[Federal Register Volume 72, Number 102 (Tuesday, May 29, 2007)]
[Proposed Rules]
[Pages 29744-29746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-10177]



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Part IV





Department of Housing and Urban Development





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24 CFR Part 982



Housing Choice Voucher Program Homeownership Option; Eligibility of 
Units Not Yet Under Construction; Proposed Rule

  Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4991-P-01]
RIN 2577-AC60


Housing Choice Voucher Program Homeownership Option; Eligibility 
of Units Not Yet Under Construction

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise HUD's regulations for the 
homeownership option authorized under the Housing Choice Voucher (HCV) 
program. Through the homeownership option, a public housing agency may 
provide voucher assistance for an eligible family that purchases a 
dwelling unit for residence by the family. The current homeownership 
option regulations provide that, to be eligible for purchase with 
voucher assistance, a unit must be either an existing unit or under 
construction at the time the family enters into the contract for sale. 
This proposed rule would permit the use of voucher homeownership 
assistance for the purchase of units not yet under construction at the 
time the family contracts to purchase the home. This proposed rule also 
makes conforming changes for purposes of the homeownership option. 
These revisions would expand the housing choices available to families 
participating in the homeownership option under the HCV program.

DATES: Comment Due Date: July 30, 2007.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Office of the General Counsel, Rules Docket 
Clerk, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Room 10276, Washington, DC 20410-0001. Communications should refer 
to the above docket number and title.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable. 
In all cases, communications must refer to the docket number and title.
    Public Inspection of Public Comments. All comments and 
communications submitted to HUD will be available, without charge, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal 
Information Relay Service at (800) 877-8339. Copies of all comments 
submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Alfred C. Jurison, Office of Public 
and Indian Housing, 451 Seventh Street SW., Room 4210, Washington, DC 
20410-8000; 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 (800) 
877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

A. The HCV Homeownership Option

    Through the HCV program, HUD pays rental subsidies so that eligible 
families can afford decent, safe, and sanitary housing. Under the 
homeownership option of the HCV program, a public housing agency (PHA) 
may provide voucher assistance for an eligible family to purchase, 
rather than rent, a dwelling unit for residence by the family. The 
regulations for the homeownership option are codified in subpart M of 
the HCV program regulations at 24 CFR part 982. Subpart M describes 
program requirements for alternatives to the basic HCV program.
    In general, a PHA that administers assistance under the HCV program 
may offer homeownership assistance as an option for qualified families. 
Before commencing homeownership assistance for a family, the PHA 
determines whether the family is qualified, the unit is eligible, and 
the family has satisfactorily completed the required PHA program of 
pre-assistance homeownership counseling.

B. Ineligibility of Units Not Yet Under Construction

    The current homeownership option regulations provide that, to be 
eligible for purchase with voucher assistance, a unit must be either an 
existing unit or under construction at the time the family enters into 
the contract for sale. Upon re-consideration, HUD believes that the 
housing eligibility requirements may be overly restrictive.
    For example, job growth in an area will frequently trigger the 
construction of new housing developments. The current eligibility 
prohibition has the potential to deter voucher families from moving to 
such an area in search of employment opportunities. In addition, the 
current requirements hamper efforts to use homeownership voucher 
assistance in combination with mutual self-help or other sweat-equity 
programs in those high-cost market areas where affordable homeownership 
opportunities otherwise remain elusive for participating homeownership 
voucher families. Further, many localities have established affordable 
housing requirements on developers of new housing subdivisions 
mandating that a specified percentage of the homes to be constructed be 
set aside for purchase by low-income families. The current eligibility 
restriction prohibits voucher families from benefiting from these local 
affordable housing initiatives prior to the construction of new homes.
    Since few existing homes are accessible to persons with impaired 
mobility, the current prohibition also has the potential to make it 
more difficult for persons with disabilities to purchase a home with 
voucher assistance. Modification of the home following purchase may not 
be easily accomplished, and may require the purchaser to incur 
significant additional costs. Allowing the purchase of units not yet 
under construction would allow individuals with disabilities to make 
design changes for accessibility purposes while the home is being 
built, thus minimizing homeownership costs.

II. This Proposed Rule

    To address the programmatic concerns described above, this proposed 
rule would permit the use of voucher homeownership assistance for the 
purchase of units not yet under construction at the time the family 
contracts to purchase the home. However, the PHA may not commence 
homeownership assistance for the family until: (1) HUD has approved an 
environmental certification and request

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for release of funds under 24 CFR part 58 or has notified the PHA of 
environmental approval of the site under 24 CFR part 50 prior to 
commencement of construction; (2) completion of construction of the 
unit; and (3) the unit's passing of the required Housing Quality 
Standards and independent inspections required under Sec.  982.631(a).
    Since the regulatory amendment authorizes the provision of federal 
homeownership assistance to be used for units not yet under 
construction, the assistance must comply with applicable federal 
environmental review requirements. Individual actions on up to four 
dwelling units are generally excluded from review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) (NEPA). Such 
actions, however, must comply with other federal environmental review 
authorities (such as those regarding the preservation of historic 
properties, the management of floodplains, and the protection of 
wetlands). HUD's regulations implementing NEPA and related 
environmental laws and authorities are codified at 24 CFR parts 50 and 
58.
    Under 24 CFR part 58, a unit of general local government, a county, 
or a state (referred to in 24 CFR part 58 as the ``responsible 
entity'') is responsible for the required federal environmental 
reviews, pursuant to a number of HUD program statutes, including Title 
I of the United States Housing Act of 1937, which authorizes the HCV 
program. If a PHA objects in writing to the performance of the federal 
environmental review by the responsible entity, or if the responsible 
entity declines to perform the review, then HUD may perform the 
environmental review itself (see 24 CFR 58.11). HUD's performance of 
the environmental review is governed by 24 CFR part 50.
    The proposed rule reflects the environmental review requirements 
applicable to the use of federal assistance in connection with housing 
construction. The proposed rule would also require additional terms to 
be included in the contract of sale if the unit is not yet under 
construction and instructs PHAs when it is appropriate to begin 
providing homeownership assistance. Specifically, the contract of sale 
between the family and the seller must provide that: (1) The purchaser 
is not obligated to purchase the unit unless an environmental review 
has been performed and the site has received environmental approval 
prior to commencement of construction, in accordance with 24 CFR 
982.628; (2) construction will not commence until the required 
environmental review has been completed and the seller has received 
written notice from the PHA that environmental approval has been 
obtained. Conduct of the environmental review may not necessarily 
result in environmental approval, and environmental approval may be 
conditioned on the contracting parties' agreement to modifications to 
the unit design or to mitigation actions; and (3) commencement of 
construction in violation of the preceding clause voids the purchase 
contract and renders homeownership assistance under this part 
unavailable for purchase of the unit. A PHA may not commence 
homeownership assistance for the family until either: (1) The 
responsible entity has completed the environmental review procedures 
required by 24 CFR part 58, and HUD has approved the environmental 
certification and request for release of funds; or (2) HUD has 
performed an environmental review under 24 CFR part 50 and has notified 
the PHA in writing of environmental approval of the site. This proposed 
rule would permit voucher families to benefit from local affordable 
housing initiatives and in areas where job growth is occurring, as well 
as aid in reducing the cost of making homes accessible to persons with 
mobility impairments while still complying with applicable federal 
environmental review requirements.
    In conformity with the regulatory changes described above, this 
proposed rule also would make explicit that the initial environmental 
review requirements for units not yet under construction are broader 
than for those units that are constructed or that are under 
construction. Similarly, this proposed rule emphasizes that when a 
family receiving homeownership assistance chooses to move to another 
unit, environmental review requirements must be satisfied for that unit 
in order for the family to continue receiving tenant-based assistance. 
This includes completing a new environmental review for any unit not 
yet under construction.

III. Findings and Certifications

Paperwork Reduction Act

    Under section 3504(h) of the Paperwork Reduction Act of 1995 (PRA) 
(44 U.S.C. 3501-3520), 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 current valid control number. This 
rule does not contain information collection requirements, as defined 
under the PRA.

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review''). 
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, as provided under 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, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500. Due to security measures at the 
HUD Headquarters building, please schedule an appointment to review the 
docket file by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number).

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(2)(C)). That finding is available for 
public inspection between the hours of 8 a.m. and 5 p.m. weekdays in 
the Regulations Division, Office of General Counsel, Department of 
Housing and Urban Development, 451 Seventh Street, SW., Room 10276, 
Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
finding by calling the Regulations Division at (202) 708-3055 (this is 
not a toll-free number).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule is exclusively concerned with PHAs that administer 
tenant-based housing assistance under the HCV program. Specifically, 
the proposed rule would expand the types of units that are eligible for 
purchase under the homeownership option to include units not yet under 
construction at the time

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the family enters into the contract of sale. 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 fewer than 50,000 
persons. The number of entities potentially affected by this rule is 
therefore not substantial. Accordingly, the undersigned certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

    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 will 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 Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (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 on the private sector. This rule will not 
impose any federal mandates on any state, local, or tribal governments, 
or on the private sector, within the meaning of the UMRA.

    Catalog of Federal Domestic Assistance: The Catalog of Federal 
Domestic Assistance Number for the HCV program is 14.871.

List of Subjects in 24 CFR Part 982

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

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 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. Revise Sec.  982.626(c) to read as follows:


Sec.  982.626  Homeownership option: Initial Requirements.

* * * * *
    (c) Environmental requirements. The PHA is responsible for 
complying with the authorities listed in Sec.  58.6 of this title 
requiring the purchaser to obtain and maintain flood insurance for 
units in special flood hazard areas, prohibiting assistance for 
acquiring units in the coastal barrier resources system, and requiring 
notification to the purchaser of units in airport runway clear zones 
and airfield clear zones. In the case of units not yet under 
construction at the time the family enters into the contract for sale, 
the additional environmental review requirements referenced in Sec.  
982.628(e) of this part also apply, and the PHA shall submit all 
relevant environmental information to the responsible entity or to HUD 
to assist in completion of those requirements.
    3. Amend Sec.  982.628 as follows:
    a. Remove paragraph (a)(2);
    b. Redesignate paragraphs (a)(3), (a)(4), and (a)(5) as paragraphs 
(a)(2), (a)(3), and (a)(4), respectively; and
    c. Add paragraph (e) to read as follows:


Sec.  982.628  Homeownership option: Eligible units.

* * * * *
    (e) Units not yet under construction. Families may enter into 
contracts of sale for units not yet under construction at the time the 
family enters into the contract for sale. However, the PHA shall not 
commence homeownership assistance for the family for that unit unless 
and until:
    (1) Either:
    (i) The responsible entity completed the environmental review 
procedures required by 24 CFR part 58, and HUD approved the 
environmental certification and request for release of funds prior to 
commencement of construction; or
    (ii) HUD performed an environmental review under 24 CFR part 50 and 
notified the PHA in writing of environmental approval of the site prior 
to commencement of construction;
    (2) Construction of the unit has been completed; and
    (3) The unit has passed the required Housing Quality Standards 
(HQS) inspection (see Sec.  982.631(a)) and independent inspection (see 
Sec.  982.631(b)).
    4. Add Sec.  982.631(c)(3) to read as follows:


Sec.  982.631  Homeownership option: Home inspections, contract of 
sale, and PHA disapproval of seller.

* * * * *
    (c) * * *
    (3) In addition to the requirements contained in paragraph (c)(2) 
of this section, a contract for the sale of units not yet under 
construction at the time the family is to enter into the contract for 
sale must also provide that:
    (i) The purchaser is not obligated to purchase the unit unless an 
environmental review has been performed and the site has received 
environmental approval prior to commencement of construction in 
accordance with 24 CFR 982.628.
    (ii) The construction will not commence until the environmental 
review has been completed and the seller has received written notice 
from the PHA that environmental approval has been obtained. Conduct of 
the environmental review may not necessarily result in environmental 
approval, and environmental approval may be conditioned on the 
contracting parties' agreement to modifications to the unit design or 
to mitigation actions.
    (iii) Commencement of construction in violation of paragraph 
(c)(3)(ii) of this section voids the purchase contract and renders 
homeownership assistance under 24 CFR part 982 unavailable for purchase 
of the unit.
* * * * *
    5. Revise Sec.  982.637(b) to read as follows:


Sec.  982.637  Homeownership option: Move with continued tenant-based 
assistance.

* * * * *
    (b) Requirements for continuation of homeownership assistance. The 
PHA must determine that all initial requirements listed in Sec.  
982.626 (including the environmental requirements with respect to a 
unit not yet under construction) have been satisfied if a family that 
has received homeownership assistance wants to move to such a unit with 
continued homeownership assistance. However, the following requirements 
do not apply:
* * * * *

    Dated: April 12, 2007.
Paula O. Blunt,
General Deputy Assistant Secretary for Public and Indian Housing.
 [FR Doc. E7-10177 Filed 5-25-07; 8:45 am]
BILLING CODE 4210-67-P