) regarding inspection 
to meet HQS.
     Unit selection policy, advertising, and owner application 
requirements for existing housing with assistance attached to 25 
percent or fewer of the units in a building. For existing housing 
developments in the project-based voucher program, which have 
assistance attached to no more than 25 percent of the development's 
units, the PHA must advertise the availability of the project-based 
assistance. Such advertisements must meet standards comparable to those 
in 24 CFR 983.51(b); otherwise, section 983.51 does not apply to these 
projects.
    Specifically, the PHA must advertise in a newspaper of general 
circulation that the PHA will accept applications for assistance for 
existing housing projects. The advertisement must be published once a 
week for three consecutive weeks; specify an application deadline of at 
least 30 days after the date the advertisement is last published; 
specify the number of units the PHA estimates that it will be able to 
assist under the funding the PHA is making available for this purpose; 
and state that only applications submitted in response to the 
advertisement will be considered. The PHA advertisement must also state 
the PHA's selection policies. In all cases, PHAs must maintain 
documentation of responses to advertisements or competitive proposals 
received in response to the PHA notice.
    For existing housing developments with more than 25 percent 
project-based units (i.e., at this time, for the elderly and special 
populations only, since the supportive services exception to the 25% 
cap is not implemented in this notice), and for newly constructed or 
rehabilitated units, the PHA must establish policies for public 
advertisement and competitive selection of units to be assisted with 
project-based voucher assistance. 24 CFR 983.51 is applicable.

C. 20 Percent Limit

    Section 232 requires PHAs that participate in the project-based 
voucher program to comply with the statutory language that states that 
``[n]ot more than 20 percent of the funding available for tenant-based 
assistance under this section that is administered by the [public 
housing] agency may be attached to structures pursuant to this 
paragraph'' [bracketed material added]. This language supersedes 24 CFR 
983.3(b), and is effective immediately. Therefore, the total cumulative 
number of project-based units, including units previously placed under 
AHAP or HAP in the PHA's project-based certificate program, may not 
exceed 20 percent of the baseline number of units in the PHA's voucher 
program.

D. Consistency With PHA Plan

    Until HUD issues further instructions, PHAs submitting PHA Plans 
that wish to use the project-based voucher program (as revised by 
Section 232) must include--as a required attachment to the PHA Plan 
template--a statement of the projected number of project-based units 
and general locations and how project basing would be consistent with 
their PHA Plans. If a PHA wishes to use the project-based voucher 
program before the anticipated approval date of the PHA's next PHA 
Plan, the PHA may do so by adding the information as an amendment to 
the PHA Plan and following the regulations and notices for such PHA 
Plan amendments.
    As with all programs that are covered by the PHA Plan, the program 
must be carried out in conformity with the nondiscrimination 
requirements specified in the PHA Plan regulations, and must 
affirmatively further fair housing as required by the PHA Plan 
regulations.

E. Consistency With the Goals of Deconcentrating Poverty and Expanding 
Housing and Economic Opportunities

    Section 232 requires, in addition to consistency with the PHA Plan, 
that a contract for project-basing under the voucher program be 
consistent with the goals of deconcentrating poverty and expanding 
housing opportunities. Until HUD issues further instructions, HUD will 
implement the deconcentration of poverty requirements in Section 232 by 
requiring that all new project-based assistance agreements or HAP 
contracts be for units in census tracts with poverty rates of less than 
20 percent, unless HUD specifically approves an exception.

F. Partially Assisted Building Requirement

    A PHA may not enter into an agreement or HAP contract or other 
binding commitment to provide project-based voucher assistance for more 
than 25 percent of the units in any one building, except for single-
family dwellings and projects for elderly families and disabled 
families.
    HUD is not implementing through this notice the exception for 
buildings for families receiving supportive services. HUD will address 
that exception through rulemaking, which will define ``supportive 
services.'' In accordance with existing program usage, single family 
dwellings refer to 1-4 family dwellings.
    If the PHA had entered into an agreement for project-based units 
prior to the effective date of this notice, section 232 provides that 
such buildings may have the assistance extended or renewed, 
notwithstanding this section on partially assisted buildings, 42 U.S.C. 
1437f(o)(13)(D), as amended by the Appropriations Act.

[[Page 3609]]

G. Family Choice to Move With Continued Assistance

    The new law provides that assisted families may move from the 
assisted building, and retain federal housing assistance. For the 
continued assistance option, Section 232, similar to existing 24 CFR 
983.206(d)(2), requires for new HAP contracts that the owner permit the 
assisted tenants to move from the housing at any time after the family 
has occupied the dwelling unit with project-based voucher assistance 
for 12 months.
    The law now provides that the PHA must provide the family with 
housing choice voucher assistance or such other tenant-based rental 
assistance that is subject to comparable income, assistance, rent 
contribution, affordability and other requirements. HUD will set the 
standards as to what may qualify as comparable assistance by 
regulation, but, for new HAP contracts incorporating this requirement, 
the PHA must in the interim use voucher assistance available under the 
ACC to provide tenant-based assistance for the family. If no such 
assistance is available at the time the family moves, the PHA must give 
the family priority to receive the next available tenant-based voucher. 
Vouchers under funding allocations targeted by HUD for special purposes 

(e.g., family unification, mainstream disabled) are not available for 
this purpose, since they are required to be used only for the targeted 
purpose.

H. HAP Contract Term

    The new law provides that, for HAP contracts entered after the 
effective date of the law, a HAP contract between a PHA and an owner of 
housing under this program may have a duration of up to 10 years (as 
determined by the PHA), subject to the future availability of 
sufficient appropriated funds under the PHA's consolidated ACC with 
HUD.
    Upon expiration of the HAP contract term, the new law provides that 
the PHA may agree with the project-based housing owner to extend the 
HAP contract for such period as the PHA determines appropriate to 
expand housing opportunities (as well as an extension to assure long-
term affordability of the housing, as provided under prior law). All 
HAP contract extensions must be contingent upon the future availability 
of appropriated funds.

I. Rent Limits

    The new law provides that the HAP contract shall establish gross 
rents (rent to owner plus the allowance for tenant-paid utilities) that 
do not exceed 110 percent of the established Fair Market Rent 
(``FMR''), or any HUD-approved ``exception payment standard'' (i.e., a 
payment standard amount that exceeds 110 percent of the published FMR) 
for the area where the housing is located.
    If a unit has been allocated a low-income housing tax credit under 
the Internal Revenue Code of 1986 at 26 U.S.C. 42, but is not located 
in a ``qualified census tract'' as defined in the law, the rent to 
owner may be established at any level that does not exceed the rent 
charged for comparable units in the same building that receive the tax 
credit but do not have additional rental assistance.
    Within the limitations mentioned above, the initial rent to the 
owner may differ from payment standard amounts in the payment standard 
schedule adopted for the PHA's tenant-based voucher program. However, 
just as in the regular tenant-based program and the project-based 
program under prior law, the initial and adjusted rent to owner must be 
reasonable in relation to rents charged in the private market for 
comparable unassisted units (see 42 U.S.C. 1437(f)(o)(10)(A).

J. Rent Adjustments During the Term of the HAP Contract

    Section 232 provides that a housing assistance payments contract 
for project-based voucher assistance shall provide for rent adjustments 
and that the adjusted rent for any assisted unit shall be reasonable in 
comparison with rents charged for comparable dwelling units in the 
private, unassisted local market and may not exceed the maximum rent 
limits permitted under the statutory limitations summarized above. 
Determination of whether rent is reasonable in relation to comparable 
units shall be governed by 24 CFR 983.256.
    The annual rent adjustment provisions at 983.254 and the special 
rent adjustment provisions at 983.255 shall only be applicable if the 
AHAP with the owner was executed before the effective date of this 
notice. These annual and special adjustment regulatory provisions do 
not apply to project-based assistance for existing housing pursuant to 
this notice, and do not apply if the Agreement for newly constructed or 
rehabilitated housing was executed on or after the effective date of 
this notice.

K. Family Share of Rent and Housing Assistance Payment

    The housing assistance payment is calculated in accordance with 24 
CFR 983.260 as the gross rent minus the total tenant payment. The 
family share is calculated in accordance with 24 CFR 983.261 by 
subtracting the amount of the HAP from the gross rent.

L. Tenant Selection

    The PHA selection system for project-based units must comply with 
the requirements specified below, which in most respects (except for 
the income targeting provision) are a codification of present 
regulatory and contractual requirements:
     Income targeting. The requirements of 42 U.S.C. 1437n(b) 
and 24 CFR 982.201(b)(2) govern the selection of eligible families for 
this program, and generally provide that not less than 75 percent of 
families admitted annually to the PHA's combined tenant-based and 
project-based voucher program shall be families whose incomes do not 
exceed 30 percent of the area median, as determined by HUD.
     Applicants may only be selected from the PHA waiting list.
     A PHA may only maintain a separate project-based waiting 
list if all PHA tenant-based assistance applicants who seek project-
based housing can be placed on this list upon request and without 
penalty to any other application for assisted housing they may have 
pending. Subject to its waiting list policies and selection preferences 
specified in the PHA administrative plan, the PHA may place a family 
referred by an owner of project-based voucher units on its waiting 
list.
    If a PHA chooses to establish a separate waiting list for project-
based assistance, the PHA must give all applicants currently on its 
waiting list for tenant-based assistance the opportunity to also have 
their names placed on the waiting list for project-based assistance in 
accordance with the PHA's established selection policies.
     As in the current project-based program, the PHA must 
refer families to housing units from the waiting list according to its 
regular applicant selection policies. If an applicant does not rent a 
unit with project-based assistance, or the owner turns an applicant 
down for admission to a project-based unit, the applicant may not be 
removed from the PHA's tenant-based assistance waiting list for that 
reason but must maintain its position on the list as though no offer of 
housing had been made.
    Vacant units. A HAP contract must be in a form prescribed by HUD. 
The PHA may enter into such a contract that agrees to provide vacancy 
payments up to 60 days after a unit becomes vacant, in an amount not to 
exceed the rent to the owner as provided by the HAP contract on the day 
the family vacated.

[[Page 3610]]

    The PHA may only make such payments for a vacant unit if:
    (1) The vacancy was not the owner's fault, and
    (2) The PHA and owner take action to minimize the likelihood and 
length of any vacancy.
    Reduction of contract units after vacancy. Except for units for 
which an AHAP was executed before the effective date of this notice, 
the new law supersedes 24 CFR 983.152(b) and (c). Instead, the 
following provisions apply:
    If no eligible family rents a vacant unit within 120 days 
(commencing on the first day of the month when the vacancy occurs), the 
PHA may terminate its commitment to make any additional housing 
assistance payments for the unit for the balance of the HAP contract 
term. The PHA may use the amounts so saved to provide other voucher 
assistance.
    The policy guidance and implementation directives of this notice 
remain in effect until the new project-based voucher changes in law 
have been fully implemented through a new regulation. HUD will endeavor 
to answer any questions PHAs may have that arise that are not 
anticipated in this notice.
    HUD will soon issue a new required tenancy addendum and HAP 
contract for the project-based voucher program as implemented by this 
notice.

    Dated: January 8, 2001.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 01-999 Filed 1-12-01; 8:45 am]
BILLING CODE 4210-33-P