[Federal Register Volume 66, Number 189 (Friday, September 28, 2001)]
[Rules and Regulations]
[Pages 49788-49791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24269]



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Part V





Department of Housing and Urban Development





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24 CFR Part 1000



Revision to Cost Limits for Native American Housing; Final Rule

  Federal Register / Vol. 66, No. 189 / Friday, September 28, 2001 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1000

[Docket No. FR-4517-F-02]
RIN 2577-AC14


Revision to Cost Limits for Native American Housing

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

ACTION: Final rule.

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SUMMARY: This rule revises HUD's regulations regarding the way 
construction costs are controlled in the Indian Housing Block Grant 
(IHBG) program administered by IHBG grantees, who are Indian tribes or 
their tribally designated housing entities (TDHEs). This rule replaces 
the system of HUD-established Dwelling Construction and Equipment costs 
(DC&Es) with a choice between HUD-established Total Development Costs 
(TDCs) or standards established by the tribe/TDHE based on standards in 
its geographic area. This rule also provides that the construction, 
acquisition, or assistance of non-dwelling structures is either subject 
to tribally developed standards or to documentation of comparability to 
the size, design and amenities of similar buildings constructed in the 
geographic area. This rule follows an April 20, 2000 proposed rule and 
takes into consideration the public comments received on the proposed 
rule. After careful consideration of all the public comments received 
on the April 20, 2000 proposed rule, HUD has decided to adopt the 
proposed rule without significant change.

DATES: Effective Date: October 29, 2001. The information collection 
requirements required by this rule, however, will not be effective 
until the Office of Management and Budget (OMB) approves them under the 
Paperwork Reduction Act of 1995 and assigns them a control number. 
Publication of the control number, which will be by separate Federal 
Register notice, notifies the public that OMB has approved these 
information collection requirements.

FOR FURTHER INFORMATION CONTACT: Bruce Knott, Office of Native American 
Programs, at 303-675-1600, extension 3302, or email him at the 
following address: [email protected]. Persons with hearing or 
speech impairments may access the above telephone number via TTY by 
calling the Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION

I. Statutory Background

    The implementing regulations for the Native American Housing 
Assistance and Self-Determination Act (NAHASDA) (25 U.S.C. 4101 et 
seq.) provide for the control of construction costs through HUD-
established Dwelling Construction and Equipment limits, also referred 
to as DC&Es. (see 24 CFR 1000.156). The DC&E limits replaced a limit 
called Total Development Cost (TDC) which included an amount for DC&E 
as well as other costs such as administration, planning, site 
acquisition and financing. The tribe/TDHE is responsible for insuring 
that the amount of IHBG funds used for each unit does not exceed the 
most recently published DC&E limit for the area.
    In an effort to provide flexibility in high cost situations, DC&E 
standards were designed to limit only the hard costs of construction 
within five feet of the foundation. Nevertheless, tribes/TDHEs which 
began using DC&E limits in place of TDC limits in accordance with 24 
CFR part 1000 discovered that the new limits were still inadequate.

II. The April 20, 2000 Proposed Rule

    On April 20, 2000 (65 FR 21288), HUD published a proposed rule to 
amend 24 CFR part 1000. The purpose of the proposed rule was to 
implement changes for dwelling cost limits by replacing the system of 
HUD-established DC&E limits with a choice between HUD-established TDC 
limits or tribally developed standards based on an assessment of local 
factors. The proposed rule also provided that the construction, 
acquisition, or assistance of non-dwelling structures be subject to 
tribally developed standards or to documentation of comparability to 
the size, design and amenities of similar buildings constructed in the 
geographic area.

III. Public Comments, Generally

    The public comment period for the proposed rule closed on June 19, 
2000. HUD received six public comments on the proposed rule. The 
comments were received from housing authorities, affiliated 
organizations and a law firm representing a municipality participating 
in the IHBG program.
    Although the commenters expressed varying degrees of concern with 
the rule, most focus was on the narrow issue of mandatory HUD approval 
of excess construction costs where tribally developed alternative 
standards were in place. HUD appreciates the suggestions offered by the 
commenters and carefully considered the issues raised by them. 
Nonetheless, HUD's responsibility to protect the interests of all 
tribal grant recipients is of paramount importance. Additionally, the 
extensive and diverse tribal participation in the development of the 
rule coupled with the low overall number of comments submitted on the 
proposed rule indicates that the rule and its underlying policies are 
supported by a majority of the affected entities.
    Several of the commenters suggested technical changes that did not 
alter the substance of the proposed rule. These changes were 
incorporated where appropriate to improve readability or better explain 
the policies and procedures contained in the rule. For example, one 
commenter suggested that the term ``non-dwelling buildings'' be changed 
to ``non-dwelling activities'' or ``non-dwelling affordable housing 
activities.'' HUD responded to this suggested change by replacing 
``non-dwelling building'' with ``non-dwelling structure.'' Another 
commenter suggested moving a sentence from 24 CFR 1000.158 to 1000.156. 
HUD responded by moving the sentence as suggested since the 
modification improved the clarity of the rule.

IV. This Final Rule

    For the reasons discussed below, HUD has decided to adopt the April 
20, 2000 proposed rule without significant change. The following 
section of the preamble contains a discussion of the significant issues 
raised by the public commenters and HUD's response to their comments.

V. Discussion of the Public Comments Received on the April 20, 2000 
Proposed Rule

    Comment: Existing DC&E standards are adequate to cover the cost of 
constructing affordable residential dwellings. If TDC limits are 
restored, difficulties will arise in completing the construction of 
projects. DC&E standards should be retained.
    HUD Response: The proposed rule change was initiated at the request 
of a large number of Indian tribes and organizations whose past 
experiences under the rule indicated that DC&E standards created 
barriers to the provision of affordable housing. Given the minimal 
comment on this proposed rule, HUD believes that the majority of tribes 
and TDHEs agree.
    Comment: HUD should allow participants to continue using DC&E 
standards rather than requiring them to choose between published TDCs 
or tribally developed standards since TDCs are inadequate in areas with 
particularly high infrastructure costs. If

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it is necessary to reinstate the TDC limits for the benefit of a 
majority of tribes, the rule should allow tribes the option to use DC&E 
limits as an acceptable alternative. While the option of allowing 
tribes to determine their own TDC limits may appear to be a solution to 
the way construction costs are controlled, this option can result in a 
significant amount of research and effort on the part of a tribe.
    HUD Response: Although infrastructure costs within a housing site 
are included in TDC limits, the recipient may request an increased cost 
limit where necessary for a specific dwelling unit or project. The 
recipient may also provide documentation to HUD supporting a general 
increase in cost limits for their area if the cost of developing 
housing is consistently higher than the published cost limits. 
Furthermore, the TDC standard contained in the final rule poses no 
limitation on the cost of infrastructure outside the boundaries of a 
housing site. Given the ability of recipients to request an increase in 
cost limits where justified by local conditions, HUD believes that the 
potential benefit of maintaining dual limits is outweighed by the 
administrative burden of establishing and enforcing a second set of 
standards.
    Comment: The term ``local'' should be expressly defined in the 
rule. This term is used throughout the rule and given the importance of 
the term for tribal formulations of written standards for houses and 
non-dwelling buildings, HUD should define this term.
    HUD Response: To the maximum extent allowable under the enabling 
legislation, 24 CFR part 1000 encourages tribes to develop and 
implement programs in a regulatory environment supportive of self-
determination. For the purposes of the final rule, the term ``local'' 
is given its usual and customary meaning, referring to the tribe's 
general geographic area.
    Comment: HUD should describe in detail the procedure for reviewing 
tribally developed written standards for affordable housing programs. 
The rule should contain provisions for discussion or negotiation 
between a tribe and HUD before HUD makes a final decision to disapprove 
or modify tribal standards and a specific certification process should 
be included to address those instances when HUD accepts tribal 
standards under 24 CFR 1000.158 or 1000.162(c).
    HUD Response: The rule does not include provisions for HUD's review 
and approval of tribally developed standards. HUD's review of tribally 
developed standards will, instead, be conducted in accordance with 24 
CFR part 1000, subpart F which describes procedures for monitoring of 
recipients and the process for notification, discussion and appeal of 
HUD determinations. The rule does contain, in both 24 CFR 1000.158 and 
1000.162, a narrative description of the process and the recordkeeping 
a tribe must employ when it elects to develop and use its own written 
standards.
    Comment: The rule should specifically address the danger of 
earthquakes as a consideration in the development of written tribal 
standards. In order to ensure the safety and structural integrity of 
tribal homes and buildings in areas of active geological fault lines, 
the rule needs to require standards that address these concerns.
    HUD Response: The list of considerations contained in 24 CFR 
1000.158 is not exhaustive. It is intended to provide examples of items 
that may be assessed in the formulation of written tribal standards. A 
number of other environmental concerns, such as flooding, hurricanes 
and permafrost, are not expressly included in the list of 
considerations. These areas, along with the design or retrofitting of 
structures to withstand earthquake hazards, are addressed under 
generally applicable environmental regulations or other local codes and 
ordinances. Thus, they need not be specifically enumerated in the rule. 
These factors do, however, fall within the listed considerations of 
environmental concerns and mitigations, climate and design and 
construction features that are reasonable and necessary to provide 
decent, safe, sanitary and affordable housing.
    Comment: The requirement for HUD approval of project costs 
exceeding 110% of the TDC limit should be eliminated or, in the 
alternative, the maximum allowable amount by which costs may exceed the 
TDC limit without HUD approval should be raised. If the tribe is 
allowed to develop its own standards for modest low income housing, the 
tribe should be allowed to develop the local costs of these standards. 
This requirement renders the development and adoption of local 
standards essentially meaningless.
    HUD Response: The provision requiring HUD approval of project costs 
in excess of 110% of the TDC limit was added after completion of tribal 
consultation as a result of discussions conducted during pre-
publication clearance. HUD believes that this provision is consistent 
with the intent of the consulting group since it operates for the 
general protection of all tribes for which program funds are being used 
to develop moderately designed housing. Tribes may still adopt written 
standards pursuant to 24 CFR 1000.158(b) and 1000.162(c)--and must 
request HUD review and approval only in extreme cost situations. In 
those situations where published TDC limits are inadequate to develop 
moderately priced housing, the tribe has the alternative of requesting 
revised limits for an individual project or their local area. Thus, the 
imposition of the 110% of TDC threshold for requiring HUD approval does 
not significantly curtail program flexibility.
    Comment: Remove language in 24 CFR 1000.158(c) and 1000.162(a) 
which includes ``funding from all sources'' in the maximum development 
cost. A tribe should be allowed to add non-NAHASDA funds on top of the 
TDC and not have these funds included in the TDC. Under the prior TDC 
and DC&E guidance, tribes were allowed to exclude donations from TDC 
consideration. To now include donations in the TDC limit is a 
substantial deviation from all prior practices and guidance.
    HUD Response: Grant recipients are required under 24 CFR 1000.156 
to develop housing that is moderate in design and under 24 CFR 1000.160 
to develop non-dwelling structures that are reasonable and necessary to 
accomplish the purpose of the intended building--regardless of the 
source of funds. In the past, a limited number of recipients have 
developed housing that was more than moderate in design by providing 
non-HUD funded assistance in addition to the published maximum HUD 
assistance for the project. The language in question merely reiterates 
that maximum cost provisions apply to all units whether assisted in 
whole or part with NAHASDA funds.

VI. Findings and Certifications

Public Reporting Burden

    The information collection requirements contained in the rule will 
be submitted to the Office of Management and Budget for approval in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). The OMB approval number, once assigned, will be published in the 
Federal Register. 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.

Consultation with Indian Tribal Governments

    In accordance with Executive Order 13084, Consultation and 
Coordination With Indian Tribal Governments, issued on May 14, 1998, 
the Department has

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consulted with representatives of tribal governments concerning the 
subject of this rule. As described above, the rule originated from 
concerns brought to HUD's attention by tribal representatives.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 601-612) has reviewed and approved this final rule and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. While many TDHEs may 
be small entities, the effect of this rule developed in consultation 
with tribal representatives, will not be likely to have a significant 
impact on a substantial number of them. As mentioned above, it is 
expected that fewer than ten TDHEs will be affected by this rule. To 
the extent that small entities will be affected, the impact is expected 
to be beneficial, as a result of the consultation that has taken place. 
Accordingly, the economic impact of this final rule is not significant, 
and it will not affect a substantial number of small entities.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made at the proposed rule stage in accordance with HUD regulations 
at 24 CFR part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969. This finding remains applicable to 
this final rule and is available for public inspection between the 
hours of 7:30 a.m. and 5:30 p.m. weekdays in the Regulations Division 
at the address stated above.

Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule would not have 
federalism implications and would not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This final rule does not impose a Federal mandate 
that will result in the expenditure by State, local, or tribal 
governments in the aggregate, or by the private sector, of $100 million 
or more in any one year.

Regulatory Review

    The Office of Management and Budget (OMB) has reviewed this rule 
under Executive Order 12866, Regulatory Planning and Review, issued by 
the President on September 30, 1993. OMB determined that this rule is a 
``significant regulatory action'' as defined in section 3(f) of the 
Order (although not an economically significant regulatory action under 
the Order). Any changes made in this rule as a result of that review 
are identified in the docket file, which is available for public 
inspection during regular business hours in the Regulations Division, 
Office of General Counsel, Room 10276, U.S. Department of Housing and 
Urban Development, 451 Seventh Street, SW, Washington, DC 20410.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance Program number 
applicable to 24 CFR part 1000 is 14.867.

List of Subjects in 24 CFR Part 1000

    Aged, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Low and moderate income housing, 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 1000 as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

    1. The authority citation for part 1000 continues to read as 
follows:

    Authority: 25 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).


    2. Revise Sec. 1000.156 to read as follows:


Sec. 1000.156  Is affordable housing developed, acquired, or assisted 
under the IHBG program subject to limitations on cost or design 
standards?

    Yes. Affordable housing must be of moderate design. For these 
purposes, moderate design is defined as housing that is of a size and 
with amenities consistent with unassisted housing offered for sale in 
the Indian tribe's general geographic area to buyers who are at or 
below the area median income. The local determination of moderate 
design applies to all housing assisted under an affordable housing 
activity, including development activities (e.g., acquisition, new 
construction, reconstruction, moderate or substantial rehabilitation of 
affordable housing and homebuyer assistance) and model activities. 
Acquisition includes assistance to a family to buy housing. Units with 
the same number of bedrooms must be comparable with respect to size, 
cost and amenities.
    3. Add new Secs. 1000.158, 1000.160, and 1000.162 to read as 
follows:


Sec. 1000.158  How will a NAHASDA grant recipient know that the housing 
assisted under the IHBG program meets the requirements of 
Sec. 1000.156?

    (a) A recipient must use one of the methods specified in paragraph 
(b) or (c) of this section to determine if an assisted housing project 
meets the moderate design requirements of Sec. 1000.156. For purposes 
of this requirement, a project is one or more housing units, of 
comparable size, cost, amenities and design, developed with assistance 
provided by the Act.
    (b) The recipient may adopt written standards for its affordable 
housing programs that reflect the requirement specified in 
Sec. 1000.156. The standards must describe the type of housing, explain 
the basis for the standards, and use similar housing in the Indian 
tribe's general geographic area. For each affordable housing project, 
the recipient must maintain documentation substantiating compliance 
with the adopted housing standards. The standards and documentation 
substantiating compliance for each activity must be available for 
review by the general public and, upon request, by HUD. Prior to 
awarding a contract for the construction of housing or beginning 
construction using its own workforce, the recipient must complete a 
comparison of the cost of developing or acquiring/rehabilitating the 
affordable housing with the limits provided by the TDC discussed in 
paragraph (c) of this section and may not, without prior HUD approval, 
exceed by more than 10 percent the TDC maximum cost for the project. In 
developing standards under this paragraph, the recipient must 
establish, maintain, and follow policies that determine a local 
definition of moderate design which considers:
    (1) Gross area;
    (2) Total cost to provide the housing;
    (3) Environmental concerns and mitigations;
    (4) Climate;
    (5) Comparable housing in geographical area;

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    (6) Local codes, ordinances and standards;
    (7) Cultural relevance in design;
    (8) Design and construction features that are reasonable, and 
necessary to provide decent, safe, sanitary and affordable housing; and
    (9) Design and construction features that are accessible to persons 
with a variety of disabilities.
    (c) If the recipient has not adopted housing standards specified in 
paragraph (b) of this section, Total Development Cost (TDC) limits 
published periodically by HUD establish the maximum amount of funds 
(from all sources) that the recipient may use to develop or acquire/
rehabilitate affordable housing. The recipient must complete a 
comparison of the cost of developing or acquiring/rehabilitating the 
affordable housing with the limits provided by the TDC and may not, 
without prior HUD approval, exceed the TDC maximum cost for the 
project.


Sec. 1000.160  Are non-dwelling structures developed, acquired or 
assisted under the IHBG program subject to limitations on cost or 
design standards?

    Yes. Non-dwelling structures must be of a design, size and with 
features or amenities that are reasonable and necessary to accomplish 
the purpose intended by the structures. The purpose of a non-dwelling 
structure must be to support an affordable housing activity, as defined 
by the Act.


Sec. 1000.162  How will a recipient know that non-dwelling structures 
assisted under the IHBG program meet the requirements of 1000.160?

    (a) The recipient must use one of the methods described in 
paragraph (b) or (c) of this section to determine if a non-dwelling 
structure meets the limitation requirements of Sec. 1000.160. If the 
recipient develops, acquires, or rehabilitates a non-dwelling structure 
with funds from NAHASDA and other sources, then the cost limit standard 
established under these regulations applies to the entire structure. If 
funds are used from two different sources, the standards of the funding 
source with the more restrictive rules apply.
    (b)(1) The recipient may adopt written standards for non-dwelling 
structures. The standards must describe the type of structures and must 
clearly describe the criteria to be used to guide the cost, size, 
design, features, amenities, performance or other factors. The 
standards for such structures must be able to support the 
reasonableness and necessity for these factors and to clearly identify 
the affordable housing activity that is being provided.
    (2) When the recipient applies a standard to particular structures, 
it must document the following: (i) Identification of targeted 
population to benefit from the structures;
    (ii) Identification of need or problem to be solved;
    (iii) Affordable housing activity provided or supported by the 
structures;
    (iv) Alternatives considered;
    (v) Provision for future growth and change;
    (vi) Cultural relevance of design;
    (vii) Size and scope supported by population and need;
    (viii) Design and construction features that are accessible to 
persons with a variety of disabilities;
    (ix) Cost; and
    (x) Compatibility with community infrastructure and services.
    (c) If the recipient has not adopted program standards specified in 
paragraph (b) of this section, then it must demonstrate and document 
that the non-dwelling structure is of a cost, size, design and with 
amenities consistent with similarly designed and constructed structures 
in the recipient's general geographic area.

    Dated: August 27, 2001.
Mel Martinez,
Secretary.
[FR Doc. 01-24269 Filed 9-27-01; 8:45 am]
BILLING CODE 4210-33-P