[Federal Register Volume 72, Number 203 (Monday, October 22, 2007)]
[Rules and Regulations]
[Pages 59936-59938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-20686]



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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; Final Rule

  Federal Register / Vol. 72, No. 203 / Monday, October 22, 2007 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4991-F-02]
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: Final rule.

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SUMMARY: This final rule revises HUD's regulations for the 
homeownership option authorized under the Housing Choice Voucher (HCV) 
program. Through the homeownership option, a public housing agency 
(PHA) may provide voucher assistance for an eligible family that 
purchases a dwelling unit for residence by the family. This final rule 
authorizes 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 revision will expand the housing choices 
available to families participating in the homeownership option under 
the HCV program. This final rule follows publication of a May 29, 2007, 
proposed rule and takes into consideration the one public comment 
received on it. After careful consideration of the issues raised by the 
commenter, HUD has decided to adopt the proposed rule without change.

DATES: Effective Date: November 21, 2007.

FOR FURTHER INFORMATION CONTACT: Danielle Bastarache, Director of the 
Housing Voucher Management and Operations Division, Office of Public 
and Indian Housing, 451 Seventh Street, SW., Room 4210, Washington, DC 
20410-8000; telephone number (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--The May 29, 2007, Proposed Rule

    On May 29, 2007, at 72 FR 29744, HUD published a proposed rule for 
public comment to revise its regulations for the homeownership option 
authorized under the HCV program. 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 
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. Prior to this final rule, the 
homeownership option regulations provided 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 further consideration, HUD found the housing 
eligibility requirements to be overly restrictive.
    For example, job growth in an area will frequently trigger the 
construction of new housing developments. The eligibility prohibition 
had the potential to deter voucher families from moving to such an area 
in search of employment opportunities. In addition, the requirements 
hampered 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 for 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 eligibility restriction that was 
formerly in place prohibited 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 prohibition also had the potential to make it more 
difficult for persons with disabilities to purchase a home with voucher 
assistance. Modification of the home following purchase is not always 
easily accomplished and may require the purchaser to incur significant 
additional costs. Allowing the purchase of units not yet under 
construction, as provided by the May 29, 2007, proposed rule, would 
allow individuals with disabilities to make design changes for 
accessibility purposes while the home is being built, thus minimizing 
homeownership costs.

II. Discussion of Public Comment

    The public comment period on the May 29, 2007, proposed rule closed 
on July 30, 2007. HUD received one public comment from a housing 
authority.
    The commenter stated that it strongly supports the proposed rule 
but considered Sec.  982.628(e)(1)(i) of the proposed rule too rigid 
because it did not specify a time limit for HUD to approve the 
environmental certification, as completed by the responsible entity, 
and to request the release of funds. The commenter suggested that its 
experience has shown that once the environmental certification is 
completed by the responsible entity, approval and request for the 
release of funds should be a simple process that should be able to be 
completed within a 30-day time frame. The commenter stated that any 
delay beyond the 30-day period would delay the start of construction 
and increase the cost to the builder and eventually to the homebuyer 
and the HCV homeownership program.
    HUD declines to adopt the commenter's suggestion. HUD agrees with 
the commenter that once the environmental certification is completed, 
HUD approval and release of funds is a simple process, and to date, 
PHAs have not expressed concerns that a finite time period for 
completion of the approval and release of funds process is necessary. 
HUD is concerned that adopting a one-size-fits-all approach would 
hamper any flexibility that may be necessary under certain 
circumstances. However, in the event that delays result in the approval 
and release of funds process, HUD will revisit this issue.
    This final rule therefore adopts the proposed rule without change 
and permits 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.

III. This Final Rule

    Consistent with the proposed rule, this final rule provides that 
the PHA may not commence homeownership assistance for the family until: 
(1) HUD has approved an environmental certification and request for 
release of funds under 24 CFR part 58 or has notified the PHA of 
environmental

[[Page 59937]]

approval of the site under 24 CFR part 50 prior to commencement of 
construction; (2) the unit's construction has been completed; and (3) 
the unit has passed the Housing Quality Standards and independent 
inspections required under Sec.  982.631(a). Since the final rule 
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.
    Consistent with the proposed rule, the final rule also requires 
additional terms to be included in the contract of sale if the unit is 
not yet under construction and instructs PHAs on 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.
    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 final rule permits voucher families to benefit from local 
affordable housing initiatives and development of affordable housing in 
areas where job growth is occurring, as well as aids in reducing the 
cost of making homes accessible to persons with mobility impairments 
while still complying with applicable federal environmental review 
requirements.
    This final rule, consistent with the proposed rule, makes 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. The final rule provides 
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.

IV. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact 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)). That 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, 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 final rule is exclusively concerned with PHAs that administer 
tenant-based housing assistance under the HCV program. Specifically, 
the final rule expands the types of units that are eligible for 
purchase under the homeownership option to include units not yet under 
construction at the time 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.

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.

[[Page 59938]]

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.


0
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

0
1. The authority citation for 24 CFR part 982 continues to read as 
follows:

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


0
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.

0
3. Amend Sec.  982.628 as follows:
0
a. Remove paragraph (a)(2);
0
b. Redesignate paragraphs (a)(3), (a)(4), and (a)(5) as paragraphs 
(a)(2), (a)(3), and (a)(4), respectively; and
0
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)).
0
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.
* * * * *


0
5. Revise Sec.  982.637(b) introductory text 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: October 15, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
[FR Doc. E7-20686 Filed 10-19-07; 8:45 am]
BILLING CODE 4210-67-P