[Federal Register Volume 71, Number 53 (Monday, March 20, 2006)]
[Notices]
[Pages 14084-14087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2660]



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Part III





Department of Agriculture





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Department of Housing and Urban Development





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USDA Voucher Program; Notice

  Federal Register / Vol. 71, No. 53 / Monday, March 20, 2006 / 
Notices  

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DEPARTMENT OF AGRICULTURE

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5021-N-01]


USDA Voucher Program

AGENCY: Office of Housing and Community Facilities Programs, USDA; 
Office of the Assistant Secretary for Public and Indian Housing, HUD.

ACTION: Notice.

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SUMMARY: This notice informs the public that the United States 
Department of Agriculture (USDA) is establishing a demonstration USDA 
Voucher Program, as authorized under section 542 of the Housing Act of 
1949 (without regard to section 542(b)), to be administered by the 
United States Department of Housing and Urban Development (HUD), 
pursuant to an Inter Agency Agreement (IAA) between the two 
Departments, executed on March 1, 2006. This notice informs the public 
that USDA, acting under the IAA with HUD, shall make up to $16 million 
available for this purpose, as appropriated under the Agriculture, 
Rural Development, Food and Drug Administration, and Related Agencies 
Appropriations Act, 2006. The notice also sets forth the policies and 
procedures for use of these vouchers.

DATES: Effective Date: March 20, 2006.

FOR FURTHER INFORMATION CONTACT: Laurence Anderson, Acting Deputy 
Administrator, Multi-family Housing, Rural Development, United States 
Department of Agriculture, 1400 Independence Avenue, SW., Washington, 
DC, 20250 or David A. Vargas, Director, Office of Housing Voucher 
Programs, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 4228, Washington, DC 20410-5000. Telephone number 
(202) 708-2815 (this is not a toll-free telephone 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

    The Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2006 (Pub. L. 109-97, approved 
November 10, 2005) (FY2006 Appropriations Act), appropriates 
approximately $16 million to the USDA for the USDA Voucher Program as 
authorized under section 542 of the Housing Act of 1949 (42 U.S.C. 1471 
et seq.) (without regard to section 542(b)).
    The FY 2006 Appropriations Act provides that the Secretary of the 
Department of Agriculture shall carry out a USDA voucher program as 
follows:

    That such vouchers shall be available to any low-income family 
(including those not receiving rental assistance) residing in a 
property financed with a section 515 loan which has been prepaid 
after September 30, 2005: Provided further, [t]hat the amount of the 
voucher shall be the difference between comparable market rent for a 
section 515 unit and the tenant paid rent for such unit: Provided 
further, [t]hat funds made available for such vouchers shall be 
subject to the availability of annual appropriations: Provided 
further, [t]hat the Secretary shall, to the maximum extent 
practicable, administer such vouchers with current regulations and 
administrative guidance applicable for section 8 housing vouchers 
administered by the Secretary of the Department of Housing and Urban 
Development (including the ability to pay administrative costs 
related to delivery of the voucher funds).

    In order to expedite the provision of voucher assistance to 
eligible families impacted by an owner's decision to prepay the section 
515 loan and convert the property to market-rate housing, USDA and HUD 
entered into an IAA whereby HUD will: (1) Administer, on behalf of the 
USDA, all or a portion of the USDA voucher assistance appropriated for 
this purpose, (2) provide USDA voucher assistance to public housing 
agencies (PHAs), and (3) ensure that USDA voucher assistance is 
administered to the maximum extent practicable in accordance with HUD's 
Housing Choice Voucher Program regulations at 24 CFR part 982 and 
guidance, and consistent with the formula established by the FY2006 
Appropriations Act.
    This notice outlines the process for providing voucher assistance 
to the eligible impacted families when an owner prepays a section 515 
loan after September 30, 2005. Unless expressly stated in this notice 
or in subsequent directives, the requirements of the regulations at 24 
CFR part 982 for the Housing Choice Voucher Program are applicable to 
the USDA vouchers provided under this notice. USDA vouchers authorized 
by the FY 2006 Appropriations Act and section 542 are exclusively 
tenant-based rental assistance. Consequently, the regulations at 24 CFR 
part 983 and all other directives pertaining to the project-based 
voucher program do not apply, nor do the homeownership voucher 
regulations at 24 CFR 982.625 through 982.643.

II. USDA Voucher Program Procedures

    This section sets forth the design features of the USDA Voucher 
Program, including the eligibility of families, the inspection of the 
units, and the calculation of the subsidy amount.
    USDA vouchers under this notice are administered in accordance with 
the Housing Choice Voucher Program regulations set forth at 24 CFR part 
982 unless otherwise noted by this notice or subsequent program 
requirements and guidance. In the Housing Choice Voucher Program, HUD 
pays monthly rental subsidies so eligible families can afford decent, 
safe, and sanitary housing. The program is generally administered by 
state or local governmental entities called Public Housing Agencies 
(PHAs). HUD provides housing assistance funds to the PHA. HUD also 
provides funds for PHA administration of the program.
    The basic structure of the USDA voucher program is the same as the 
Housing Choice Voucher Program. Families select and lease units that 
meet program housing quality standards. If the PHA approves a family's 
unit and tenancy, the PHA contracts with the owner to make rental 
subsidy payments (housing assistance payments) directly to the owner on 
behalf of the family on a monthly basis. The family enters into a lease 
with the owner and pays the family rent to the owner in accordance with 
the lease. The housing assistance payments (HAP) contract between the 
PHA and the owner only covers a single unit and a specific assisted 
family. If the family moves out of the leased unit, the HAP contract 
with the owner terminates. Unless expressly noted below or in 
subsequent directives, all regulatory requirements, including 
compliance with the Fair Housing Act and other civil rights related 
requirements, and directives regarding the housing choice voucher 
tenant-based program are applicable to the USDA vouchers. The PHA's 
local discretionary policies adopted in the PHA administrative plan 
apply to USDA vouchers administered by the PHA, unless such local 
policy conflicts with the requirements of the USDA voucher program 
outlined below. The USDA voucher funding remains separate and distinct 
from the PHA's regular voucher program in terms of the source and use 
of the funding. The PHA may only provide USDA voucher assistance to 
eligible low-income families that were residing in section 515 
properties on the date of the owner's prepayment of the loan to the 
extent that the PHA has funds available. The PHA may not use funds from 
the USDA voucher program

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to assist families applying under its regular voucher program. 
Furthermore, PHAs may not use HUD's regular voucher funding to assist 
families applying to USDA's voucher program. The PHA is required to 
maintain records that allow for the easy identification of families 
receiving USDA vouchers. The PHA must report monthly leasing and 
expenditures for such families separately, as will be required under 
the Voucher Management System (VMS).

1. Family Eligibility

    In order to be eligible for a USDA voucher under this notice, a 
family must be residing in the section 515 project on the date of the 
prepayment of the section 515 loan. Furthermore, the date of the 
prepayment must be after September 30, 2005, and the voucher funds 
obligated to the family before October 1, 2006. USDA will determine if 
the family is a low-income family on the date of the prepayment and, if 
the family wants to participate in the USDA voucher program, USDA will 
provide such determination to HUD. In turn, HUD will provide this 
information to the PHA that will administer the USDA vouchers. A low-
income family is a family whose annual income does not exceed 80 
percent of the median income for the area. If USDA makes a 
determination that the tenant is ineligible based on income, USDA will 
provide the administrative appeal rights.
    A family currently assisted under a Section 8 project-based 
contract on the date of the section 515 loan prepayment also qualifies 
for an enhanced voucher under section 8(t) of the United States Housing 
Act of 1937 (42 U.S.C. 1437 et seq.) on the date that the owner opts-
out of or does not renew the section 8 project-based contract. If the 
Section 8 project-based contract ends on the same day as the date of 
the prepayment, a family receiving Section 8 project-based assistance 
will inform USDA if the family chooses to either receive an enhanced 
voucher under section 8(t) or a USDA voucher.
    A family that is already receiving enhanced voucher or regular 
voucher assistance on the date of the section 515 loan prepayment (for 
example, a family previously assisted under a Section 8 project-based 
contract where the contract expired and the owner chose not to renew 
prior to the loan prepayment) may continue to receive enhanced or 
regular voucher assistance or may choose to be converted to USDA 
voucher assistance under this notice.
    Once the family has chosen to participate in the USDA voucher 
program instead of in the HUD voucher program, the family may not opt 
to switch forms of assistance.
    Tenants receiving USDA rental assistance payments on the date of 
prepayment who decline a USDA voucher and move to another USDA financed 
multi-family housing complex may request that USDA transfer their 
rental assistance payments to the new project.
    By agreeing to administer the USDA vouchers, the PHA is not 
relinquishing its authority to screen potentially eligible families or 
deny assistance on any grounds allowed under 24 CFR 982.552 and 
982.553. The PHA must provide a family with an opportunity for an 
informal review if it denies the family admission to the USDA voucher 
program in accordance with 24 CFR 982.552 and 982.553. While the 
decision to deny assistance rests with the PHA, PHAs are encouraged to 
provide an otherwise eligible family with the opportunity to enter into 
a repayment agreement if the sole reason for the denial is that the 
family owes the PHA or another PHA rent or other amounts in connection 
with public housing or Section 8.
    A family provided with a USDA voucher is not admitted to the PHA's 
regular voucher program and is not subject to local preferences or 
waiting list requirements. Families provided with USDA voucher 
assistance are not subject to the income targeting requirements of the 
tenant-based voucher program at 24 CFR 982.201(e)(2), and their 
admission is not counted in determining whether the PHA is complying 
with the income targeting requirements.

2. Initial Lease Term

    The initial lease term must be for one year.

3. Inspection of Units and Unit Approval

    Housing Choice Voucher Program housing quality standard (HQS) 
requirements apply to the USDA voucher program.
    The PHA must inspect the unit and ensure that the unit meets the 
housing quality standards of the program at 24 CFR 982.401. Under no 
circumstances may the PHA make USDA voucher rental payments for any 
period of time prior to the date that the PHA physically inspects the 
unit and determines the unit meets the housing quality standards. The 
PHA may not make any exceptions to the normal housing quality standards 
used by the PHA and must conduct a complete HQS inspection of the unit.
    Upon notification of a prepayment by USDA, HUD will determine if 
there is a PHA that has jurisdiction and that is willing and able to 
administer the USDA vouchers. HUD will provide the necessary funding to 
the selected PHA. Before approving a family's assisted tenancy or 
executing a Housing Assistance Payments Contract, the PHA must 
determine that the following conditions are met: (1) The unit is 
eligible; (2) the unit has been inspected by the PHA and passes the 
housing quality standards inspection; and (3) the lease includes the 
HUD tenancy addendum.
    Once these conditions are met, the PHA may approve the unit for 
leasing. While the PHA must use its best efforts to execute the HAP 
contract on behalf of the family before the beginning of the lease 
term, the HAP contract may be executed up to 60 calendar days after the 
beginning of the lease term (see 24 CFR 982.305(c)). If the HAP 
contract is executed during this period, the PHA will pay retroactive 
housing assistance payments to cover the portion of the approved lease 
term before execution of the HAP contract. However, under no 
circumstances may the PHA make payments to the owner before the HAP 
contract is executed. Furthermore, any HAP contract executed after the 
60-day period is void and the PHA may not pay any housing assistance 
payment to the owner for that period. If 60 days have passed from the 
beginning of the approved lease term, the PHA must re-approve the unit 
and the family and owner must enter into a new lease agreement in order 
for USDA voucher rental payments to commence on behalf of the family.
    In establishing the effective date of the voucher HAP contracts, 
the PHA may not execute a housing voucher contract that is effective 
prior to the section 515 loan prepayment.

4. Subsidy Calculations for USDA Vouchers

    The monthly housing assistance payment for the USDA voucher family 
for the initial year of assistance is the difference between comparable 
market rent for the family's former section 515 unit and the tenant 
contribution on the date of the prepayment. USDA will determine the 
voucher amount and provide the amount to HUD. The tenant can appeal 
USDA's determination of the voucher amount through USDA's 
administrative appeal process. Since the USDA voucher amount will be 
based on the comparable market rent, the voucher amount will never 
exceed the comparable market rent at the time of prepayment for the 
tenant's unit if the

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tenant chooses to stay in-place. Also, in no event may the USDA voucher 
subsidy payment exceed the actual tenant lease rent. The tenant is 
required to notify USDA directly if the tenant's income increases above 
the income amount stated in the tenant's letter. USDA will then 
determine whether the tenant still qualifies as a low income tenant. If 
not, the tenant will no longer be eligible to participate in the 
program; however, the tenant will be given the opportunity to appeal 
this determination through USDA's appeal process. The PHA must 
terminate the family's participation in the USDA voucher program when 
notified to do so by USDA.

5. Mobility and Portability of USDA Vouchers

    An eligible family who is issued a USDA voucher may elect to use 
the assistance in the same project or may choose to move from the 
property. Upon issuance of the voucher, the family also may move 
outside of the jurisdiction of the administering PHA. The provisions of 
24 CFR 925.355 do not apply.
    If the PHA with jurisdiction over the area to which the family 
wishes to move is unwilling to administer the USDA voucher, USDA will 
administer the assistance directly in the jurisdiction to which the 
family wishes to move.
    The initial search period (i.e., term) of the voucher must be at 
least 60 calendar days. At its discretion, the PHA may grant a family 
one or more extensions of the initial search period of up to an 
additional 60 days. If the family needs and requests an extension of 
the initial USDA voucher search period as a reasonable accommodation to 
make the program accessible to a family member who is a person with 
disabilities, the PHA must extend the voucher search period. The 
maximum voucher search period for any family participating in the USDA 
voucher program is 120 days. The PHA may not provide for the suspension 
of the initial or any extended search period of the voucher.

6. Term of Funding for USDA Vouchers

    It is anticipated that this USDA voucher program will provide 
voucher assistance for one year, subject to the availability of 
appropriations to the USDA and transfer of such funding to HUD. At such 
time that the last USDA voucher Annual Contributions Contract (ACC) 
funding increment expires, HUD will recall any unspent USDA voucher 
funding from the PHA.

7. Applicability of Other Requirements

    (a) In general, the following provisions of 24 CFR part 982 do not 
apply to assistance under the USDA voucher program:
    (i) Any provisions concerning the reasonableness of the rent and 
PHA determination of the reasonableness of the rent.
    (ii) Any provisions concerning the absorption of the family by the 
receiving PHA under the portability procedures.
    (iii) Any provisions related to the term of the lease or a 
participant family's subsequent move with continued assistance.
    (vi) Any provisions related to the verification and calculation of 
family income, the use of the payment standard, and the calculation of 
the housing assistance payment.
    (b) The following provisions of 24 CFR part 982 do not apply to the 
USDA voucher program:
    (i) Sec.  982.1 Programs: purpose and structure.
    (ii) Sec.  982.101 Allocation of funding.
    (iii) Sec.  982.102 Allocation of budget authority for renewal of 
expiring consolidated ACC funding increments.
    (iv) Sec.  982.160 HUD determination to administer a local program.
    (v) Sec.  982.201 Eligibility and targeting.
    (vi) Sec.  982.202 How applicants are selected: General 
Requirements.
    (vii) Sec.  982.204 Waiting list: Administration of waiting list.
    (viii) Sec.  982.205 Waiting list: Different programs.
    (ix) Sec.  982.206 Waiting list: Opening and closing; public 
notice.
    (x) Sec.  982.207 Waiting list: Local preferences in admission to 
program.
    (xi) Sec.  982.303 Term of Voucher.
    (xii) Sec.  982.314 Move with continued tenant-based assistance.
    (xiii) Sec.  982.317 Lease-purchase agreements.
    (xiv) 982.353 Where family can lease a unit with tenant-based 
assistance.
    (xv) Sec.  982.455 Automatic termination of HAP contract.
    (xvi) Subpart K Rent and Housing Assistance Payment (with the 
exception of Sec.  982.521).
    (xvii) Subpart M and the regulations of Sec. Sec.  982.601 through 
982.643.

III. The Funding Process

    This section sets forth the process for providing allocations of 
vouchers to PHAs to prevent the displacement of eligible low-income 
families who are impacted by an owner's decision to prepay the Section 
515 loan and convert the property to market-rate housing. This section 
describes the funding process, the calculation of the initial budget 
authority, and the special fee and on-going administrative fee that 
will be provided to the PHA to cover the costs of administering the 
USDA voucher on behalf of the eligible families.
    USDA is responsible for informing the tenants of the affected 
property of the prepayment and that the tenants may be eligible for 
USDA voucher assistance as a result.
    The Director of the Office of Public Housing in the HUD field 
office will determine the appropriate PHA to administer the USDA 
voucher assistance and will invite the PHA to administer the USDA 
vouchers. If there is no PHA able or willing to administer the rural 
housing vouchers, USDA will administer the USDA voucher assistance 
directly. Upon PHA acceptance of the invitation, the HUD field office 
shall provide the PHA with the information on the project. The HUD 
field office will identify the PHA to the HUD Housing Voucher Finance 
Division. USDA shall work with both the HUD field office and the PHA to 
ensure that the PHA has timely access to the project, the families, and 
any relevant records that will assist the PHA in expediting the 
determination of family eligibility and the issuance of vouchers.
    HUD Headquarters will calculate the budget authority as described 
below and assign the budget authority for the USDA voucher assistance 
to the Financial Management Center (FMC). The HUD field office shall 
transmit the approval letter to the PHA with a copy to the FMC. Upon 
receiving the approval letter from the HUD field office and the budget 
authority from HUD Headquarters, the FMC shall reserve and contract the 
USDA voucher funds based on the amount of the voucher provided the 
families by USDA, the ongoing and administrative fee determined by HUD, 
and the one-time special fee of $250 per unit. The FMC will then 
prepare and send ACC documents and the ACC transmittal letter to the 
PHA with a copy of the letter to the HUD field office.
    The PHA will determine family eligibility (except for income 
eligibility) and issue vouchers. The family will decide whether to stay 
in place or move. Upon selecting a unit, the family must submit the 
request for tenancy approval to the PHA, at which time the PHA will 
inspect the unit. Once the unit is approved, the PHA shall execute the 
HAP contract with the owner.
    After completing the initial lease-up of units, the PHA shall 
determine if the actual HAP costs will exceed the initial funding 
amount provided under the funding increment. On the rare occasion such 
an adjustment is necessary, the PHA must immediately contact the 
applicable HUD financial analyst at the FMC and provide a spreadsheet

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demonstrating the actual costs of the vouchers.

IV. On-going Administrative Fee and Special Fee

    HUD will provide the PHA with a fee for the on-going administration 
of the USDA voucher out of the USDA appropriation. The fee will be 
calculated in the same manner as the administrative fee for units the 
PHA receives under the regular housing voucher program. The 
administrative fee is calculated by multiplying the established per 
unit cost administrative fee for the PHA's housing voucher program by 
the number of families residing in the section 515 project on the 
effective date of the prepayment multiplied by 12 months.
    In order to avoid or at least minimize any adverse impact of the 
section 515 loan prepayment on the affected families, the administering 
PHA must complete a number of tasks within a relatively short amount of 
time. These tasks include completing and submitting the funding 
application; determining each individual family's eligibility; and 
conducting housing quality standards inspections on potential units.
    Depending on the number of residents affected by the action, PHAs 
may have to utilize additional staff, staff time, and PHA resources to 
promptly process and assist all eligible families. Given the time 
sensitive nature of the issuance of USDA vouchers and the leasing of 
units by eligible families, subject to the availability of funds, PHAs 
will receive a one-time special fee in recognition of the additional 
costs associated with the administration of these vouchers. The amount 
of the fee is $250 per unit for the total number of occupied units on 
the effective date of the prepayment.

V. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was 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). This Finding of No Significant Impact is 
available for public inspection between the hours of 8 a.m. and 5 p.m. 
weekdays in the Office of Regulations, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
public comments by calling the Regulations Division at (202) 708-3055 
(this is not a toll-free number). Under 24 CFR 50.19(b)(3), (5) and 
(11), activities assisted under this notice are categorically excluded 
from environmental review under the National Environmental Policy Act 
of 1969 and are not subject to compliance with related environmental 
laws and authorities.

Paperwork Reduction Act

    The information collection requirements contained in this document 
are those of the Housing Choice Voucher Program, which have been 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB 
control number 2577-0169. In accordance with the Paperwork Reduction 
Act, HUD may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection displays 
a currently valid OMB control number.

    Dated: March 14, 2006.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
Russell T. Davis,
Administrator, Housing and Community Facilities Programs, U.S. 
Department of Agriculture.
[FR Doc. 06-2660 Filed 3-15-06; 3:17 pm]
BILLING CODE 4210-67-P