[Federal Register Volume 72, Number 201 (Thursday, October 18, 2007)]
[Rules and Regulations]
[Pages 59003-59005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-20525]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1000

[Docket No. FR-4999-F-02]
RIN 2577-AC61


Use of Indian Housing Block Grant Funds for Rental Assistance in 
Low-Income Housing Tax Credit Projects

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

ACTION: Final rule.

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SUMMARY: This final rule amends the Indian Housing Block Grant (IHBG) 
program regulations to specify the conditions under which IHBG funds 
may be used for project-based or tenant-based rental assistance. The 
final rule clarifies that such rental assistance may be provided in a 
manner consistent with assistance provided under section 8 of the 
United States Housing Act of 1937 on behalf of a tenant receiving 
assistance under the Native American Housing Assistance and Self-
Determination Act of 1996 (NAHASDA). This final rule follows 
publication of a June 8, 2007, proposed rule, and adopts the proposed 
rule without change. HUD received one public comment on the June 8, 
2007, proposed rule, expressing unqualified support for the proposed 
regulatory changes.

DATES: Effective Date: November 19, 2007.

FOR FURTHER INFORMATION CONTACT: Deborah Lalancette, Director, Office 
of Grants Management, Office of Native American Programs, Department of 
Housing and Urban Development, 1670 Broadway, 23rd Floor, Denver, CO 
80202-4801; telephone (303) 675-1625 (this is not a toll-free number). 
Persons with hearing or speech impairments may access this number 
through TTY by calling the toll-free Federal Information Relay Service 
at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Indian Housing Block Grant (IHBG) program, HUD makes 
assistance available to eligible Indian tribes for affordable housing 
activities. The amount of assistance made available to each Indian 
tribe is

[[Page 59004]]

determined using an allocation formula, developed with the active 
participation of Indian tribes and using negotiated rulemaking 
procedures. An Indian tribe (or its tribally designated housing entity 
(TDHE)) may use its IHBG funds for a wide range of affordable housing 
activities, including the provision of project-based or tenant-based 
rental assistance for eligible families. The regulations governing the 
IHBG program are located in part 1000 of HUD's regulations in title 24 
of the Code of Federal Regulations.
    In 1986, Congress amended the Internal Revenue Code to create the 
Low Income Housing Tax Credit (LIHTC) (see 26 U.S.C. 42), a tax 
incentive to promote the development of affordable rental housing. 
Eligible projects receive Federal income tax credits over a 10-year 
period using a formula that, in part, takes into account certain 
eligible costs called ``eligible basis.'' Generally, Federal grants 
used with respect to a building, or for its operation thereof, result 
in a dollar-for-dollar decrease in eligible basis. However, the 
Internal Revenue Service (IRS) has recognized that certain types of 
Federal rental assistance payments are not Federal grants that require 
a reduction in a building's eligible basis. They include payments made 
pursuant to Section 8 of the United States Housing Act of 1937 (42 
U.S.C. 1437f) (Section 8) and comparable programs or methods of rental 
assistance designated by the Secretary of the Treasury by publication 
in the Federal Register or in the Internal Revenue Bulletin. (See the 
income tax regulations at 26 CFR 1.42-16(b).)
    HUD rental assistance programs (such as the project-based voucher 
program) address the requirements that apply when such program rental 
assistance is provided to tenants residing in LIHTC projects. However, 
the IHBG program regulations are silent with regard to the use of IHBG 
rental assistance in these projects. HUD has received requests from 
several Indian tribes and TDHEs that are IHBG recipients and wish to 
use their IHBG funds for LIHTC projects.
    On June 8, 2007 (72 FR 31944), in response to these tribal 
requests, HUD published a proposed rule for public comment to specify 
the conditions under which IHBG funds may be used for tenant-based or 
project-based rental assistance.

II. This Final Rule

    This final rule follows publication of the June 8, 2007, proposed 
rule and adopts the proposed rule without change. The public comment 
period on the proposed rule closed on August 7, 2007. HUD received a 
single public comment from a state housing finance agency, expressing 
unqualified support for the proposed regulatory changes.
    The final rule adds a new Sec.  1000.103 to clarify that IHBG funds 
may be used for project-based or tenant-based rental assistance. 
Further, the final rule clarifies that IHBG funds may be used for 
project-based or tenant-based rental assistance that is administered in 
a manner consistent with Section 8. Only the Secretary of the Treasury 
may make a determination that project-based or tenant-based rental 
assistance complies with the income tax regulations at 26 CFR 1.42-
16(b) and, therefore, will not reduce the building's eligible basis. 
This final rule will allow for such determination to be made. This 
final rule does not limit the range of eligible activities that an 
Indian tribe or TDHE may undertake. It merely clarifies one permissible 
use of IHBG funds.

III. Findings and Certifications

Regulatory Flexibility Act

    The Regulatory Flexibility Act (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 rule would 
clarify that IHBG funds may be used for project-based or tenant-based 
rental assistance that is provided in a manner consistent with 
assistance provided under Section 8 of the United States Housing Act of 
1937 on behalf of a tenant receiving assistance under NAHASDA. This 
rule would not impose new requirements on IHBG program participants. 
Accordingly, the undersigned certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.

Environmental Impact

    A Finding of No Significant Impact (FONSI) 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 (42 U.S.C. 4332(2)(C)). The 
FONSI 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, 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 rule docket file 
by calling the Regulations Division at (202) 708-3055 (this is not a 
toll-free number).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. 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.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) 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 would not 
impose any federal mandate on any state, local, or tribal government, 
or on the private sector, within the meaning of UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number applicable to the 
program affected by this rule is 14.862.

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, Public housing, Reporting and 
recordkeeping requirements.

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For the reasons described in the preamble, HUD amends 24 CFR part 1000 
to read as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

0
1. The authority citation for part 1000 continues to read as follows:

    Authority: 25 U.S.C. 1401 et seq. and 42 U.S.C. 3535(d).


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2. Add Sec.  1000.103 to read as follows:

[[Page 59005]]

Sec.  1000.103  How may IHBG funds be used for tenant-based or project-
based rental assistance?

    (a) IHBG funds may be used for project-based or tenant-based rental 
assistance.
    (b) IHBG funds may be used for project-based or tenant-based rental 
assistance that is provided in a manner consistent with section 8 of 
the United States Housing Act of 1937 (42 U.S.C. 1437f).
    (c) IHBG funds used for project-based or tenant-based rental 
assistance must comply with the requirements of NAHASDA and this part.

    Dated: October 11, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
[FR Doc. E7-20525 Filed 10-17-07; 8:45 am]
BILLING CODE 4210-67-P