[Federal Register Volume 80, Number 173 (Tuesday, September 8, 2015)]
[Rules and Regulations]
[Pages 53709-53712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22022]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 960

[Docket No. FR 5743-I-02]
RIN 2577-AC94


Streamlining Administrative Regulations for Public Housing: 
Revisions to Public Housing Flat Rents

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

ACTION: Interim rule.

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SUMMARY: Section 238 of the Department of Housing and Urban Development 
Appropriations Act, 2015 (2015 Appropriations Act) amended the 
requirements in the United States Housing Act of 1937 (1937 Act) for 
public housing agencies (PHAs) to set flat rents in public housing. 
These requirements were previously amended by Department of Housing and 
Urban Development Appropriations Act, 2014 (2014 Appropriations Act). 
This interim rule amends HUD regulations implementing the Fiscal Year 
(FY) 2014 statutory language regarding public housing flat rents to 
allow PHAs to take advantage of the FY 2015 authority that provides 
PHAs with more flexibility in setting flat rents. This interim rule 
supersedes the portion of a proposed rule issued by HUD earlier this 
year that addressed the issue of setting flat rents in public housing, 
and HUD continues to seek comment on this issue.

DATES: Effective Date: October 8, 2015.
    Comment Due Date: November 9, 2015.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim 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

[[Page 53710]]

8 a.m. and 5 p.m., weekdays, at the above address. Due to security 
measures at the HUD Headquarters building, an advance appointment to 
review the public comments must be scheduled by calling the Regulations 
Division at 202-708-3055 (this is not a toll-free number). Individuals 
with speech or hearing impairments may access this number via TTY by 
calling the Federal Relay Service at 800-877-8339 (this is a toll-free 
number). Copies of all comments submitted are available for inspection 
and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Todd Thomas, Program Analyst, Public 
Housing Management and Occupancy Division, Office of Public and Indian 
Housing, Department of Housing and Urban Development, 40 Marietta 
Street NW., Atlanta, GA 30303, telephone (678) 732-2056 (this is not a 
toll-free number) or at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Section 3(a)(2)(B) of the 1937 Act (42 U.S.C. 1437a(a)(2)(B)) 
requires PHAs to set a flat rental amount for each public housing unit. 
In the 2014 Appropriations Act,\1\ this amount was statutorily set at 
no less than 80 percent of the applicable fair market rent (FMR), as 
determined by HUD under section 8(c) of the 1937 Act (42 U.S.C. 
1437f(c)). In the event that implementation of this requirement would 
increase a family's rental payment by more than 35 percent a year, the 
PHA must phase in the flat rent as necessary to avoid such result. The 
2014 Appropriations Act required HUD to implement this change by 
notice, and to begin the rulemaking process necessary to amend the 
corresponding regulations. HUD implemented the 2014 statutory change by 
notice issued on May 19, 2014 \2\ and commenced rulemaking on January 
6, 2015, at 80 FR 423.\3\
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    \1\ Title II of Division L of the Consolidated Appropriations 
Act, 2014, Public Law 113-76, approved January 17, 2014.
    \2\ See Notice PIH 2014-12 at http://portal.hud.gov/hudportal/documents/huddoc?id=pih2014-12.pdf.
    \3\ See http://www.gpo.gov/fdsys/pkg/FR-2015-01-06/pdf/2014-30504.pdf.
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    In the 2015 Appropriations Act,\4\ section 3 of the 1937 Act was 
amended again to allow for additional flexibility to the requirement 
that the flat rental amount be set at no less than 80 percent of the 
applicable FMR, as established under 8(c) of the 1937 Act. HUD may 
allow a PHA to establish a flat rent based on an FMR that is based on 
an area geographically smaller than would otherwise be used, if HUD 
determines that the resulting FMR more accurately reflects local market 
conditions. In addition, a PHA may apply to HUD for an exception 
allowing a flat rental amount that is lower than the amount otherwise 
determined under the two allowable FMRs, if HUD determines that the two 
FMRs do not reflect the market value of the property and the lower flat 
rental amount is based on a market analysis of the applicable market. 
In either case, the alternative flat rent must not create a 
disincentive for families seeking to become economically self-
sufficient to continue to reside in public housing.
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    \4\ Title II of Division K of the Consolidated and Further 
Continuing Appropriations Act, 2015, Public Law 113-235, approved 
December 16, 2014.
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    In addition to providing additional flexibility to the 80 percent 
of an applicable FMR and allowing PHAs to apply for an exception, the 
2015 Appropriations Act struck the statutory language requiring flat 
rents to be based on the rental value of the unit and the language 
requiring PHAs to comply with the statutory provisions by June 1, 2014.
    HUD's January 6, 2015 rule proposed regulatory changes to conform 
to several statutory changes made to the 1937 Act that were designed to 
streamline and ease the burden of administrative requirements, imposed 
primarily on PHAs but also on multifamily housing owners administering 
programs and certain HUD Multifamily Housing and HUD Community Planning 
and Development programs. The January 6, 2015, proposed rule addresses 
a variety of administrative requirements, including verification of 
Social Security numbers, annual reexamination for families on fixed 
incomes, utility reimbursements, and the Earned Income Disregard used 
in several HUD programs. That proposed rule also included changes to 24 
CFR 960.253(b), the regulations addressing public housing flat 
rents,\5\ and proposed to codify the changes already implemented for 
flat rents by PIH Notice 2014-12.
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    \5\ See the discussion of flat rents in the preamble of the 
January 6, 2015, proposed rule at 80 FR 426, and the proposed 
regulatory changes at 80 FR 432-432.
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    This interim rule replaces only the proposed changes with respect 
to flat rents in Sec.  960.253(b); the changes proposed in January for 
other portions of Sec.  960.253 remain in place, and are not effective 
until HUD issues a final rule that addresses all the regulatory changes 
proposed by HUD on January 6, 2015. HUD intends to issue a single final 
rule that takes into consideration all public comments received on both 
the January 6, 2015, proposed rule and this interim rule.

II. This Interim Rule--Summary of Changes

    This interim rule, consistent with statutory authority and the 
notice implementing the changes in the 2014 Appropriations Act, 
establishes a standard flat rent amount at not less than 80 percent of 
the applicable FMR for a given unit.
    However, the 2015 Appropriations Act allowed PHAs flexibility when 
establishing flat rents if 80 percent of the applicable FMR did not 
reflect the market value of a unit.\6\ This interim rule amends 24 CFR 
960.253(b)(2) to provide PHAs additional flexibility when setting flat 
rents using a HUD-determined FMR. First, this interim rule provides 
that HUD may permit a flat rental amount based on either 80 percent of 
the applicable FMR, or an FMR that more accurately reflects local 
market conditions and is based on an area geographically smaller than 
the one that would otherwise be used. This second FMR would be either 
the Small Area FMR (SAFMR), issued for metropolitan counties, or the 
unadjusted rents, for counties not covered by an SAFMR, or any 
successor fair market rental determination. If neither a SAFMR nor an 
unadjusted rent has been determined for an area, PHAs must set flat 
rents based on the applicable FMR for the larger area. Second, this 
interim rule provides that the PHA may submit to HUD a request for an 
exception to use a flat rental amount that is lower than the amount 
allowed under the two FMRs. This request, if made, must include a 
market analysis and a demonstration that the proposed lower flat rental 
amount is based on a market analysis of the applicable market and is 
reasonable in comparison to other comparable unassisted units.
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    \6\ See, for example, the description of section 238 in the 
attached overview of the 2015 Appropriations Act by the Council of 
Large Public Housing Authorities, at http://www.clpha.org/articledetail/?aid=645.
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    While the new statutory authority grants PHAs additional 
flexibility in establishing flat rents, PHAs are not required to 
exercise such flexibility. PHAs may opt to continue to implement flat 
rents equal to not less than 80 percent of the applicable FMR, as 
determined under 8(c) of the 1937 Act. Some PHAs may want to wait for 
the conclusion of public comment and the final rule before taking 
advantage of the new authority, and HUD understands and supports this 
position.

[[Page 53711]]

    However, consistent with the 2014 Appropriations Act and the 
implementing PIH Notice 2014-12, PHAs are required to adjust flat rents 
downward to account for tenant-paid utilities and to revise flat rents 
within 90 days of HUD's issuance of new FMRs. In addition, the family's 
rent must not increase by more than 35 percent in a single year as a 
result of the new flat rent rules.
    Finally, this interim rule removes language requiring documentation 
on the part of the PHA regarding the PHA's methods of determining a 
unit's flat rent, as the process setting flat rents is now less reliant 
upon discretionary actions by the PHA, except in the case of exception 
requests, which require documentation provided by PHAs.

III. Justification for Interim Rulemaking

    In general, HUD publishes rules for advance public comment in 
accordance with its rule on rulemaking at 24 CFR part 10. However, 
under 24 CFR 10.1, HUD may omit prior public notice and comment if it 
is ``impracticable, unnecessary, or contrary to the public interest.'' 
Under such circumstances, HUD may publish an interim rule without 
soliciting public comment. In this instance, HUD has determined that it 
is unnecessary to delay the effectiveness of this rule for advance 
public comment.
    First, section 238 of the 2015 Appropriations Act is effective 
immediately and introduces statutory changes intended to provide relief 
to PHAs and tenants burdened by the current statute. This interim rule 
implements those statutory changes.
    Second, while the interim rule does exercise some discretion on the 
part of HUD, the exercise is minimal and generally relies on the PHA 
requesting action by HUD to initiate the action. HUD is not mandating 
that PHAs use the flexibility authorized by the new statutory language, 
but is rather allowing PHAs the option to utilize the new authority if 
they so choose. PHAs may elect to continue to establish flat rents in 
accordance with the changes allowed under the 2014 Appropriations Act. 
Given that many PHAs want to use the new authority, this interim rule 
strikes the right balance of allowing them to implement this new 
authority but not requiring them to do so.
    Finally, although HUD has determined that good cause exists to 
publish this rule for effect without prior solicitation of public 
comment, HUD recognizes the value and importance of public input in the 
rulemaking process. Accordingly, HUD is issuing these regulatory 
amendments on an interim basis and providing a 60-day public comment 
period.

IV. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, ``Regulatory Planning and Review.'' This rule 
was determined to be a ``significant regulatory action,'' as defined in 
section 3(f) of the order (although not an economically significant 
regulatory action under the order). The docket file is available for 
public inspection in the Regulations Division, Office of the General 
Counsel, 451 7th Street SW., Room 10276, Washington, DC 20410- 0500. 
Due to security measures at the HUD Headquarters building, please 
schedule an appointment to review the docket file by calling the 
Regulations Division at 202-708-3055 (this is not a toll-free number). 
Individuals with speech or hearing impairments may access this number 
via TTY by calling the Federal Information Relay Service at 800-877-
8339 (this is a toll-free number).

Information Collection Requirements

    The information collection requirements contained in this interim 
rule have been submitted to 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, 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 interim 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 (FONSI) with respect to the 
environment was made in accordance with HUD regulations in 24 CFR part 
50, which implement section 102(2)(C) of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4332(2)(C)), in connection with HUD's 
publication of the Streamlining Administrative Regulations proposed 
rule, published on January 6, 2015, at 80 FR 423. That FONSI remains 
applicable to this interim rule, and 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 FONSI by calling the Regulations Division at 
202-708-3055 (this is not a toll-free number). Individuals with speech 
or hearing impairments may access this number via TTY by calling the 
Federal Relay Service at 800-877-8339 (this is a toll-free number).

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 interim rule reduces administrative burdens on PHAs in many 
aspects of administering public housing. All PHAs, regardless of size, 
will benefit from the burden reduction made by this interim rule. These 
revisions impose no significant economic impact on a substantial number 
of small entities. Therefore, the undersigned certifies that this 
interim rule will not have a significant impact on a substantial number 
of small entities.
    Notwithstanding HUD's belief that this interim 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 interim 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 interim 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.

[[Page 53712]]

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the Public 
Housing program is 14.872.

List of Subjects for 24 CFR Part 960

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

    Accordingly, for the reasons stated in the preamble, HUD amends 24 
CFR part 960 as follows:

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

0
1. The authority citation for 24 CFR part 960 continues to read as 
follows:

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

0
2. In Sec.  960.253, revise paragraph (b) to read as follows:


Sec.  960.253  Choice of rent.

* * * * *
    (b) Flat rent. The flat rent is determined annually, based on the 
market rental value of the unit as determined by this paragraph (b).
    (1) The PHA must establish a flat rent for each public housing unit 
that is no less than 80 percent of the applicable Fair Market Rent 
(FMR) as determined under 24 CFR part 888, subpart A; or
    (2) HUD may permit a flat rent of no less than 80 percent of an 
applicable small area FMR (SAFMR) or unadjusted rent, if applicable, as 
determined by HUD, or any successor determination, that more accurately 
reflects local market conditions and is based on an applicable market 
area that is geographically smaller than the applicable market area 
used in paragraph (b)(1) of this section. If HUD has not determined an 
applicable SAFMR or unadjusted rent, the PHA must rely on the 
applicable FMR under paragraph (b)(1) or may apply for an exception 
flat rent under paragraph (b)(3).
    (3) The PHA may request, and HUD may approve, on a case-by-case 
basis, a flat rent that is lower than the amounts in paragraphs (b)(1) 
and (2) of this section, subject to the following requirements:
    (i) The PHA must submit a market analysis of the applicable market.
    (ii) The PHA must demonstrate, based on the market analysis, that 
the proposed flat rent is a reasonable rent in comparison to rent for 
other comparable unassisted units, based on the location, quality, 
size, unit type, and age of the public housing unit and any amenities, 
housing services, maintenance, and utilities to be provided by the PHA 
in accordance with the lease.
    (iii) All requests for exception flat rents under this paragraph 
(b)(3) must be submitted to HUD.
    (4) For units where utilities are tenant-paid, the PHA must adjust 
the flat rent downward by the amount of a utility allowance for which 
the family might otherwise be eligible under 24 CFR part 965, subpart 
E.
    (5) The PHA must revise, if necessary, the flat rent amount for a 
unit no later than 90 days after HUD issues new FMRs.
    (6) If a new flat rent 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.
* * * * *

    Dated: August 7, 2015.
Lourdes Castro Ram[iacute]rez,
Principal Deputy Assistant Secretary for Public and Indian Housing.
    Approved on August 7, 2015.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2015-22022 Filed 9-4-15; 8:45 am]
 BILLING CODE 4210-67-P