[Federal Register Volume 68, Number 180 (Wednesday, September 17, 2003)]
[Rules and Regulations]
[Pages 54335-54336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-23636]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4759-F-03]
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: Final rule.

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SUMMARY: This final 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 final 
rule also establishes procedures to remove potential conflicts of 
interest where the PHA is the seller. These provisions are modeled on 
the requirements for PHA-owned units in the voucher rental program. The 
final rule follows publication of an October 28, 2002, interim rule. 
After consideration of the issues raised by the single public commenter 
on the interim rule, HUD has decided to adopt the interim rule without 
change.

DATES: Effective Date: October 17, 2003.

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 20410-5000; telephone (202) 
708-0477. (This is not a toll-free number.) Hearing- or speech-impaired 
individuals may access this number through TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION

I. Background

    On October 28, 2002 (67 FR 65864), HUD published an interim rule 
providing that units owned or substantially controlled by a public 
housing agency (PHA) are eligible for purchase under the Housing Choice 
Voucher Program homeownership option. Under the ``homeownership 
option'' of the Housing Choice Voucher Program, a PHA may choose to 
provide monthly homeownership assistance to an eligible family that 
purchases a dwelling unit to be occupied by the family. On November 6, 
2002 (67 FR 67522), HUD published a technical correction to the October 
28, 2002, interim rule, correcting a typographical error concerning the 
designation of the paragraph being added to the voucher program 
regulations.
    The October 28, 2002, interim rule amended 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 expands the availability of housing and 
affordable homeownership opportunities for voucher families 
participating in the homeownership option.
    The October 28, 2002, interim rule 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.

II. This Final Rule; Discussion of the Public Comment on the October 
28, 2002, Interim Rule

    This final rule follows publication of the October 28, 2002, 
interim rule. The public comment period on the interim rule closed on 
December 27, 2002. HUD received a single public comment on the interim 
rule from the New York City Housing Authority. After consideration of 
the issues raised by the public commenter, and for the reasons 
discussed below, HUD has decided to adopt the interim rule without 
change.
    The commenter supported the changes made by the interim rule, 
writing that the rule ``expands the choices available especially in 
markets where the affordable stock is decreasing.'' However, the 
commenter also wrote that high-cost communities, such as New York City, 
have been unable to implement the voucher homeownership option due to 
HUD's program design and the nearly prohibitive costs of housing. The 
commenter suggested that HUD revise the regulations governing the 
homeownership option to address these concerns. The commenter 
recommended that HUD authorize the use of project-based voucher 
assistance to provide voucher homeownership assistance. The commenter 
also suggested that the maximum term of voucher homeownership 
assistance (typically fifteen years in most cases under Sec.  982.634) 
should be made equal to the term of the mortgage obtained by the 
homebuyer (typically thirty years). Finally, the commenter recommended 
that HUD allow PHAs to provide voucher homeownership assistance at 120% 
of the published Fair Market Rent.
    As noted, HUD has not revised the interim rule in response to these 
comments, and is adopting the final rule without change. The changes 
suggested by the commenter were not included as part of, and are 
outside the scope of, the October 28, 2002, interim rule which focused 
on making PHA-owned or controlled properties eligible for purchase 
under the Housing Choice Voucher Program. The changes recommended by 
the commenter are more appropriately directed towards the Section 8 
homeownership option rule, a separate rulemaking proposed on April 30, 
1999 (64 FR 23488), and made final on September 12, 2002 (65 FR 55134). 
HUD considered the substance of the changes recommended by the 
commenter in the course of that rulemaking. Since the changes are 
outside the scope of the interim rule, HUD is not prepared to adopt the 
suggested changes at this final rule stage. HUD will consider the 
recommended changes should it decide to undertake future rulemaking to 
amend the homeownership option regulations.

III. Findings and Certifications

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review'').

[[Page 54336]]

OMB determined that this rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not economically 
significant, as provided in section 3(f)(1) of the Order). Any changes 
made to the rule subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the 
Regulations Division, Room 10276, Office of General Counsel, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Washington, 
DC 20410-0500.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was made at the interim 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 (42 U.S.C. 4332). The Finding remains 
applicable to this final rule and is available for public inspection 
between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations 
Division, Room 10276, Office of General Counsel, 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 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 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. 
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 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.

0
Accordingly, for the reasons stated in the preamble, the interim rule 
for part 982 of title 24 of the Code of Federal Regulations, published 
on October 28, 2003, 67 FR 65864, as corrected on November 6, 2003, 67 
FR 67522, is promulgated as final, without change.

    Dated: September 9, 2003.
Michael M. Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 03-23636 Filed 9-16-03; 8:45 am]
BILLING CODE 4210-33-P