[Federal Register Volume 80, Number 3 (Tuesday, January 6, 2015)]
[Proposed Rules]
[Pages 423-436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-30504]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 574, 960, 966, 982, 983, and 990

[Docket No. FR 5743-P-01]
RIN 2506-AC38


Streamlining Administrative Regulations for Public Housing, 
Housing Choice Voucher, Multifamily Housing, and Community Planning and 
Development Programs

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

ACTION: Proposed rule.

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SUMMARY: Section 243 of the Department of Housing and Urban Development 
Appropriations Act, 2014 (2014 Appropriations Act), authorized HUD to 
implement certain statutory changes to the United States Housing Act of 
1937 (1937 Act) made by the 2014 Appropriations Act through notice, 
followed by notice and comment rulemaking. Notices implementing the 
changes were published on May 19, 2014, and June 25, 2014. Consistent 
with statutory direction, this proposed rule commences the rulemaking 
process to codify in regulation the statutory changes made to the 1937 
Act by the 2014 Appropriations Act and to solicit comment on HUD's 
implementation of these changes through the published notices. HUD 
intends to address the FY14 provision on consortia through separate 
rulemaking.
    In addition, this rulemaking also proposes changes to streamline 
regulatory requirements pertaining to certain elements of the Housing 
Choice Voucher (HCV), Public Housing (PH), and various multifamily 
housing (MFH) rental assistance programs; to reduce the administrative 
burden on public housing agencies (PHAs) and MFH owners; and to align, 
where feasible, requirements across programs. One of the proposed 
changes would also affect the HOME Investment Partnerships program, 
Continuum of Care program, and the Housing Opportunities for Persons 
With AIDS (HOPWA) program which are administered by HUD's Office of 
Community Planning and Development.

DATES: Comment Due Date: March 9, 2015.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule. All 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 comments 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.

    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 toll-free 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: For questions, please contact the 
following people (none of the phone numbers are toll-free):
    HOME program: Marcia Sigal, 202-402-3002.
    HOPWA: Will Rudy, 202-402-1934.
    Office of Special Needs Housing programs: Brett Gagnon, 202-402-
3509.

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    Multifamily Housing programs: Claire Brolin, 202-708-3000.
    Housing Choice Voucher program: Becky Primeaux, 202-402-6050.
    Public Housing program: Todd Thomas, 202-402-5849.
    Persons with hearing or speech impairments may access these numbers 
through TTY by calling the toll-free Federal Relay Service at 800-877-
8339. Any of the above-listed contacts may also be reached via postal 
mail at the following address: Department of Housing and Urban 
Development, 451 7th Street SW., Washington, DC 20410.

SUPPLEMENTARY INFORMATION: 

I. Background

    In recent years and in accordance with Executive Order 13563 
(Improving Regulation and Regulatory Review)\1\ and several HUD-
initiated streamlining initiatives,\2\ HUD solicited recommendations 
from program participants on how program operations could be 
streamlined to reduce costs and enhance efficiency, while still 
maintaining HUD's core program oversight functions (e.g., reducing 
improper payments,\3\ etc.). With respect to public housing programs, 
HUD received input from national and local industry groups, individual 
public housing agencies (PHAs), and Moving-to-Work (MTW) agencies, 
among others. Where possible, HUD has sought to streamline requirements 
across programs, with a particular focus on aligning program 
requirements across the public housing and Section 8 (tenant- and 
project-based) portfolios. This proposed rule therefore includes 
several provisions where the requirements of programs operated out of 
the Office and Public and Indian Housing are aligned with the 
requirements of project-based Section 8 programs operated out of HUD's 
Office of Housing.
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    \1\ See http://www.gpo.gov/fdsys/pkg/FR-2011-01-21/pdf/2011-1385.pdf.
    \2\ HUD's Delivering Together Initiative was started to reduce 
burdens on public housing agencies and improve cross-program 
collaboration (see http://www.hud.gov/offices/hsg/mfh/trx/meet/2011tracsindustrybriefing.pdf). The Public Housing Administrative 
Reform Initiative sought to identify public housing administrative 
processes that could be streamlined (see http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/phari).
    \3\ The Rental Housing Integrity Improvement Project (see http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/rhiip) is a strategy designed to 
reduce income and rent calculation errors and improper payments that 
result from such errors.
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    In response to HUD's solicitation of comments, HUD received many 
recommendations. Among these recommendations, HUD specifically examined 
recommendations to relieve the administrative burden on PHAs and MFH 
owners while maintaining important tenant protections and oversight 
practices. Some of the recommendations required statutory change and 
were included in recent budget proposals; several of the 
recommendations were enacted in FY14 and are being implemented through 
this proposed regulation. Others have been implemented through notice; 
for example, Notice PIH 2013-03 \4\ (extended by Notice PIH 2013-26) 
provides temporary compliance assistance to PHAs through several 
provisions that are proposed to be made permanent through this 
rulemaking. Some of the statutorily permitted recommendations lacked 
authority to be implemented by notice and are included in this proposed 
rule.
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    \4\ See http://portal.hud.gov/hudportal/documents/huddoc?id=pih2013-03.pdf.
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    In addition to the PH and HCV programs, this proposed rule would 
affect the following MFH programs, as of the date of this proposal:
    A. Project-Based Section 8 (New Construction, State Agency-
Financed, Substantial Rehabilitation, Rural Housing Services, Loan 
Management Set-Aside, and Property Disposition Set-Aside).
    B. Section 8 Moderate Rehabilitation.
    C. Rent Supplement Program.
    D. Section 202 Supportive Housing for the Elderly (including PAC 
and PRAC).
    E. Section 811 Supportive Housing for Persons with Disabilities 
(including PRAC and PRA).
    F. Section 235.
    G. Section 236.
    H. Section 221.
    The proposed rule would also affect certain programs administered 
by the Assistant Secretary for Community Planning and Development: HOME 
Investment Partnerships program (HOME) and the Continuum of Care 
program. HUD is also taking the opportunity afforded by this proposed 
rule to relocate HOPWA program requirements currently codified in 24 
CFR part 5 to the main HOPWA program regulations at 24 CFR part 574. 
Although the substance of these provisions would not be revised, the 
proposed relocation will improve the clarity of the program regulations 
by locating all HOPWA regulatory requirements in a single part of the 
Code of Federal Regulations. The section-by-section summary of this 
proposed rule is organized by the program(s) the proposed rule would 
affect. Section A addresses proposed regulatory changes that cross all 
programs (e.g., HCV, MFH, and PH). Section B presents proposed changes 
that would affect the administration of both the HCV and PH programs. 
Section C contains proposed changes that affect the PH program only. 
Changes proposed only to the HCV program are in section D.\5\ The 
proposed regulatory changes are then presented in order by section 
number.
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    \5\ One of the proposed changes also affects the CPD programs 
listed earlier.
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II. This Proposed Rule--Section-by-Section Proposed Changes

A. HCV, MFH, and PH Program Regulations

Verification of Social Security Numbers (Sec.  5.216)
    Under current regulations, most applicants are required to have a 
Social Security Number (SSN) at move-in. Absent a regulatory waiver, 
this requirement results in an applicant family being denied assistance 
if the addition of a child occurs in close proximity to the applicant's 
move-in date and the family is unable to obtain a SSN for the child, 
due to circumstances beyond its control. By contrast, HUD regulations 
provide for the addition to a participant family of a new household 
member under the age of 6 years who has no assigned SSN.
    HUD proposes to align the requirements across applicant and 
participant households with respect to new household members under the 
age of 6 years who lack SSNs. Specifically, HUD proposes to authorize 
applicant households to become program participants even if a child 
under the age of 6 years is added to the household within the 6-month 
period prior to the household's date of admission and that child has 
not yet been issued an SSN. The household would have 90 days from the 
date of move-in to provide the documentation evidencing issuance of an 
SSN. As is the case with program participants, an extension of one 90-
day period would be required for assistance applicants under certain 
circumstances.
Definition of Extremely Low-Income Families (Sec. Sec.  5.603, 960.102)
    HUD's 2014 Appropriations Act \6\ defines the term ``extremely low-
income family'' to mean a very low-income family whose income does not 
exceed the higher of 30 percent of area median income or the poverty 
level. This rule would amend Sec.  5.603 to include the revised 
definition of an extremely low-income family. This definition applies

[[Page 425]]

to all programs assisted under the 1937 Act.
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    \6\ HUD's 2014 Appropriations Act is Title II of Division L of 
Public Law 113-76, 128 Stat. 5, approved January 17, 2014. See 
general provision section 238 of this Act at 128 Stat. 635.
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    In addition to the change in the definition, this rule proposes to 
correct some improper cross-citations in Sec. Sec.  5.603 and 960.102, 
but proposes no substantive changes associated with these corrections.
Use of Actual Past Income (Sec.  5.609)
    HUD's current regulations define ``annual income'' to mean income 
projected to be received in the 12 months following admission or the 
annual reexamination date. The process of projecting income introduces 
the potential for error.
    This rule proposes to allow PHAs and MFH owners to define annual 
income as either actual past income or projected income. Actual past 
income would be based on amounts received prior to admission or the 
annual reexamination effective date and would therefore simply exclude 
the additional step of projecting income based on this information.
    For PHAs, whichever definition is chosen for either the HCV or PH 
program must be applied to all families in the respective program. 
Likewise, a MFH owner must apply the same definition of annual income 
for all families in a single property.
    If a PHA or MFH owner chooses to define annual income as actual 
past income, then it may not adopt the option provided in the proposed 
revisions to Sec. Sec.  5.657, 960.257, and 982.516 to provide for the 
streamlined annual reexamination of fixed-income families (see below). 
In other words, if a PHA or MFH owner adopts the streamlined annual 
reexamination for families on fixed incomes, below, then it must use 
projected income to determine annual income. Also, the PHA must use 
projected income if the family makes a request (for example the family 
may have experienced a decrease in income that would result in a lower 
family payment than would be calculated if income is defined as actual 
past income).
Exclusion of Mandatory Education Fees From Income (Sec.  5.609(b)(9))
    Current regulations provide that education assistance in excess of 
amounts needed for tuition is to be counted as income for the purposes 
of determining whether an individual is eligible to receive assistance. 
However, in recent years, appropriations acts have also excluded from 
income amounts needed to pay required fees charged to students as part 
of a growing trend among institutions of higher education moving from a 
traditional tuition-only structure to a structure of tuition and fees. 
Fees often include, but are not limited to, student service fees, 
student association fees, student activity fees, and laboratory fees.
    HUD believes that including many of these fixed fees within the 
definition of tuition, in accordance with statutory instructions in 
recent years, will increase opportunities for its participants to 
further their education. Therefore, HUD is amending the definition of 
income with respect to higher education costs pursuant to the recent 
statutory changes.
Streamlined Annual Reexamination for Families on Fixed Incomes 
(Sec. Sec.  5.657, 960.257, 982.516)
    PHAs and MFH owners are statutorily required to verify income and 
calculate rent annually, including for families on fixed incomes. The 
requirement to undertake the complete process for income verification 
and rent determination for families on fixed incomes is not necessary 
given the infrequency of changes to their incomes. Further, this 
requirement consumes considerable staff time and resources.
    HUD proposes to simplify the requirements associated with 
determining the annual income of families on fixed incomes by allowing 
PHAs and owners to opt to conduct a streamlined annual reexamination of 
income for families when 100 percent of the family's income consists of 
fixed income sources. In a streamlined annual reexamination, PHAs and 
owners will recalculate family incomes by applying a published cost-of-
living adjustment (COLA) for the source of income to the previously 
verified income amount. If COLA information is not publicly available 
and cannot be provided by the tenant through a document generated by a 
third party, then the PHA or owner must follow the standard 
verification process to determine the appropriate adjustment for the 
fixed-income source. If a family has several sources of fixed income, 
then the PHA or owner must apply the respective COLA or verify the 
adjustment for each source.
    Calculating adjustments to annual income (e.g., medical deductions, 
child care deductions) is still required as part of the streamlined 
annual reexamination of income. PHAs must follow the requirements 
related to deductions for such expenses, including third-party 
verification of these deductions. Furthermore, PHAs using the 
streamlined annual reexamination of income may not exercise the option 
to use actual past income to determine annual income under Sec.  5.609 
(instead, they must use projected income).

B. HCV and PH Program Regulations

Utility Reimbursements (Sec. Sec.  960.253, 982.514)
    As required by Sec.  5.632 of the current regulations, where 
tenants pay for their utility usage, PHAs must reimburse tenants if the 
utility allowance exceeds the total tenant payment. HUD's public 
housing regulations at Sec.  960.253 specify the conditions under which 
a utility reimbursement must be paid but do not specify how frequently 
such reimbursement must be made. HUD's HCV regulations at Sec.  
982.514, however, require voucher agencies to pay any utility 
reimbursement on a monthly basis. As a result, voucher agencies may 
have to process small monthly checks and expend postage to mail them to 
voucher holders, which may constitute an administrative and financial 
burden.
    For both the public housing and HCV programs, this rule proposes to 
permit PHAs to make reimbursements of $20 or less (per quarter) on a 
quarterly basis, in order to eliminate the burdensome process of 
processing and mailing monthly reimbursement checks. In the event a 
family leaves the program in advance of its next quarterly 
reimbursement, the PHA would be required to reimburse the family for a 
prorated share of the applicable reimbursement.
Earned Income Disregard (Sec. Sec.  5.617, 574.305, 960.255)
    HUD's regulations at Sec.  5.617 and Sec.  960.255 establish the 
earned income disregard (EID), which permits certain tenants of public 
housing and persons with disabilities participating in the HCV and 
certain CPD programs \7\ to accept a job without having their rent 
increase right away due to the increase in earned income. The EID is 
available for a total of 24 months, but those months can be spread 
across 48 months to account for intermittent job losses. In addition, 
PHAs are required to fully exclude income for the first 12 months of 
EID, and to exclude only 50 percent for the last 12 months. Tracking 
employment for a 48-month period and determining how much to exclude 
depending on the month can be burdensome to PHAs.
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    \7\ The CPD programs are: HOME Investment Partnerships Program 
(24 CFR part 92), Housing Opportunities for Persons with AIDS (24 
CFR part 574, and Continuum of Care program (24 CFR part 578). 
Current regulations refer to the Supportive Housing program, and HUD 
is proposing to update that reference to the Continuum of Care 
program.
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    HUD proposes to retain the current framework for the earned income 
disregard in Sec.  5.617 as applied to the HOPWA program and to 
relocate these

[[Page 426]]

requirements to a new Sec.  574.305 in the HOPWA regulations in 24 CFR 
part 574. These requirements will continue to apply to qualified 
families, defined as those families that reside in HOPWA-assisted 
housing (including tenant-based rental assistance funded under HOPWA). 
HUD is retaining the current framework for HOPWA, while changing it for 
other programs, because under the HOPWA program every assisted 
household will have at least one family member that is a person with a 
disability (defined at Sec.  5.403) and, therefore, will be affected by 
this rulemaking. If the new EID requirements were applied to the HOPWA 
program, it would disproportionately affect the HOPWA program portfolio 
and adversely affect HOPWA program participants. At the same time, 
however, HUD supports retaining the existing EID rules for the HOPWA 
program. For these reasons, Sec.  574.305 is proposed to be created to 
retain the existing EID rules for the HOPWA program.
    For programs other than HOPWA, HUD proposes to limit the EID to 24 
consecutive months from the date that a participant qualifies for the 
EID. The rule would maintain the full exclusion for the first 12-month 
period, provided the eligible family member remains continually 
employed for such period. For the second 12-month period, the rule 
would provide PHAs with the discretion to phase in a rent increase, 
disregarding not less than 50 percent of the excluded amount in 
determining a family's rent, but again only if the eligible family 
member remains continually employed. After the expiration of the 
consecutive 24-month period during which a family has remained 
continually employed, the EID would terminate. These changes would 
eliminate the burden on PHAs of having to track employment starts and 
stops over a 48-month period.
    HUD notes that, pursuant to section 3(b)(5)(B)(ii) of the 1937 Act 
(42 U.S.C. 1437a(b)(5)(B)(ii)), PHAs have wide discretion to exclude 
earned income in determining adjusted income for families residing in 
public housing. At their discretion, PHAs could therefore adopt 
policies that continue an earned income exclusion for such families 
beyond the point at which the EID terminates.
Family Declaration of Assets Under $5,000 (Sec. Sec.  960.259, 982.516)
    Families are required to report all assets annually. The amount of 
interest earned on those assets is included as income used to calculate 
the tenant's rent obligation. Tenants with assets below $5,000 
typically generate minimal income from these assets, which results in 
small changes, if any, to tenant rental payments. PHAs spend 
significant time verifying such assets.
    HUD proposes that, for a family that has net assets equal to or 
less than $5,000, a PHA, at both admission and recertification, may 
accept a family's declaration that it has net assets equal to or less 
than $5,000, without taking additional steps to verify the accuracy of 
the declaration. The declaration must state the amount of income the 
family expects to receive from such assets; this amount will be 
included in the family's income.

C. PH Program Regulations

Public Housing Rents for Mixed Families (Sec.  5.520(d))
    a. When calculating prorated rents for families that include 
members both with and without citizenship or eligible immigration 
status, Sec.  5.520(d) requires PHAs to determine the maximum rent by 
establishing the 95th percentile of all total tenant payments (TTPs) 
for each bedroom size. To do this, PHAs have to take the full set of 
TTPs, order them from highest to lowest, and identify the numeral below 
which 95 percent of TTPs fall.
    This rule would require PHAs to use instead the established flat 
rent applicable to the unit, significantly reducing the administrative 
burden for PHAs.
    b. Under the current method of calculating prorated rents for mixed 
families, when a mixed family's TTP is greater than the maximum rent, 
the mixed family ends up paying less under proration than would a 
family where all members are eligible for assistance.
    This rule proposes to amend the regulation to use the mixed 
family's TTP when TTP exceeds the flat rent, eliminating this 
discrepancy.

    Note:  Several of the proposed changes to this provision simply 
eliminate references to the legacy Section 8 Rental Certificate 
program. The only substantive changes pertain to the method of 
prorating assistance for the public housing program.

Flat Rents (Sec.  960.253)
    The 2014 Appropriations Act requires PHAs to establish flat rents 
equal to no less than 80 percent of the applicable Fair Market Rent. In 
the event that implementation of this requirement would increase a 
family's rent by more than 35 percent, the PHA must phase in the flat 
rent as necessary to ensure that a family's rental payment does not 
increase by more than 35 percent in any one year. This proposed rule 
would update the current regulations to reflect the new statutory 
requirements and provide additional information to PHAs on how to 
implement the new requirements, including details on how tenant-paid 
utilities affect flat rents and the information about rent options a 
PHA must provide to a family paying a flat-rent.
    In addition, HUD's current regulation at Sec.  960.253(d) permits 
PHAs to set a ceiling limit on rents for a period of three years from 
October 1, 1999, if the PHA had previously established ceiling rents. 
After that time, PHAs were required to adjust the ceiling rent to be 
equal to the flat rent for a unit. Given that the 3-year time period 
has expired and the flat rent provisions now determine a maximum rent, 
all ceiling rents must be set equal to flat rents. To further clarify, 
this proposed rule would apply the requirements for establishing and 
updating flat rents to the requirements for ceiling rents.\8\
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    \8\ HUD notes that section 238 of the Department of Housing and 
Urban Development Act, 2015, as part of the Fiscal Year (FY) 2015 
Omnibus Consolidated and Further Continuing Appropriations Act 
(Public Law 113-235 (further revises section 3(a)(2)(B) of the 
United States Housing Act of 1937 (42 U.S.C. 1437a(a)(2)(B)(i)), 
pertaining to flat rents. As to not delay issuance of this proposed 
rule, HUD will address the further revision in a separate proposed 
rule.
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Tenant Self-Certification for Community Service Requirements 
(Sec. Sec.  960.605, 960.607)
    Under HUD's current public housing regulations, PHAs are required 
annually to review and determine family member compliance with the 
community service requirement. For any qualifying activity administered 
by a third party that a family states it has completed, the PHA is 
required to obtain third-party verification. Although HUD's regulations 
at Sec.  960.607(a) require family members who complete qualifying 
activities administered by a third party to obtain a certification 
signed by the third party, in many cases this requirement is not met, 
resulting in PHAs having to request third-party verification from 
organizations that either fail to maintain adequate records or are 
simply unresponsive. The effort to obtain third-party verification of 
compliance consumes considerable time and resources that could be 
directed to other PHA activities, and, in some cases, delays the 
recertification process.
    HUD proposes to allow PHAs to accept a tenant's signed self-
certification of compliance with the community service requirement. Any 
self-certification must include details (including contact information) 
on what the activity was and where it was completed and a certification 
that the

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statement is true. Further, PHAs are encouraged to undertake periodic 
quality assurance reviews of self-certifications to test for fraudulent 
certifications.
Public Housing Grievance Procedures (Sec. Sec.  966.52 Through 966.57)
    Under HUD's current regulations, many portions of the grievance 
process are repetitive or overly prescriptive for PHAs. Through this 
rule, HUD proposes to eliminate the repetitive and overly prescriptive 
requirements in the regulations, and instead provide PHAs with 
additional flexibility to include procedures in the mandatory 
Admissions and Continued Occupancy Policies developed by each PHA. 
Procedures proposed to be streamlined are informal settlements (Sec.  
966.54), grievance procedures for failure to request a hearing and 
requiring escrow deposits (Sec.  966.55), and matters relating to 
transcripts, copies, and the conduct of the hearing (Sec. Sec.  966.56 
and 966.57). Requirements relating to scheduling and location formerly 
contained in Sec.  966.55 are proposed to be merged into Sec.  966.56.
    HUD also proposes to permit PHAs to establish expedited grievance 
procedures and eliminates a separate category of hearing panel by 
redefining ``hearing officer'' to include the possibility of more than 
one person hearing a complaint.
Limited Vacancies (Sec.  990.150)
    Under current regulations, HUD is required to provide operating 
subsidy for a limited number of vacant units under an Annual 
Contributions Contract. The proposed rule would clarify that the number 
of vacant units eligible for operating subsidy shall be not more than 3 
percent of the total units, on a project-by-project basis.

Section D: HCV Program Regulations

Start of Assisted Tenancy (Sec.  982.309)
    Under current regulations, there is no option for PHAs to adopt 
policies regarding the date when a tenant may move into an assisted 
unit once the unit is ready for move-in.
    HUD proposes to allow PHAs to limit move-ins to certain days of the 
month, such as the first day of the month. This would streamline 
administration of move-ins for some PHAs, reduce the need for pro-rated 
checks and possibly the number of checks issued, and provide Housing 
Assistance Payment (HAP) savings by eliminating overlapping HAP 
payments.
Biennial Inspections and the Use of Alternate Inspection Methods 
(Sec. Sec.  982.405, 983.103)
    The 2014 Appropriations Act authorizes PHAs to comply with the 
requirement to inspect HCV units during the term of a HAP contract by 
inspecting such units not less than biennially rather than annually to 
assure compliance with HUD's housing quality standards. To avoid 
duplication of effort, for example where an HCV-assisted tenant resides 
in a property inspected under another program (for example, the Low 
Income Housing Tax Credit program), the law authorizes a PHA to comply 
with the biennial inspection requirement by relying upon an inspection 
performed pursuant to such other program. Finally, the law authorizes 
the Secretary to adjust the frequency of inspections for mixed-finance 
properties assisted with project-based vouchers where inspections 
performed under such other program take place more or less frequently 
than biennially.
    This rule proposes to update HUD's regulations to reflect the 
statutory changes and to provide details on how PHAs may use the new 
flexibilities. PHAs will be required to obtain copies of reports of 
these inspections and will be prohibited from relying upon such 
inspections if such copies may not be obtained. In addition, because 
section 8(o)(13)(F) of the 1937 Act states that the inspection 
requirements of section 8(o)(8) apply to the PBV program, this rule 
proposes to update the PBV inspection regulations (Sec.  983.103) to 
reflect the new statutory authority in section 8(o)(8).
Housing Quality Standards (HQS) Reinspection Fees (Sec.  982.405)
    HUD proposes to allow PHAs the option of charging a reasonable fee 
to an owner if the owner indicates that an HQS violation is fixed, but 
a reinspection proves that the violation has not yet been fixed. This 
fee would not be permitted if the reinspection confirms that previous 
violations have been fixed but also reveals new HQS violations. The fee 
would pertain solely to owner obligations under Sec.  982.404(a) and 
not to family obligations under Sec.  982.404(b).
Exception Payment Standards for Providing Reasonable Accommodations 
(Sec. Sec.  982.503, 982.505)
    Current regulations require a PHA to request a waiver from a HUD 
Field Office for an exception payment standard above 110 percent of the 
fair market rent (FMR) to provide a reasonable accommodation for a 
family that includes a person with a disability. This process takes 
considerable administrative time for the PHA and, in some cases, the 
processing time for the waiver prevents the family from leasing the 
unit.
    HUD proposes to allow PHAs to approve, if they so choose, a payment 
standard of not more than 120 percent of the FMR without HUD approval 
if required as a reasonable accommodation for a family that includes a 
person with a disability. This proposed streamlining provision would 
allow a PHA to establish a payment standard within limits currently 
permitted but designated for approval only by a HUD Field Office. For 
any voucher unit assisted under the program, PHAs would still be 
required to perform a rent reasonableness determination in accordance 
with section 8(o)(10) of the 1937 Act and HCV program regulations. 
Therefore, PHAs that utilize this provision must maintain documentation 
that the PHA performed the required rent reasonableness analysis.
Family Income and Composition: Regular and Interim Examinations (Sec.  
982.516)
    With respect to interim examinations, current regulations require 
PHAs to conduct a reexamination of income whenever a family member with 
income is added to a family participating in the voucher program. 
Regulations for the public housing program (at Sec.  960.257) are less 
prescriptive.
    In the interest of streamlining requirements across programs, HUD 
proposes to revise Sec.  982.516 to align the regulatory language more 
closely with Sec.  960.257, which will facilitate HUD's ability to 
issue guidance on interims that applies uniformly to the public housing 
and voucher programs.
Utility Payment Schedules (Sec.  982.517)
    a. Size and type of units. HUD's current regulations require PHAs 
to establish a utility allowance based on size and type of units in a 
given locality. Requiring PHAs to establish a utility allowance based 
on both of these factors increases the complexity involved in 
developing a utility allowance schedule.
    HUD proposes to require that the allowance be based on the size of 
the unit and either the type of the unit, as is currently required, or 
a streamlined version of ``unit type,'' limited to ``attached'' or 
``detached.'' In other words, PHAs would have the option to define unit 
type as either ``attached'' or ``detached.'' For any family that would 
face a lower utility allowance because of this change to the schedule, 
the PHA

[[Page 428]]

must provide at least 60 days' notice before the revised utility 
allowance schedule may go into effect.
    b. Size of dwelling units. HUD's current regulations require PHAs 
to use utility allowances for the size of the dwelling unit actually 
leased by the family. The 2014 Appropriations Act requires that the 
amount allowed for tenant-paid utilities not exceed the utility 
allowance for the family unit size as determined by the PHA. Therefore, 
HUD proposes to revise the regulations to conform to the statutory 
change.
    The proposed rule would require PHAs to use the lesser of the two 
standards, unless the family is living in a larger unit as a result of 
a reasonable accommodation, in which case the PHA would be required to 
use the utility allowance for the size unit the family is actually 
leasing. Section 982.517(e) already requires a PHA to approve a higher 
amount than shown on the utility allowance schedule as a reasonable 
accommodation, so HUD is proposing no revision to that provision. The 
proposed rule also includes a clarifying change to Sec.  982.402, 
cross-referencing Sec.  982.517.

III. Specific Issues for Comment

    While HUD solicits and welcomes comments on all aspects of this 
rule, HUD specifically seeks comment on the following:
    1. Use of Actual Past Income (Sec.  5.609). Does this provision 
provide a clear streamlining benefit to PHAs? If not, what additional 
specific changes should HUD consider?
    a. For PHAs that choose to use past income to determine annual 
income, does requiring the same time frame for all sources of income 
and expenses still provide for streamlining, or does this make the 
information collection and verification process too complex? If it does 
make the process too complex, what alternatives should be available?
    b. Should PHAs be permitted to use past income for only some income 
sources, rather than for the entire program? For example, does past 
income only work for families with consistent income amounts? Or, does 
past income also work for families that have sporadic income?
    c. What other types of income documentation should HUD permit PHAs 
to use to verify past income?
    2. Earned Income Disregard (Sec. Sec.  5.617, 960.255). Will the 
proposed changes to the earned income disregard reduce the 
administrative burden associated with implementing the EID? If not, 
what other or additional specific changes would facilitate 
administration of the EID?
    3. Streamlined Annual Reexamination for Families on Fixed Incomes 
(Sec. Sec.  5.657, 960.257, 982.516). In order to utilize these 
provisions, PHAs and MFH owners will be required to determine annually 
that family incomes consist solely of fixed-income sources. Consistent 
with the goal of streamlining, by what means could PHAs and MFH owners 
assure that such families do not have other sources of income?
    4. Utility Reimbursements (Sec. Sec.  960.253, 982.514). Will the 
proposed changes to the required frequency of utility reimbursement 
provide regulatory relief to PHAs? If not, then what changes would 
provide such relief?
    5. Start of Assisted Tenancy (Sec.  982.309). HUD is concerned that 
this proposed change may have the unintended consequence of limiting 
tenant choice. Does the provision provide enough of a benefit to PHAs 
to merit inclusion in this streamlining regulation?
    6. Biennial Inspections and the Use of Alternate Inspection Method 
(Sec.  982.405). Where an inspection conducted under an alternative 
method results in a finding that a property is out of compliance with 
the standard particular to that method, should HUD still require PHAs 
to inspect units using HQS, or should HUD allow PHAs to rely upon 
remedial actions taken to bring the property into compliance with the 
standards under the alternative inspection protocol? In the latter 
instance, if HUD were to adopt such a policy, what should HUD require 
of PHAs to demonstrate that an initially noncompliant property was 
subsequently brought into compliance with the standards under an 
alternative inspection method?
    7. Inspection of Mixed-Finance Properties (Sec.  982.405). Should 
HUD broaden the applicability of this provision beyond PBV-assisted 
properties with LIHTC or HOME financing or an FHA-insured mortgage? If 
so, to what specific type(s) of mixed-finance properties should it 
apply, and why?
    8. General. Are there other opportunities to align requirements 
across programs? Please be specific.

IV. Findings and Certifications

Information Collection Requirements
    The information collection requirements contained in this proposed 
rule 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 numbers 2577-0220 and 0169. In accordance with the 
Paperwork Reduction Act of 1995, 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 currently valid OMB 
control number.
Unfunded Mandates Reform Act
    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for federal agencies to assess the effects of 
their regulatory actions on state, local, and tribal governments and 
the private sector. This rule will not impose any federal mandates on 
any state, local, or tribal governments or the private sector within 
the meaning of UMRA.
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 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 202-402-3055 (this is not a toll-free number). Individuals with 
speech or hearing impairments may access this number via TTY by calling 
the Federal Information Relay Service at 800-877-8339.
Impact on Small Entities
    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 rule reduces administrative burdens on PHAs and MFH owners in many 
aspects of administering assisted housing. All PHAs and MFH owners, 
regardless of size, will benefit from the burden reduction proposed by 
this rule. These revisions impose no significant economic impact on a 
substantial number of small entities. Therefore, the undersigned 
certifies that this rule will not have a significant impact on a 
substantial number of small entities.

[[Page 429]]

    Notwithstanding HUD's belief that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any 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 final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments nor preempt state law 
within the meaning of the Executive Order.
Catalog of Federal Domestic Assistance
    The Catalog of Federal Domestic Assistance numbers applicable to 
the programs that would be affected by this rule are: 14.103, 14.123, 
14.135, 14.149, 14.157, 14.181, 14.195, 14.23514.241, 14.326, 14.850, 
14.871, and 14.872.

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs-housing and community development, 
Individuals with disabilities, Intergovernmental relations, Loan 
programs-housing and community development, Low and moderate income 
housing, Mortgage insurance, Penalties, Pets, Public housing, Rent 
subsidies, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

24 CFR Part 574

    Community facilities, Grant programs-housing and community 
development, Grant programs-social programs, HIV/AIDS, Low and moderate 
income housing, Reporting and recordkeeping requirements

24 CFR Part 960

    Aged, Grant programs-housing and community development, Individuals 
with disabilities, Pets, Public housing.

24 CFR Part 966

    Grant programs-housing and community development, Public housing, 
Reporting and recordkeeping requirements.

24 CFR Part 982

    Grant programs-housing and community development, Grant programs-
Indians, Indians, Public housing, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 983

    Grant programs-housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements

24 CFR Part 990

    Accounting, Grant programs-housing and community development, 
Public housing, Reporting and recordkeeping requirements

    Accordingly, for the reasons stated in the preamble, HUD proposes 
to amend 24 CFR parts 5, 574, 960, 966, 982, 983, and 990 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority citation for part 5 continues to read as follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 3535(d), 
Sec. 327, Pub. L. 109-115, 119 Stat. 2936, and Sec. 607, Pub. L. 
109-162, 119 Stat. 3051.
0
2. Amend Sec.  5.216 as follows:
0
a. Designate the second paragraph (g)(1)(ii) as paragraph (g)(1)(iii);
0
b. Revise paragraph (h)(1);
0
c. In paragraph (h)(2), remove the phrase ``paragraph (h)(1)'' and add 
in its place ``paragraph (g)(1)''; and
0
d. Add paragraph (h)(3).
    The revision and addition read as follows:


Sec.  5.216  Disclosure and verification of Social Security and 
Employer Identification Numbers.

* * * * *
    (h) * * *
    (1) Except as provided in paragraphs (h)(2) and (3) of this 
section, if the processing entity determines that the assistance 
applicant is otherwise eligible to participate in a program, the 
assistance applicant may retain its place on the waiting list for the 
program but cannot become a participant until it can provide the 
documentation referred to in paragraph (g)(1) of this section to verify 
the SSN of each member of the household.
* * * * *
    (3) If a child under the age of 6 years was added to the assistance 
applicant household within the 6-month period prior to the household's 
date of admission, the assistance applicant may become a participant, 
so long as the documentation required in paragraph (g)(1) of this 
section is provided to the processing entity within 90 calendar days 
from the date of admission into the program. The processing entity 
shall grant an extension of one additional 90-day period if the 
processing entity determines that, in its discretion, the assistance 
applicant's failure to comply was due to circumstances that could not 
reasonably have been foreseen and were outside the control of the 
assistance applicant. If the applicant family fails to produce the 
documentation required in paragraph (g)(1) of this section within the 
required time period, the processing entity shall follow the provisions 
of Sec.  5.218.
* * * * *
0
3. Amend Sec.  5.520 as follows:
0
a. Revise paragraph (c)(1) introductory text;
0
b. Revise paragraph (c)(2) introductory text;
0
c. Revise paragraph (d); and
0
d. Add paragraph (e).
    The revisions and addition read as follows:


Sec.  5.520  Proration of assistance.

* * * * *
    (c) * * *
    (1) Section 8 assistance other than assistance provided for a 
tenancy under the Section 8 Housing Choice Voucher Program. For Section 
8 assistance other than assistance for a tenancy under the voucher 
program, the PHA must prorate the family's assistance as follows:
* * * * *
    (2) Assistance for a Section 8 voucher tenancy. For a tenancy under 
the voucher program, the PHA must prorate the family's assistance as 
follows:
* * * * *
    (d) Method of prorating assistance for Public Housing covered 
programs. (1) The PHA shall prorate the family's assistance as follows:
    (i) Step 1. Determine the total tenant payment in accordance with 
Sec.  5.628. (Annual income includes income of all family members, 
including any family member who has not established eligible 
immigration status.)
    (ii) Step 2. Subtract the total tenant payment from the PHA-
established flat rent applicable to the unit. The result is the maximum 
subsidy for which the family could qualify if all members were eligible 
(``family maximum subsidy'').
    (iii) Step 3. Divide the family maximum subsidy by the number of 
persons in the family (all persons) to determine the maximum subsidy 
per each family member who has citizenship or eligible immigration 
status (``eligible family member''). The subsidy per eligible family 
member is the ``member maximum subsidy''.

[[Page 430]]

    (iv) Step 4. Multiply the member maximum subsidy by the number of 
family members who have citizenship or eligible immigration status 
(``eligible family members'').
    (2) The product of steps 1 through 4 of paragraphs (d)(1)(i) 
through (iv) of this section is the amount of subsidy for which the 
family is eligible (``eligible subsidy''). The family's rent is the 
PHA-established flat rent minus the amount of the eligible subsidy.
    (e) Method of prorating assistance when the mixed family's TTP is 
greater than the Public Housing flat rent. When the mixed family's TTP 
is greater than the flat rent, the PHA must use the TTP as the mixed 
family TTP. The PHA subtracts from the mixed family TTP any established 
utility allowance, and the sum becomes the mixed family rent.


Sec.  5.601  [Amended]

0
4. In Sec.  5.601 in paragraph (e),, remove the phrase ``Housing 
Opportunities for Persons with AIDS (24 CFR part 574);''.
0
5. In Sec.  5.603, revise the definitions of ``Extremely low income 
family'' and ``Total tenant payment'' in paragraph (b) to read as 
follows:


Sec.  5.603  Definitions.

* * * * *
    (b) * * *
    Extremely low-income family. A family whose annual income does not 
exceed the higher of:
    (1) The poverty guidelines established by the Department of Health 
and Human Services applicable to the family of the size involved 
(except in the case of families living in Puerto Rico or any other 
territory or possession of the United States); or
    (2) 30 percent of the median income for the area, as determined by 
HUD, with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 30 percent of the 
area median income for the area if HUD finds that such variations are 
necessary because of unusually high or low family incomes.
* * * * *
    Total tenant payment. See Sec.  5.628.
* * * * *
0
6. Amend Sec.  5.609 as follows:
0
a. Revise paragraph (a);
0
b. In paragraph (b)(9), add the phrase ``and any other required fees 
and charges'' after ``tuition'' in the first sentence; and
0
c. Add paragraphs (e) and (f).
    The revision and additions read as follows:


Sec.  5.609  Annual income.

    (a) Annual income means all amounts, monetary or not, which:
    (1) Go to, or on behalf of, the family head or spouse (even if 
temporarily absent) or to any other family member, either:
    (i) Prior to admission or the annual reexamination effective date 
(i.e., ``actual past income''); or
    (ii) During the 12-month period following admission or the annual 
reexamination effective date (i.e., ``projected income''); and
    (2) Are not specifically excluded in paragraph (c) of this section.
* * * * *
    (e) At the family's request, the PHA or owner must use projected 
income to calculate annual income.
    (f) Absent a family's request to use projected income to calculate 
annual income:
    (1) A PHA may choose to determine annual income by using actual 
past income in lieu of projected income for its public housing or 
Housing Choice Voucher program (or both), but it must apply the same 
definition of annual income for all families in the selected program.
    (2) An owner may choose to determine annual income by using actual 
past income in lieu of projected income, but it must apply the same 
definition of annual income for all families in a single property.
0
7. In Sec.  5.617, revise paragraphs (a) and (c) to read as follows:


Sec.  5.617  Self-sufficiency incentives for persons with 
disabilities--Disallowance of increase in annual income.

    (a) Applicable programs. The disallowance of increase in annual 
income provided by this section is applicable only to the following 
programs: HOME Investment Partnerships Program (24 CFR part 92); 
Continuum of Care Program (24 CFR part 578); and the Housing Choice 
Voucher Program (24 CFR part 982). For the Housing Opportunities for 
Persons With AIDS (HOPWA) program, refer to 24 CFR 574.305. For public 
housing program self-sufficiency incentives, refer to 24 CFR 960.255.
* * * * *
    (c) Disallowance of increase in annual income--(1) Initial 12-month 
exclusion. During the consecutive 12-month period beginning on the date 
a member who is a person with disabilities of a qualified family is 
first employed or the family first experiences an increase in annual 
income attributable to employment, the responsible entity must exclude 
from annual income (as defined in the regulations governing the 
applicable program listed in paragraph (a) of this section) of a 
qualified family 100 percent of any increase in income of the family 
member who is a person with disabilities as a result of employment over 
prior income of that family member.
    (2) Second 12-month exclusion. During the second consecutive 12-
month period after the date a member who is a person with disabilities 
of a qualified family is first employed or the family first experiences 
an increase in annual income attributable to employment, the 
responsible entity must exclude from annual income of a qualified 
family not less than 50 percent of any increase in income of such 
family member as a result of employment over income of that family 
member prior to the beginning of such employment.
    (3) Duration of exclusions. Any income exclusions under this 
paragraph (c) shall continue only as long as the family member who is a 
person with disabilities of a qualified family is continually employed, 
during the 24-month exclusionary period. If the family member becomes 
unemployed, the income exclusion shall stop and the family must re-
qualify under the terms of paragraphs (a) and (b) of this section for 
the benefits under this section.
    (4) Conflicting exclusions. If grant funds affected by this 
paragraph (c) are combined with grant funds that have conflicting 
earned income exclusions, the regulations pertaining to the program 
that provides the rental assistance shall govern.
* * * * *
0
8. In Sec.  5.657, add paragraph (d) to read as follows:


Sec.  5.657  Section 8 project-based assistance programs: Reexamination 
of family income and composition.

* * * * *
    (d) Reexaminations for families with fixed incomes. For families 
with fixed incomes, an owner may elect to determine the family's annual 
income at reexamination by applying a verified cost of living 
adjustment for the source of income to the previously verified or 
adjusted income amount.
    (1) ``Families with fixed income'' is defined as families whose 
income consists solely of the following:
    (i) Social Security payments, including Supplemental Security 
Income (SSI) and Supplemental Security Disability Insurance (SSDI); or
    (ii) Federal, State, local and private pension plans.
    (2) To verify a cost of living adjustment, an owner may use 
adjustments published publicly or that are made available to the owner 
by tenant-provided, third party-generated documents. If no verification 
is available, the owner must follow the

[[Page 431]]

standard income verification process to calculate the change in income.
    (3) An owner that adopts the streamlined reexamination procedures 
in this paragraph must use projected income to determine a family's 
annual income and may not adopt the option to determine annual income 
using actual past income (Sec.  5.609(a)(1)(i)).

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

0
9. The authority citation for part 574 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 12901-12912.
0
10. Add Sec.  574.305 to read as follows:


Sec.  574.305  Self-sufficiency incentives for persons with 
disabilities--Disallowance of increase in annual income.

    (a) Applicability. The disallowance of increase in annual income 
provided by this section is applicable only to the HOPWA program.
    (b) Definitions. The following definitions apply for purposes of 
this section.
    Disallowance. Exclusion from annual income.
    Person with disabilities. See 24 CFR 5.403.
    Previously unemployed includes a person with disabilities who has 
earned, in the twelve months previous to employment, no more than would 
be received for 10 hours of work per week for 50 weeks at the 
established minimum wage.
    Qualified family. A family residing in HOPWA-assisted housing:
    (1) Whose annual income increases as a result of employment of a 
family member who is a person with disabilities and who was previously 
unemployed for one or more years prior to employment;
    (2) Whose annual income increases as a result of increased earnings 
by a family member who is a person with disabilities during 
participation in any economic self-sufficiency or other job training 
program; or
    (3) Whose annual income increases, as a result of new employment or 
increased earnings of a family member who is a person with 
disabilities, during or within six months after receiving assistance, 
benefits or services under any state program for temporary assistance 
for needy families funded under Part A of Title IV of the Social 
Security Act, as determined by the grantee or project sponsor in 
consultation with the local agencies administering temporary assistance 
for needy families (TANF) and Welfare-to-Work (WTW) programs. The TANF 
program is not limited to monthly income maintenance, but also includes 
such benefits and services as one-time payments, wage subsidies and 
transportation assistance--provided that the total amount over a six-
month period is at least $500.
    (c) Disallowance of increase in annual income. (1) Initial twelve-
month exclusion. During the cumulative twelve-month period beginning on 
the date a member who is a person with disabilities of a qualified 
family is first employed or the family first experiences an increase in 
annual income attributable to employment, the grantee or project 
sponsor must exclude from annual income (as defined at 24 CFR 5.609) of 
a qualified family any increase in income of the family member who is a 
person with disabilities as a result of employment over prior income of 
that family member.
    (2) Second twelve-month exclusion and phase-in. During the second 
cumulative twelve-month period after the date a member who is a person 
with disabilities of a qualified family is first employed or the family 
first experiences an increase in annual income attributable to 
employment, the grantee or project sponsor must exclude from annual 
income of a qualified family fifty percent of any increase in income of 
a family member who is a person with disabilities as a result of 
employment over income of that family member prior to the beginning of 
such employment.
    (3) Maximum four-year disallowance. The disallowance of increased 
income of an individual family member who is a person with disabilities 
as provided in paragraph (c)(1) or (2) of this section is limited to a 
lifetime 48-month period. The disallowance only applies for a maximum 
of twelve months for disallowance under paragraph (c)(1) of this 
section and a maximum of twelve months for disallowance under paragraph 
(c)(2) of this section, during the 48-month period starting from the 
initial exclusion under paragraph (c)(1) of this section.
    (d) Inapplicability to admission. The disallowance of increases in 
income as a result of employment of persons with disabilities under 
this section does not apply for purposes of admission to the program 
(including the determination of income eligibility or any income 
targeting that may be applicable).


Sec.  574.310  [Amended]

0
11. In Sec.  574.310, remove the citation ``24 CFR 5.617'' and add in 
its place ``Sec.  574.305'' in paragraph (d)(1).

PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING

0
12. The authority citation for part 960 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437d, 1437n, 1437z-3, and 
3535(d).

0
13. In Sec.  960.102, revise paragraph (a) to read as follows:


Sec.  960.102  Definitions.

    (a) Definitions found elsewhere:
    (1) General definitions. The following terms are defined in 24 CFR 
part 5, subpart A: 1937 Act, drug, drug-related criminal activity, 
elderly person, federally assisted housing, guest, household, HUD, MSA, 
premises, public housing, public housing agency (PHA), Section 8, 
violent criminal activity.
    (2) Definitions under the 1937 Act. The following terms are defined 
in 24 CFR part 5, subpart D: annual contributions contract (ACC), 
applicant, elderly family, family, person with disabilities.
    (3) Definitions and explanations concerning income and rent. The 
following terms are defined or explained in 24 CFR part 5, subpart F: 
Annual income (see 24 CFR 5.609); economic self-sufficiency program, 
extremely low income family, low income family, tenant rent, total 
tenant payment (see 24 CFR 5.613), utility allowance.
* * * * *
0
14. Amend Sec.  960.253 as follows:
0
a. Revise paragraph (b);
0
b. In paragraph (c)(1), remove the phrase ``PHA's rent policies'' and 
add in its place ``PHA's policies'';
0
c. Remove the last sentence of paragraph (c)(3) and add paragraph 
(c)(4);
0
d. Revise paragraphs (d) and (e);
0
e. Redesignate paragraph (f) as paragraph (g); and
0
f. Add a new paragraph (f).
    The revisions and addition read as follows:


Sec.  960.253  Choice of rent.

* * * * *
    (b) Flat rent. (1) The flat rent is based on the rental value of 
the unit, and is subject to the following requirements:
    (i) Not less than once every five PHA fiscal years, the PHA must 
use a reasonable method to determine the rental value for a unit.
    (ii) The PHA must establish a flat rent that is based upon the 
requirements of paragraph (b)(1)(i), but the flat rent may not be less 
than 80 percent of the applicable Fair Market Rent (FMR) as determined 
under 24 CFR part 888, subpart A.

[[Page 432]]

    (iii) For units where utilities are tenant-paid, the PHA must 
adjust the flat rent amount downward by the amount of a utility 
allowance for which the family might otherwise be eligible under 24 CFR 
part 965, subpart E.
    (iv) The PHA must revise, if necessary the flat rent amount for a 
unit no later than 90 days after HUD issues new FMRs.
    (2) If a new flat rent, adjusted to meet the 80 percent of FMR 
threshold, would cause a family's rent to increase by more than 35 
percent, the family's rent increase must be phased in at 35 percent 
annually until such time that the family chooses to pay the income-
based rent or the family is paying the flat rent established pursuant 
to this paragraph.
    (3) The PHA must maintain records that document the method used to 
determine flat rents, and also show how flat rents are determined by 
the PHA in accordance with this method, and document flat rents offered 
to families under this method.
    (c) * * *
    (4) The PHA may elect to establish policies regarding the frequency 
of utility reimbursement payments for payments made to the family.
    (i) The PHA will have the option of making utility reimbursement 
payments quarterly, for reimbursements totaling $20 or less per 
quarter. In the event a family leaves the program in advance of its 
next quarterly reimbursement, the PHA must reimburse the family for a 
prorated share of the applicable reimbursement.
    (ii) If the PHA elects to pay the utility supplier, the PHA must 
notify the family of the amount of utility reimbursement paid to the 
utility supplier.
    (d) Ceiling rent. A PHA using ceiling rents authorized and 
established before October 1, 1999, may continue to use ceiling rents, 
provided such ceiling rents are set at the level required for flat 
rents under this section. PHAs must follow the requirements for 
calculating and adjusting flat rents in paragraph (b) of this section 
when calculating and adjusting ceiling rents.
    (e) Information for families. For the family to make an informed 
choice about its rent options, the PHA must provide sufficient 
information for an informed choice. Such information must include at 
least the following written information:
    (1) The PHA's policies on switching type of rent in circumstances 
of financial hardship; and
    (2) The dollar amounts of tenant rent for the family under each 
option, following the procedures in paragraph (f) of this section.
    (f) Reexamination of family income and revisions of flat rental 
amounts. The PHA must revise the flat rental amount, as necessary, 
based on the findings of the PHA's rental value analysis and changes to 
the FMR. Families must be offered the choice between a flat rental 
amount and a previously calculated income-based rent according to the 
following:
    (1) For a family that chooses the flat rent option, the PHA must 
conduct a reexamination of family income and composition at least once 
every three years.
    (2) At initial occupancy, or in any year in which a participating 
family is paying the income-based rent, the PHA must:
    (i) Conduct a full examination of family income and composition, 
following the provisions in Sec.  960.257;
    (ii) Inform the family of the flat rental amount and the income-
based rental amount determined by the examination of family income and 
composition;
    (iii) Inform the family of the PHA's policies on switching rent 
types in circumstances of financial hardship; and
    (iv) Apply the family's rent decision at the next lease renewal.
    (3) In any year in which a family chooses the flat rent option but 
the PHA chooses not to conduct a full examination of family income and 
composition for the annual rent option under the authority of paragraph 
(f)(1) of this section, the PHA must:
    (i) Use income information from the examination of family income 
and composition from the first annual rent option;
    (ii) Inform the family of the updated flat rental amount and the 
rental amount determined by the most recent examination of family 
income and composition;
    (iii) Inform the family of the PHA's policies on switching rent 
types in circumstances of financial hardship; and
    (iv) Apply the family's rent decision at the next lease renewal.
* * * * *
0
15. In Sec.  960.255, revise paragraph (c) to read as follows:


Sec.  960.255  Self-sufficiency incentives--Disallowance of increase in 
annual income.

* * * * *
    (c) Disallowance of increase in annual income--(1) Initial 12-month 
exclusion. During the consecutive 12-month period beginning on the date 
a member of a qualified family is first employed or the family first 
experiences an increase in annual income attributable to employment, 
the PHA must exclude from annual income (as defined in 24 CFR 5.609) of 
a qualified family 100 percent of any increase in income of the family 
member as a result of employment over prior income of that family 
member.
    (2) Second 12-month exclusion. During the second consecutive 12-
month period after the date a member of a qualified family is first 
employed or the family first experiences an increase in annual income 
attributable to employment, the PHA must exclude from annual income of 
a qualified family not less than 50 percent of any increase in income 
of such family member as a result of employment over income of that 
family member prior to the beginning of such employment.
    (3) Duration of exclusions. Any income exclusions under this 
paragraph (c) shall continue only as long as a member of a qualified 
family is continually employed. If the family member becomes 
unemployed, the income exclusion shall stop and the family must re-
qualify for the benefits under this section, at which point such family 
shall be eligible for all benefits under this paragraph (c).
* * * * *
0
16. In Sec.  960.257 revise the section heading and paragraphs (a) and 
(b) to read as follows:


Sec.  960.257  Family income and composition: Annual and interim 
reexaminations.

    (a) When PHA is required to conduct reexamination. (1) For families 
who pay an income-based rent, the PHA must conduct a reexamination of 
family income and composition at least annually and must make 
appropriate adjustments to the rent after consultation with the family 
and upon verification of the information.
    (2) For families who choose flat rents, the PHA must conduct a 
reexamination of family income and composition at least once every 
three years, in accordance with the procedures in Sec.  960.253(f).
    (3) For all families who include nonexempt individuals, as defined 
in Sec.  960.601, the PHA must determine compliance once each 12 months 
with community service and self-sufficiency requirements in subpart F 
of this part.
    (4) The PHA may use the results of these reexaminations to require 
the family to move to an appropriate size unit.
    (b) Interim reexaminations. (1) A family may request an interim 
reexamination of family income or composition because of any changes 
since the last determination. The PHA must make the interim 
reexamination

[[Page 433]]

within a reasonable time after the family request.
    (2) The PHA must adopt policies prescribing when and under what 
conditions the family must report a change in family income or 
composition. The PHA must make the interim reexamination of family 
income or composition within a reasonable time after the family 
request.
    (3) For families with fixed incomes, a PHA may elect to recalculate 
a family's annual income at an interim reexamination by applying a 
verified cost of living adjustment for the source of income to the 
previously verified or adjusted income amount.
    (i) ``Families with fixed income'' is defined as families whose 
income consists solely of the following:
    (A) Social Security payments, including Supplemental Security 
Income (SSI) and Supplemental Security Disability Insurance (SSDI); or
    (B) Federal, State, local and private pension plans.
    (ii) To verify a cost of living adjustment, a PHA may use 
adjustments published publicly or that are made available to the PHA by 
tenant-provided, third party-generated documents. If no verification is 
available, the PHA must follow the standard income verification process 
to calculate the change in income.
    (iii) A PHA that adopts the streamlined reexamination procedures in 
this paragraph (b)(3) of this section must use projected income to 
determine a family's annual income and may not adopt the option to 
determine annual income using actual past income (24 CFR 
5.609(a)(1)(i)).
* * * * *
0
17. In Sec.  960.259, revise paragraph (c)(1) introductory text, and 
add paragraph (c)(2) to read as follows:


Sec.  960.259  Family information and verification.

* * * * *
    (c) * * *
    (1) The PHA must obtain and document in the family file third-party 
verification of the following factors, or must document in the file why 
third-party verification was not available:
* * * * *
    (2) For a family with net assets equal to or less than $5,000, a 
PHA may accept a family's declaration that it has net assets equal to 
or less than $5,000, without taking additional steps to verify the 
accuracy of the declaration. The declaration must state the amount of 
income the family expects to receive from such assets; this amount must 
be included in the family's income.
0
18. In Sec.  960.605, revise paragraphs (c)(3) through (5) to read as 
follows:


Sec.  960.605  How PHA administers service requirements.

* * * * *
    (c) * * *
    (3) The PHA must review family compliance with service requirements 
and must verify such compliance annually at least 30 days before the 
end of the 12-month lease term. If qualifying activities are 
administered by an organization other than the PHA, the PHA may obtain 
verification of family compliance from such third parties or may accept 
a signed certification from the family member that he or she has 
performed such qualifying activities.
    (4) The PHA must retain reasonable documentation of service 
requirement performance or exemption in a participant family's files.
    (5) The PHA must comply with non-discrimination and equal 
opportunity requirements listed at 24 CFR 5.105(a) and affirmatively 
further fair housing in all their activities in accordance with the 
AFFH Certification as described in 24 CFR 91.225(a)(1).
0
19. In Sec.  960.607, revise paragraph (a) to read as follows:


Sec.  960.607  Assuring resident compliance.

    (a) Acceptable documentation demonstrating compliance. (1) If 
qualifying activities are administered by an organization other than 
the PHA, a family member who is required to fulfill a service 
requirement must provide one of the following:
    (i) A signed certification to the PHA by such other organization 
that the family member has performed such qualifying activities; or
    (ii) A signed self-certification to the PHA by the family member 
that he or she has performed such qualifying activities.
    (2) The signed self-certification must include the following:
    (i) A statement that the tenant contributed at least 8 hours per 
month of community service not including political activities within 
the community in which the adult resides; or participated in an 
economic self-sufficiency program (as that term is defined in paragraph 
(g) of this section) for at least 8 hours per month;
    (ii) The name, address, and a contact person at the community 
service provider; or the name, address and contact person for the 
economic self-sufficiency program;
    (iii) The date(s) during which the tenant completed the community 
service activity, or participated in the economic self-sufficiency 
program;
    (iv) A description of the activity completed; and
    (v) A certification that the tenant's statement is true.
* * * * *

PART 966--PUBLIC HOUSING LEASE AND GRIEVANCE PROCEDURE

0
20. The authority citation for part 966 continues to read as follows:

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

0
21. Amend Sec.  966.52 by adding a second sentence at the end of 
paragraph (a); and adding paragraph (e), to read as follows:


Sec.  966.52  Requirements.

    (a) * * * A PHA may establish an expedited grievance procedure as 
defined in Sec.  966.53.
* * * * *
    (e) The PHA must not only meet the minimal procedural due process 
requirements contained in this subpart but also satisfy any additional 
requirements required by local, state, or federal law.
0
22. In Sec.  966.53, revise paragraphs (b), (d), and (e) to read as 
follows:


Sec.  966.53  Definitions.

* * * * *
    (b) Complainant means any tenant whose grievance is presented to 
the PHA or at the project management office.
* * * * *
    (d) Expedited grievance means a procedure established by the PHA 
for any grievance concerning a termination of tenancy or eviction that 
involves: (1) Any criminal activity that threatens the health, safety, 
or right to peaceful enjoyment of the PHA's public housing premises by 
other residents or employees of the PHA; or
    (2) Any drug-related or violent criminal activity on or off such 
premises.
    (e) Hearing officer means an impartial person or persons selected 
by the PHA, other than the person who made or approved the decision 
under review, or a subordinate of that person. Such individual or 
individuals do not need legal training.
* * * * *


Sec.  966.54  [Amended]

0
23. Amend Sec.  966.54 by removing the second and third sentences.


Sec.  966.55  [Removed]

0
24. Remove Sec.  966.55.
0
25. Amend Sec.  966.56 as follows:
0
a. Revise paragraph (a);
0
b. In paragraph (b)(2), remove the comma;

[[Page 434]]

0
c. Remove paragraphs (c), (f), and (g);
0
d. Redesignate paragraphs (d), (e), and (h) as paragraphs (c), (d), and 
(e), respectively;
0
e. Revise redesignated paragraph (c); and
0
f. In redesignated paragraph (e), add paragraph (e)(3).
    The revisions and addition read as follows:


Sec.  966.56  Procedures governing the hearing.

    (a) The hearing shall be scheduled promptly for a time and place 
reasonably convenient to both the complainant and the PHA and held 
before a hearing officer. A written notification specifying the time, 
place, and the procedures governing the hearing shall be delivered to 
the complainant and the appropriate official.
* * * * *
    (c) If the complainant or the PHA fails to appear at a scheduled 
hearing, the hearing officer may make a determination to postpone the 
hearing for no more than five business days or may make a determination 
that the party has waived his right to a hearing. Both the complainant 
and the PHA shall be notified of the determination by the hearing 
officer A determination that the complainant has waived the 
complainant's right to a hearing shall not constitute a waiver of any 
right the complainant may have to contest the PHA's disposition of the 
grievance in an appropriate judicial proceeding.
* * * * *
    (e) * * *
    (3) Materials must be provided in other languages prevalent in the 
Community in accordance with HUD' Final Guidance on LEP published in 
the Federal Register on January 22, 2007.
0
26. Revise Sec.  966.57 to read as follows:


Sec.  966.57  Decision of the hearing officer.

    (a) The hearing officer shall prepare a written decision, including 
the reasons for the PHA's decision within a reasonable time after the 
hearing. A copy of the decision shall be sent to the complainant and 
the PHA. The PHA shall retain a copy of the decision in the tenant's 
folder.
    (b) The decision of the hearing officer shall be binding on the PHA 
unless the PHA Board of Commissioners determines that:
    (1) The grievance does not concern PHA action or failure to act in 
accordance with or involving the complainant's lease on PHA 
regulations, which adversely affects the complainant's rights, duties, 
welfare or status;
    (2) The decision of the hearing officer is contrary to applicable 
Federal, State or local law, HUD regulations or requirements of the 
annual contributions contract between HUD and the PHA.
    (c) A decision by the hearing officer or Board of Commissioners in 
favor of the PHA or which denies the relief requested by the 
complainant in whole or in part shall not constitute a waiver of, nor 
affect in any manner whatever, any rights the complainant may have to a 
trial de novo or judicial review in any judicial proceedings, which may 
thereafter be brought in the matter.

PART 982--SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER 
PROGRAM

0
27. The authority citation for part 982 continues to read as follows:

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

0
28. In Sec.  982.309 add paragraph (a)(5) to read as follows:


Sec.  982.309  Term of assisted tenancy.

    (a) * * *
    (5) The PHA may adopt policies limiting the effective date of the 
lease to a certain day or days of the month, such as the first day of 
the month. Assistance paid upon family move-out must be in accordance 
with Sec.  982.311(d).
* * * * *
0
29. In Sec.  982.402 add a sentence at the end of (d)(2) to read as 
follows:


Sec.  982.402  Subsidy Standards.

* * * * *
    (d) * * *
    (2) * * * However, utility allowances must follow Sec.  982.517(d).
0
30. Amend Sec.  982.405 as follows:
0
a. In paragraph (a), remove the word ``annually'' and add in its place 
``biennially'';
0
b. Revise paragraph (e); and
0
c. Add paragraph (f).
    The revision and addition read as follows:


Sec.  982.405  PHA initial and periodic unit inspection.

* * * * *
    (e) The PHA may not charge the family for inspection or 
reinspection of the unit. The PHA may not charge the owner for the 
initial inspection of the unit or a regularly scheduled inspection of 
the unit. The PHA may establish a reasonable fee to owners for 
reinspections if the reinspection reveals that deficiencies cited in 
the previous inspection that the owner is responsible for repairing 
pursuant to Sec.  982.404(a) were not corrected. The owner may not pass 
this fee along to the family.
    (f) If a participant family or government official reports a 
condition that is life-threatening (i.e., the PHA would require the 
owner to make the repair within no more than 24 hours in accordance 
with Sec.  982.404(a)(3)), then the PHA must inspect the housing unit 
within 24 hours of when the PHA received the notification. If the 
reported condition is not life-threatening (i.e., the PHA would require 
the owner to make the repair within no more than 30 calendar days), 
then the PHA must inspect the unit within 15 days of when the PHA 
received the notification. In the event of extraordinary circumstances, 
such as if a unit is within a Presidentially declared disaster area, 
HUD may waive the 24-hour or the 15-day inspection requirement until 
such time as an inspection is feasible.


Sec.  982.406  [Redesignated as Sec.  982.407]

0
31. Redesignate Sec.  982.406 as Sec.  982.407.
0
32. Add a new Sec.  982.406 to read as follows:


Sec.  982.406  Use of Alternative Inspections.

    (a) In general. (1) A PHA may comply with the biennial inspection 
requirement in Sec.  982.405(a) by relying on an inspection conducted 
for another housing assistance program.
    (2) Units in properties that are mixed-finance properties assisted 
with project-based vouchers may be inspected at least triennially 
pursuant to 24 CFR 983.103(g).
    (b) Administrative plans. A PHA relying on an alternative 
inspection to fulfill the biennial inspection requirement for a 
particular unit must identify the alternative inspection method being 
used in the PHA's administrative plan. Such a change may be a 
significant amendment to the plan, in which case the PHA must follow 
its plan amendment and public notice requirements before using the 
alternative inspection method.
    (c) Eligible inspection methods. (1) PHAs may rely upon inspections 
of housing assisted under the HOME Investment Partnerships (HOME) 
program or housing financed under the Department of the Treasury's Low-
Income Housing Tax Credit (LIHTC) program, or inspections performed by 
HUD with no action other than amending their administrative plans.
    (2) If a PHA wishes to rely on an inspection method other than a 
method listed in paragraph (c)(1) of this section, then, prior to 
amending its administrative plan, the PHA must submit to the Real 
Estate Assessment Center (REAC) a certification affirming, under 
penalty of perjury, that the

[[Page 435]]

method ``provides the same or greater protection to occupants of 
dwelling units'' as would HQS. A PHA must also assure that it will be 
able to obtain the results of such alternative inspection; a PHA that 
is unable to obtain the results of an alternative inspection may not 
rely upon the inspection method to comply with the biennial inspection 
requirement in Sec.  982.405(a).
    (3) A PHA that submits a certification under paragraph (c)(2) of 
this section must monitor changes to the standards and requirements 
applicable to such method so that it is made aware of any weakening of 
the method that would cause the alternative inspection to no longer 
meet or exceed HQS, in which case the PHA may no longer rely upon the 
alternative inspection method to comply with the biennial inspection 
requirement.
    (d) Rules for passing alternative methods. (1) In order to utilize 
an alternative inspection method, a property must meet the standards or 
requirements regarding housing quality or safety applicable to 
properties assisted under the program using the alternative inspection 
method. To make the determination of whether such standards or 
requirements are met, the PHA must adhere to the following procedures:
    (i) If a property is inspected under an alternative inspection 
method, and the property receives a ``pass'' score, then the PHA may 
rely on that inspection to demonstrate compliance with the biennial 
inspection requirement.
    (ii) If a property is inspected under an alternative inspection 
method, and the property receives a ``fail'' score, then the PHA may 
not rely on that inspection to demonstrate compliance with the biennial 
inspection requirement.
    (iii) If a property is inspected under an alternative inspection 
method that does not employ a pass/fail determination--for example, in 
the case of a program where deficiencies are simply noted--then the PHA 
must review the list of deficiencies to determine whether any cited 
deficiency would have resulted in a ``fail'' score under HQS. If no 
such deficiency exists, then the PHA may rely on the inspection to 
demonstrate compliance with the biennial inspection requirements; if 
such a deficiency does exist, then the PHA may not rely on the 
inspection to demonstrate such compliance.
    (2) Under any circumstance described above in which a PHA is 
prohibited from relying on an alternative inspection method, the PHA 
must, in a reasonable period of time, conduct an HQS inspection of any 
units in the property occupied by voucher program participants and 
follow HQS procedures to remedy any noted deficiencies.
    (f) Records retention. As with all other inspection reports, and as 
required by Sec.  982.158(f)(4), reports for inspections conducted 
pursuant to an alternative inspection method must be obtained by the 
PHA. Such reports must be available for HUD inspection for at least 
three years from the date of the latest inspection.
0
33. Amend Sec.  982.503 as follows:
0
a. Add paragraph (b)(1)(iii);
0
b. Remove the first word in paragraph (b)(2) and in its place add 
``Except as described in Sec.  982.503(b)(1)(iii), the'';
0
c. In paragraph (c)(2), remove the paragraph heading, remove paragraph 
(c)(2)(ii), and redesignate paragraphs (c)(2)(i)(A) and (B) as 
paragraphs (c)(2)(i) and (ii), respectively.
    The addition reads as follows:


Sec.  982.503  Voucher tenancy: Payment standard amount and schedule.

* * * * *
    (b) * * *
    (1) * * *
    (iii) The PHA may establish an exception payment standard up to 120 
percent if required as a reasonable accommodation for a family that 
includes a person with a disability. Any unit approved under an 
exception payment standard must still meet the reasonable rent 
requirements found at Sec.  982.507.
* * * * *


Sec.  982.505  [Amended]

0
34. In Sec.  982.505:
0
a. In the section heading, remove ``Voucher tenancy:''; and
0
b. In paragraph (d), remove the phrase ``within the basic range'' and 
add in its place ``between 90 and 120 percent of the FMR''.
0
35. In Sec.  982.514, add paragraph (c) to read as follows:


Sec.  982.514  Distribution of housing assistance payment.

* * * * *
    (c) The PHA may elect to establish policies regarding the frequency 
of utility reimbursement payments for payments made to the family.
    (i) The PHA will have the option of making utility reimbursement 
payments quarterly, for reimbursements totaling $20 or less per 
quarter. In the event a family leaves the program in advance of its 
next quarterly reimbursement, the PHA would be required to reimburse 
the family for a prorated share of the applicable reimbursement.
    (ii) If the PHA elects to pay the utility supplier directly, the 
PHA must notify the family of the amount paid to the utility supplier.
0
36. Amend Sec.  982.516 as follows:
0
a. Add a hyphen between ``third'' and ``party'' in paragraph (a)(2) 
introductory text and add paragraph (a)(3);
0
b. Remove paragraph (e);
0
c. Redesignate paragraphs (b), (c), and (d) as paragraphs (c), (d), and 
(e), respectively;
0
d. Add a new paragraph (b);
0
e. In redesignated paragraph (c), revise the paragraph heading; and
0
f. Revise redesignated paragraph (e)(2).
    The revisions and addition read as follows:


Sec.  982.516  Family income and composition: Annual and interim 
examinations.

    (a) * * *
    (3) For a family with net assets equal to or less than $5,000, a 
PHA may accept a family's declaration that it has net assets equal to 
or less than $5,000, without taking additional steps to verify the 
accuracy of the declaration. The declaration must state the amount of 
income the family expects to receive from such assets; this amount must 
be included in the family's income
    (b) Families with fixed income. For families with fixed incomes, a 
PHA may elect to recalculate a family's annual income by applying a 
verified cost of living adjustment for the source of income to the 
previously verified or adjusted income amount.
    (1) ``Families with fixed income'' is defined as families whose 
income consists solely of the following:
    (i) Social Security payments, including Supplemental Security 
Income (SSI) and Supplemental Security Disability Insurance (SSDI); or
    (ii) Federal, State, local and private pension plans.
    (2) To verify a cost of living adjustment, a PHA may use 
adjustments published publicly or that are made available to the PHA by 
tenant-provided, third party-generated documents. If no verification is 
available, the PHA must follow the standard income verification process 
to calculate the change in income.
    (3) A PHA that adopts the streamlined reexamination procedures in 
this paragraph (b) of this section must use projected income to 
determine a family's annual income and may not adopt the option to 
determine annual income using actual past income (24 CFR 
5.609(a)(1)(i)).
    (c) Interim reexaminations. * * *
* * * * *
    (e) * * *
    (2) At the effective date of a regular or interim reexamination, 
the PHA must

[[Page 436]]

make appropriate adjustments in the housing assistance payment in 
accordance with Sec.  982.505.
* * * * *
0
37. Amend Sec.  982.517 as follows:
0
a. Capitalize the first word in paragraph (b)(2)(i);
0
b. Revise paragraph (b)(3);
0
c. In paragraph (c)(1), capitalize the first word and remove the word 
``PHAs'' and add in its place the word ``has'';
0
d. Redesignate paragraph (c)(2) as paragraph (c)(3) and add a new 
paragraph (c)(2); and
0
e. Revise paragraph (d).
    The revisions read as follows:


Sec.  982.517  Utility allowance schedule.

* * * * *
    (b) * * *
    (3) The cost of each utility and housing service category must be 
stated separately. For each of these categories, the utility allowance 
schedule must take into consideration unit size (by number of bedrooms) 
and unit type (e.g., apartment, row-house, town house, single-family 
detached, and manufactured housing). At the PHA's discretion, ``unit 
type'' may consider solely whether the unit is ``attached'' or 
``detached.''
* * * * *
    (c) * * *
    (2) In the event that the utility allowance to be used in 
calculating the housing assistance payment provided on behalf of a 
participant decreases based solely on a PHA opting to determine unit 
type based solely on whether a unit is ``attached'' or ``detached,'' 
the PHA must provide at least 60 days notice to the participant prior 
to the revised utility allowance taking effect.
* * * * *
    (d) Use of utility allowance schedule. (1) The PHA must use the 
appropriate utility allowance for the lesser of the size of dwelling 
unit actually leased by the family or the family unit size as 
determined under the PHA subsidy standards. In cases where the unit 
size leased exceeds the family unit size as determined under the PHA 
subsidy standards as a result of a reasonable accommodation, the PHA 
must use the appropriate utility allowance for the size of the dwelling 
unit actually leased by the family.
    (2) At reexamination, the PHA must use the PHA current utility 
allowance schedule, provided the PHA is able to provide a family with 
at least 60 days' notice prior to such reexamination. A PHA may comply 
with this 60-day notice requirement by means of an interim 
reexamination.
* * * * *

PART 983--PROJECT-BASED VOUCHER (PBV) PROGRAM

0
38. The Authority citation for part 983 continues to read as follows:

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


Sec.  983.2  [Amended]

0
39. In Sec.  983.2 amend paragraph (c)(4) by removing the citation 
``Sec.  982.406'' and adding in its place ``Sec.  982.407''.
0
40. In Sec.  983.103, revise paragraph (d) and add paragraph (g) to 
read as follows:


Sec.  983.103  Inspecting Units.

* * * * *
    (d) Biennial inspections. (1) At least biennially during the term 
of the HAP contract, the PHA must inspect a random sample, consisting 
of at least 20 percent of the contract units in each building to 
determine if the contract units and the premises are maintained in 
accordance with the HQS. Turnover inspections pursuant to paragraph (c) 
of this section are not counted toward meeting this inspection 
requirement.
    (2) If more than 20 percent of the biennial sample of inspected 
contract units in a building fail the initial inspection, the PHA must 
reinspect 100 percent of the contract units in the building.
    (3) A PHA may also use the procedures applicable to HCV units in 24 
CFR 982.406.
* * * * *
    (g) Mixed-Finance Properties. In the case of a property assisted 
with project-based vouchers (authorized at 42 U.S.C. 1437f(o)(13)) that 
is subject to inspection under the LIHTC or HOME program or as a result 
of an FHA-insured mortgage, the PHA may rely upon inspections conducted 
at least triennially to demonstrate compliance with the inspection 
requirement of 24 CFR 982.405(a).

PART 990--THE PUBLIC HOUSING OPERATING FUND PROGRAM

0
41. The Authority citation for part 990 continues to read as follows:

    Authority:  42 U.S.C. 1437g; 42 U.S.C. 3535(d).
0
42. In Sec.  990.150 revise paragraph (a) to read as follows:


Sec.  990.150  Limited vacancies.

    (a) Operating subsidy for a limited number of vacancies. HUD shall 
pay operating subsidy for a limited number of vacant units under an 
ACC. The limited number of vacant units shall be equal to or less than 
3 percent of the unit months on a project-by-project basis based on the 
definition of a project under subpart H of this part (provided that the 
number of eligible unit months shall not exceed 100 percent of the unit 
months for a project), beginning July 1, 2014.
* * * * *

    Dated: December 22, 2014.
Jemine A. Bryon,
 Acting Assistant Secretary for Public and Indian Housing.

Biniam T. Gebre,
Acting Assistant Secretary for Housing-Federal Housing Commissioner.

Clifford Taffet,
General Deputy Assistant Secretary for Community Planning and 
Development.
[FR Doc. 2014-30504 Filed 1-5-15; 8:45 am]
BILLING CODE 4210-67-P