[Federal Register Volume 67, Number 208 (Monday, October 28, 2002)]
[Rules and Regulations]
[Pages 65864-65865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27310]



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Part V





Department of Housing and Urban Development





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24 CFR Part 982



Housing Choice Voucher Program Homeownership Option: Eligibility of 
Units Owned or Controlled by a Public Housing Agency; Final Rule

  Federal Register / Vol. 67, No. 208 / Monday, October 28, 2002 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4759-I-01]
RIN 2577-AC39


Housing Choice Voucher Program Homeownership Option: Eligibility 
of Units Owned or Controlled by a Public Housing Agency

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

ACTION: Interim rule.

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SUMMARY: This interim rule provides that units owned or substantially 
controlled by a public housing agency (PHA) are eligible for purchase 
under the Housing Choice Voucher Program homeownership option. The 
inclusion of PHA-owned or controlled properties among properties 
eligible for purchase under the homeownership option will expand the 
availability of housing and affordable homeownership opportunities for 
voucher families participating in the homeownership option. The interim 
rule also establishes procedures to remove potential conflicts of 
interest where the PHA is the seller. Specifically, the interim rule 
provides that an independent entity must perform certain administrative 
duties for which the PHA would normally be responsible. These 
provisions are modeled on the requirements for PHA-owned units in the 
voucher rental program.

DATES: Effective Date: November 27, 2002.
    Comments Due Date: December 27, 2002.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to 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 20410-0500. 
Communications should refer to the above docket number and title. 
Facsimile (FAX) comments are not acceptable. A copy of each 
communication submitted will be available for inspection and copying 
between 7:30 a.m. and 5:30 p.m. at the above address.

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. Background

    Under the ``homeownership option'' of the Housing Choice Voucher 
Program, a public housing agency (PHA) may choose to provide monthly 
tenant-based assistance to an eligible family that purchases a dwelling 
unit that will be occupied by the family. The regulatory requirements 
governing the homeownership option are located in subpart M of HUD's 
regulations for the Housing Choice Voucher Program at 24 CFR part 982. 
Subpart M describes program requirements for special housing types, 
where assistance is provided with voucher program funds under the 
consolidated annual contributions contract.
    This interim rule provides that properties owned or substantially 
controlled by a PHA are eligible for purchase under the homeownership 
option. The current homeownership option regulations are unclear 
regarding the eligibility of PHA-owned units. This interim rule amends 
Sec.  982.628 of the homeownership option regulations, which concerns 
the eligibility of units, to specify that a PHA may provide 
homeownership assistance for the purchase of a PHA-owned unit. The 
inclusion of PHA-owned units in the universe of eligible units will 
expand the availability of housing and affordable homeownership 
opportunities for voucher families participating in the homeownership 
option.
    New Sec.  982.628(c) provides that PHA-owned units are eligible for 
purchase through the homeownership option, but provides that an 
independent entity must perform certain administrative duties for which 
the PHA would normally be responsible. The independent entity must 
review the contract of sale, conduct the initial housing quality 
standards (HQS) inspection, and review the independent inspection 
report. In addition, the independent entity must determine the 
reasonableness of the sales price and any PHA provided financing.
    The reviews performed by the independent entity shall be conducted 
in accordance with the homeownership option regulations. The 
independent entity must be selected by the PHA and approved by HUD in 
accordance with existing procedures under the tenant-based assistance 
program at Sec.  982.352(b)(iv)(B) and (C). The PHA may not steer, 
direct, or require families to purchase PHA-owned properties.
    Except for the purchase of PHA-owned units, the homeownership 
option regulations do not require the PHA to consider the reasonability 
of the sales price. In addition, although a PHA may establish 
requirements governing terms and types of financing, it is not required 
to do so (see Sec.  982.632). Therefore, the requirement that the 
independent entity review the reasonableness of the sales price and any 
PHA provided financing for PHA-owned units goes beyond what is 
otherwise required, but HUD believes a third party review of these two 
areas is helpful to protect the purchasing family where the seller is 
also the administering PHA.

II. 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. However, part 10 provides for exceptions to the 
general rule if the agency finds good cause to omit advanced notice and 
public participation. The good cause requirement is satisfied when 
prior public procedure is ``impractical, unnecessary, or contrary to 
the public interest'' (see 24 CFR 10.1). For the following reasons, HUD 
has determined that it would be contrary to the public interest to 
delay the effectiveness of this rule in order to solicit prior public 
comments.
    The interim rule eliminates ambiguity in HUD's homeownership option 
regulations by clarifying that PHA-owned units are eligible for 
purchase with voucher homeownership assistance. Clarifying that PHA-
owned units are eligible for purchase under the homeownership option 
will expand the availability of housing and affordable homeownership 
opportunities for voucher families participating in the program. 
Delaying the effectiveness of this rule to solicit prior public comment 
would perpetuate the current ambiguity of the regulations, and might 
prevent families from purchasing PHA-owned units.
    Although the interim rule also establishes new requirements for 
such sales, these procedures are necessary to eliminate potential 
program abuses where the PHA is also the seller. Further, these 
procedures are closely modeled on the existing requirements for PHA-
owned units under the rental voucher program. Accordingly, these 
requirements are familiar to PHAs and voucher families, and should not 
raise

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any novel issues or impose undue administrative burdens on PHAs.
    Although HUD believes that good cause exists to publish this rule 
for effect without prior public comment, HUD recognizes the value 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. HUD welcomes comments 
on the regulatory amendments made by this interim rule. The public 
comments will be addressed in the final rule.

III. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
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). That Finding remains applicable to this 
interim rule and is available for public inspection between the hours 
of 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 20410-0500.

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 rule does not impose any 
Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of the Unfunded Mandates Reform Act 
of 1995.

Executive Order 13132, Federalism

    Executive Order 13132 (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 is exclusively concerned 
with homeownership voucher assistance. This proposed rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) (RFA), has reviewed and approved this interim rule and 
in so doing certifies that this rule will 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. 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 PHAs 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 rule does not 
change the amount of funding available under the Housing Choice Voucher 
Program. Accordingly, the economic impact of this rule will not be 
significant, and it will not affect a substantial number of small 
entities.

Catalog of Domestic Assistance Number

    The Catalog of Domestic Assistance Number for the Housing Choice 
Voucher Program is 14.871.

List of Subjects in 24 CFR Part 982

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

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 982 as follows:

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

    1. The authority citation for 24 CFR part 982 continues to read as 
follows:

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


    2. Add Sec.  982.628(c) to read as follows:


Sec.  982.628  Homeownership option: Eligible units.

* * * * *
    (c) PHA-owned units. Homeownership assistance may be provided for 
the purchase of 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), only if all of the 
following conditions are satisfied:
    (1) The PHA must inform the family, both orally and in writing, 
that the family has the right to purchase any eligible unit and a PHA-
owned unit is freely selected by the family without PHA pressure or 
steering;
    (2) The unit is not ineligible housing;
    (3) The PHA must obtain the services of an independent agency, in 
accordance with Sec.  982.352(b)(1)(iv)(B) and (C), to perform the 
following PHA functions:
    (i) Inspection of the unit for compliance with the HQS, in 
accordance with Sec.  982.631(a);
    (ii) Review of the independent inspection report, in accordance 
with Sec.  982.631(b)(4);
    (iii) Review of the contract of sale, in accordance with Sec.  
982.631(c); and
    (iv) Determination of the reasonableness of the sales price and any 
PHA provided financing, in accordance with Sec.  982.632 and other 
supplementary guidance established by HUD.
* * * * *

    Dated: September 3, 2002.
Michael M. Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 02-27310 Filed 10-25-02; 8:45 am]
BILLING CODE 4210-33-P