[Federal Register Volume 77, Number 46 (Thursday, March 8, 2012)]
[Notices]
[Pages 14029-14031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5626]



[[Page 14029]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5630-N-01]


Rental Assistance Demonstration: Notice of Web Availability and 
Request for Comments

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Rental Assistance Demonstration (RAD) provides the 
opportunity to test the conversion of public housing and other HUD-
assisted properties to long-term, project-based Section 8 rental 
assistance to achieve certain goals, including the preservation and 
improvement of these properties through access by public housing 
agencies (PHAs) and owners to private debt and equity to address 
immediate and long-term capital needs. RAD is also designed to test the 
extent to which residents have increased housing choices after the 
conversion, and the overall impact on the subject properties. This 
notice announces that HUD has posted on its Web site a demonstration 
program notice (Program Notice) entitled ``Rental Assistance 
Demonstration--Partial Implementation and Request for Comments.'' Prior 
to the issuance of the final program notice that will provide for full 
implementation of RAD, HUD welcomes public comment on the entirety of 
the Program Notice and particularly seeks comments on elements 
highlighted in this notice.

DATES: Comment Due Date: April 9, 2012.
    Effective Date: The conversion of Rent Supp and RAP properties 
under Section III of the Program Notice is effective on: March 8, 2012.

ADDRESSES: Interested persons are invited to submit comments on 
applicable parts of this notice to the Regulations Division, Office of 
General Counsel, Department of Housing and Urban Development, 451 7th 
Street SW., Room 10276, Washington, DC 20410-0500. All submissions and 
communications must refer to the above docket number and title. There 
are two methods for submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. 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.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule. Also, to expedite review of public comments, it is recommended 
commenters should organize their comments by specific topical areas 
and section numbers and label those areas accordingly.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available 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 202-402-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Relay Service, 
toll-free, at 800-877-8339. Copies of all comments submitted are 
available for inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: To assure a timely response, please 
electronically direct requests for further information to this email 
address: [email protected]. Written requests may also be directed to the 
following address: Office of Public and Indian Housing--RAD Program, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
2000, Washington, DC 20410.

SUPPLEMENTARY INFORMATION: This Federal Register notice announces the 
issuance of, and solicits public comment on, a Program Notice entitled, 
``Rental Assistance Demonstration--Partial Implementation and Request 
for Comments,'' which is available on HUD's Web site at www.hud.gov/rad. The Program Notice describes, in detail, the demonstration's 
eligibility and selection criteria for participation, general 
requirements, instructions for applying for the conversion of 
assistance under RAD, and other relevant information about the 
demonstration. While HUD seeks public comment on all instructions and 
criteria provided in the Program Notice, the instructions and criteria 
applicable to the Section III of the Program Notice are effective upon 
issuance of the Program Notice. Following receipt and consideration of 
public comment, a second notice (Final Notice) will be issued with 
final program instructions and eligibility and selection criteria, 
which may include revisions to the Section III instructions and 
criteria.

I. Background

    RAD, authorized by the Consolidated and Further Continuing 
Appropriations Act, 2012, (Pub. L. 112-55, signed November 18, 2011) 
(2012 Appropriations Act) allows for the conversion of assistance under 
the public housing, Rent Supplement (Rent Supp), Rental Assistance 
(RAP), and Moderate Rehabilitation (Mod Rehab) programs (collectively, 
covered programs) to long-term, renewable assistance under Section 8. 
RAD has two separate components:
     First Component. The first component of RAD allows 
projects funded under the public housing and Mod Rehab programs to 
convert to long-term Section 8 rental assistance contracts. Under this 
component of RAD, which is covered under Sections I and II of the 
Program Notice, PHAs and Mod Rehab owners may apply to HUD to convert 
to one of two forms of Section 8 Housing Assistance Payment (HAP) 
contracts: Project-based vouchers (PBVs) or project-based rental 
assistance (PBRA). No additional or incremental funds were authorized 
for this component of RAD. Therefore, PHAs and Mod Rehab owners will be 
required to convert assistance for projects at current subsidy levels. 
The 2012 Appropriations Act authorizes up to 60,000 units to convert 
assistance under this component, to be selected competitively. The 2012 
Appropriations Act further specifies that HUD shall provide an 
opportunity for public comment on draft eligibility and selection 
criteria and on the procedures that will apply to the selection of 
properties that will participate in this component of the 
demonstration. Accordingly, these provisions will become effective 
after HUD has

[[Page 14030]]

considered all comments received on the Program Notice and publishes a 
final notice.
     Second Component. The second component of RAD, which is 
covered under Sections II and III of the Program Notice, allows owners 
of projects funded under the Rent Supp, RAP and Mod Rehab programs with 
a contract expiration or termination occurring after October 1, 2006, 
and no later than September 30, 2013, to convert tenant protection 
vouchers (TPVs) to PBVs. There is no cap on the number of units that 
may be converted under this component of RAD and no requirement for 
competitive selection. While these conversions are not subject to 
current funding levels for each project or a unit cap, they are subject 
to the availability of overall appropriated amounts for TPVs. These 
provisions are effective immediately; however, HUD is inviting comments 
on these provisions and may make changes based on its consideration of 
the comments. Any such changes will be announced in the Final Notice.

II. Issues Highlighted for Public Comment

    HUD welcomes comments on all aspects of the demonstration. In 
particular, HUD is interested in receiving comments on the following 
components (the parenthetical references below are the relevant 
sections in the Program Notice posted at www.hud.gov/rad).
    Selection Criteria (Sec. Sec.  1.12, 2.3.9). HUD seeks to convert a 
wide range of projects under the demonstration. HUD has attempted to 
simplify both the submission requirements and selection procedures 
while encouraging the participation of a wide range of PHAs and owners 
in different markets and geographic areas. HUD is especially interested 
in encouraging PHAs and owners to use the authority granted under RAD 
to address the backlog of capital needs of their properties. As a 
result, HUD is particularly interested in receiving comments on how 
well the proposed selection criteria encourage these objectives to be 
met.
    Cap on Mod Rehab Project Conversions (Sec.  2.3.9(A)). Both public 
housing and Mod Rehab properties are eligible to compete for conversion 
under the 60,000 unit cap in the first component of the RAD authority. 
However, as 60,000 units represents approximately five percent of the 
total public housing inventory of 1.2 million units, and the current 
Mod Rehab inventory is about 25,000 units, HUD believes that it is 
reasonable to limit the number of Mod Rehab conversions under the first 
component of the RAD authority to approximately five percent of the Mod 
Rehab inventory, or approximately 1,250 units total. Imposing such a 
cap on Mod Rehab conversions under this component of the RAD authority 
should be mitigated by the fact that Mod Rehab properties are also 
eligible to convert TPVs to long-term Section 8 PBVs under the second 
component of the demonstration authority. HUD is interested in 
receiving comments on how the proposed cap on Mod Rehab properties 
might affect prospects for effective conversion of assistance for 
either or both Mod Rehab and public housing properties.
    Contract Rents (Sec. Sec.  1.7(B)(5), 1.8(A)(5), 2.3.5(B)(2), 
2.3.6(A)(3)). As RAD projects are statutorily limited to converting 
existing subsidy levels to new, long-term Section 8 contracts, rents 
for the first component of the demonstration will be set relative to 
current subsidy levels and PBRA and PBV program caps. Although rents 
levels are statutorily limited, HUD is interested in receiving comments 
on how policies on contract rent setting might best facilitate PHAs and 
owners in accessing needed capital and securing firm financing plans as 
discussed below.
    Conversion Contingent upon Firm Financing Plan (Sec. Sec.  1.13, 
2.3.10). HUD is proposing a two-step process in converting assistance 
requiring assembly of needed financing relative to an initial 
commitment from HUD and then, upon approval of a firm financing plan by 
HUD, issuance of a Section 8 HAP contract. HUD believes that the two-
step process minimizes the barriers to submitting an application and 
ensures that only projects that are financially viable execute a final 
HAP and permanently convert their form of assistance under RAD. HUD is 
particularly interested in receiving comments on the associated 
timeframes and milestones outlined in the Program Notice.
    Resident Notification and Consultation. Under both components of 
the demonstration, PHAs and owners are required to notify and consult 
with tenants about their intent to apply for conversion, provide 
tenants the opportunity to comment on the proposed conversion, and 
respond to or address comments received. These and other requirements 
are designed to: (1) Protect tenants and ensure that they are able to 
meaningfully participate in the conversion process; and (2) 
appropriately balance the goals of preserving these properties and 
maximizing residents' housing choices. HUD invites comments on whether 
the notice effectively achieves these objectives.
    Rent Adjustments. Converted projects under the first component of 
the demonstration will have contract rents adjusted annually only by 
HUD's Operating Cost Adjustment Factor (OCAF). As a result, PHAs and 
Mod Rehab owners that are considering applying for participation under 
the first component of the demonstration must be reasonably confident 
that existing funding committed to the project is sufficient to meet 
project operating expenses and contingencies for the term of the 
initial contract. In addition to offering annual OCAF adjustments, HUD 
is interested in receiving comments on other actions it might 
facilitate that can best assure high-quality management and maintenance 
of properties that convert assistance under RAD.
    Addressing Capital Needs and Encouraging Preservation (Sec. Sec.  
1.5, 2.3.3). Many public housing and Mod Rehab properties require 
substantial private debt and/or equity capital to address their capital 
repair needs and preserve their assets over time. Other projects may 
not require additional financing but instead need to capitalize a 
replacement reserve account matched to a property's anticipated capital 
needs to ensure long-term viability. The demonstration allows for both 
types of projects, but favors projects with higher capital needs given 
the goal of testing conversion as a strategy for providing access to 
private debt and equity to address the backlog of capital needs. The 
demonstration also includes a ranking factor to encourage PHAs and 
owners to employ green building rehabilitation and operation techniques 
on converted properties. HUD is interested in receiving comments on how 
well the proposed rehabilitation-related ranking factors encourage 
these objectives.
    Public Housing Mixed-Finance Projects (Sec. Sec.  1.5, 1.10.3, 
1.12(B)). While a central premise of the demonstration is that Section 
8 provides a more stable platform for public housing, and HUD is aware 
that the existing Mixed-Finance inventory could benefit from converting 
assistance to Section 8 contracts, HUD believes the public housing 
properties that have not benefited from the Mixed Finance program 
should have greater access to RAD's limited authority. Accordingly, HUD 
will limit eligibility to Mixed-Finance projects with a Date of Full 
Availability prior to July 1, 2002, and reserves the right to limit the 
number of awards made to eligible Mixed-Finance projects. HUD is 
particularly interested in receiving comments on criteria that HUD 
might employ in attempting to reasonably limit the number of Mixed-
Finance

[[Page 14031]]

transactions to those most consistent with the demonstration's primary 
purpose of enabling PHAs to access needed financing to address their 
capital repair needs.
    Waivers (Sec. Sec.  1.6, 2.3.5, 2.3.6, 3.5). To carry out the goals 
of the demonstration, the 2012 Appropriations Act provides HUD with 
statutory and regulatory waiver authority. Rather than allow each PHA, 
Mod Rehab, Rent Supp or RAP owner to request specific waivers that 
would be extraordinarily difficult to administer on an individualized 
basis, HUD lists in each section of the Program Notice related to 
public housing, Mod Rehab, Rent Supp and RAP the waivers that are 
applicable to the specific type of conversions being undertaken. HUD 
invites comments on the range of waivers proposed to be offered and the 
need, if any, for additional waivers to facilitate successful RAD 
conversions by property type.
    No Partial Project Conversions. For administrative reasons, HUD 
will accept applications only for complete project conversions 
(excluding de minimis unit reductions as defined in Section I of the 
Program Notice). For example, if a PHA has a 200-unit project that 
consists of 100 family units and 100 elderly units on separate sites, 
and wants only to convert only the family units, the PHA would first 
need to seek approval from HUD independent and in advance of a RAD 
application to divide the project into two different projects. 
Procedures for changing project groupings can be found in PIH Notice 
2007-28 (which is available for download at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips). HUD is 
particularly interested in receiving comments on any potential 
unintended consequences of this policy.
    Choice-Mobility (Sec. Sec.  1.8.12, 1.12(D)(2), 2.3.6.8, 
2.3.9(C)(2)). HUD's goal is to provide all residents of converted 
projects under both the first and second components of the 
demonstration with viable options to obtain a Housing Choice Voucher 
and move from a converted property as they deem in their best 
interests, i.e., to offer them choice and mobility after a reasonable 
tenure. For projects converting assistance to PBVs, existing PBV choice 
requirements specified under section 8(o)(13)(E) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f(o)(13)(E)) will apply. For 
projects converting assistance to PBRA, choice-mobility options will be 
required to be made available consistent with Sections 1.8.12 and 
2.3.6.8. HUD will further offer ranking factor points to encourage 
applicants to form partnerships to secure the needed turnover vouchers 
necessary to support the choice-mobility requirement where none is 
readily available. HUD is particularly interested in receiving comments 
on how the indicated choice-mobility objectives can best be achieved in 
the demonstration through the indicated ranking factors or other 
actions that it might facilitate.
    Demonstration Design. HUD will be evaluating the demonstration 
based on the goals detailed in the notice. In that context, HUD 
solicits public comments on the parameters of the current design and 
how it serves those goals. For example, the demonstration creates two 
fairly distinct program options that PHAs can choose from under the 
first component of RAD: PBRA or PBVs. HUD is interested in the reasons 
why a PHA may choose to convert public housing units to PBRA rather 
than PBVs or vice versa. HUD seeks feedback on whether there are 
additional modifications to the design to maximize the opportunity for 
learning and the long-term viability of converted properties.

III. Environmental Review

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations in 24 CFR part 50 that 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4332(2)(C)). The Finding is available for public 
inspection during regular business hours in the Regulations Division, 
Office of General Counsel, Department of Housing and Urban Development, 
451 7th 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 202-402-3055 (this is not a toll-free number). Individuals with 
speech or hearing impairments may access this number via TTY by calling 
the Federal Relay Service at 800-877-8339.

    Dated: March 5, 2012.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian Housing,
Carol J. Galante,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2012-5626 Filed 3-7-12; 8:45 am]
BILLING CODE 4210-67-P