[Federal Register Volume 81, Number 45 (Tuesday, March 8, 2016)]
[Rules and Regulations]
[Pages 12354-12377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04901]
[[Page 12353]]
Vol. 81
Tuesday,
No. 45
March 8, 2016
Part III
Department of Housing and Urban Development
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24 CFR Parts 5, 880, 884, et al.
Streamlining Administrative Regulations for Public Housing, Housing
Choice Voucher, Multifamily Housing, and Community Planning and
Development Programs; Final Rule
Federal Register / Vol. 81 , No. 45 / Tuesday, March 8, 2016 / Rules
and Regulations
[[Page 12354]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5, 880, 884, 886, 891, 903, 960, 966, 982, 983, 990
[Docket No. FR 5743-F-03]
RIN 2577-AC92
Streamlining Administrative Regulations for Public Housing,
Housing Choice Voucher, Multifamily Housing, and Community Planning and
Development Programs
AGENCY: Office of the Deputy Secretary, HUD.
ACTION: Final rule.
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SUMMARY: The Department of Housing and Urban Development Appropriations
Act, 2014 (2014 Appropriations Act), made several changes to the United
States Housing Act of 1937 (1937 Act). Section 243 of the 2014
Appropriations Act authorized HUD to implement these changes through
notice, followed by notice-and-comment rulemaking. Notices implementing
the changes were published on May 19, 2014, and June 25, 2014. HUD
issued a proposed rule on January 6, 2015, to codify these changes in
regulation. In addition, the January 2015 rule proposed 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, including
the Housing Opportunities for Persons with AIDS (HOPWA) and HOME
Investment Partnerships (HOME), which are administered by HUD's Office
of Community Planning and Development (CPD). HUD also issued an interim
rule on September 8, 2015, implementing changes to flat rents in the
Public Housing program made by the Department of Housing and Urban
Development Appropriations Act, 2015 (2015 Appropriations Act).
This final rule makes changes to the regulatory text as presented
in the January 2015 proposed rule, including additional changes in
response to public comment as well as further consideration by HUD of
changes proposed in January 2015, and finalizes the regulatory changes
contained in the September 2015 interim rule.
DATES: Effective Date: April 7, 2016.
FOR FURTHER INFORMATION CONTACT: For questions regarding programs
operated by HUD's Office of Community Planning and Development, contact
Henrietta Owusu, Director, Program Policy Division, Office of
Affordable Housing Programs, at 202-402-4998. For the HCV program,
contact Becky Primeaux, Director, Housing Voucher Management and
Operations Division, at 202-402-6050. For questions regarding the
Multifamily Housing programs, contact Katherine Nzive, Director,
Program Administration Office, Asset Management and Portfolio
Oversight, at 202-708-3000. For the Public Housing program, contact
Todd Thomas, Program Analyst, Public Housing Management and Occupancy
Division, at 678-732-2056. None of the phone numbers included is toll-
free. 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
The 2014 Appropriations Act made changes to certain provisions of
the 1937 Act, such as allowing for biennial physical inspections of
certain assisted properties and permitting alternative inspection
methods to be used in certain circumstances, codifying in statute the
definition of ``extremely low-income,'' and capping utility allowances
at the lesser of the unit size on the voucher or the size of the unit
leased by the family. These changes were implemented by notice; \1\ a
proposed rule to codify the changes in regulation was published on
January 6, 2015, at 80 FR 423.
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\1\ Notice PIH 2014-12, published May 19, 2014, implemented the
changes to flat rents; 79 FR 35940, ``HUD Implementation of Fiscal
Year 2014 Appropriations Provisions on Public Housing Agency
Consortia, Biennial Inspections, Extremely Low-Income Definition,
and Utility Allowances'' (June 25, 2014), implemented all other
changes.
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In addition, HUD has solicited recommendations in recent years on
how to streamline program operations to reduce costs and enhance
efficiency while still maintaining HUD's core program oversight
functions. The January 2015 proposed rule included programmatic changes
to implement many of these suggestions. A detailed description of all
proposed amendments, including technical corrections also proposed, and
the reasons for the amendments can be found in the preamble to the
January 6, 2015 proposed rule at 80 FR 424 to 428.
As further discussed below, portions of this final rule affect the
PH program, the HCV program, the CPD programs mentioned above,\2\ and
the following MFH programs: \3\
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\2\ The only provision in this final regulation that applies
directly to the CPD programs is the earned income disregard. Other
provisions that apply do so indirectly, either because of references
in program-specific regulations or due to particular eligible
activities that follow the requirements of the Housing Choice
Voucher program. The parenthetical statements at the end of each
subpart of section II.A, exclude mention of CPD programs.
\3\ In the January 6, 2015 proposed rule, HUD inadvertently
included reference to FHA's Section 235 Homeownership program, but
as provided in a final rule published on April 3, 2015, this program
is no longer active and the regulations were removed by the April 3,
2015 final rule. See http://www.gpo.gov/fdsys/pkg/FR-2015-04-03/pdf/2015-07597.pdf.
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Project-Based Section 8 (New Construction, State Agency-
Financed, Substantial Rehabilitation, Rural Housing Services, Loan
Management Set-Aside, and Property Disposition Set-Aside).
Section 8 Moderate Rehabilitation.
Rent Supplement Program.
Section 202 Supportive Housing for the Elderly (including
Project Assistance Contract and Project Rental Assistance Contract
(PRAC)).
Section 811 Supportive Housing for Persons with
Disabilities (including PRAC and Project Rental Assistance).
Section 236 Interest Reduction Payments Program.
Rental Assistance Payment (RAP) Program.
Sections 221(d)(3) and (d)(5)--FHA Insurance Programs for
New Construction or Substantially Rehabilitated Multifamily Rental
Housing.
Some of the new flexibilities will require a PHA to make changes to
the PHA's Admissions and Continued Occupancy Policy, Administrative
Plan, or PHA plan in order for the PHA to adopt the new authorities.
HUD encourages all PHAs adopting such flexibilities to make all
required amendments as expeditiously as possible.
The 2015 Appropriations Act amended section 3 of the 1937 Act 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
[[Page 12355]]
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.
On September 8, 2015, at 80 FR 53709, HUD published an interim rule
to amend HUD's regulations implementing the 2014 Appropriations Act
language on flat rents to allow PHAs the opportunity to take advantage
of the 2015 Appropriations Act authority that provides PHAs with more
flexibility in setting flat rents. HUD advised that the interim rule
superseded the portion of the January 2015 proposed rule year that
addressed the issue of setting flat rents in public housing. Although
HUD issued the September 2015 rule as an interim rule for effect, HUD
sought public comment for a period of 60 days. By the end of the
comment period on November 9, 2015, HUD received seven comments.
II. Changes Made at the Final Rule Stage
In response to public comment and as a result of further
consideration of certain issues by HUD, this final rule makes the
following revisions to the January 2015 proposed rule. With respect to
changes made in response to public comment, the issues raised by the
commenter and HUD's basis for responding to the comments are addressed
in Section IV of this preamble. No changes are made to the September
2015 interim rule on flat rents.
A. HCV, MFH, and PH Program Regulations
1. Verification of Social Security Numbers (Sec. 5.216)
The use of the phrase ``date of admission'' appeared twice in the
proposed rule, first to identify the endpoint of the 6-month period
during which a family member under the age of 6 years who lacks a
Social Security Number (SSN) may have been added to an applicant
family, and then again to identify the starting point for the 90-day
period allotted to such a family to obtain an SSN for the newly added
child. Commenters stated that, in the HCV program, the ``date of
admission'' is typically the date of lease-up (i.e., the effective date
of the Housing Assistance Payment (HAP) contract). Prior to lease-up,
however, a PHA may have expended considerable time and resources
pulling a family from the waiting list, obtaining the necessary
verifications, procuring a Housing Quality Standards (HQS) inspection,
and performing a rent reasonableness determination. Lease-up could
ultimately occur more than 6 months from the date the child was added
the household, which would result in the household being ineligible for
admission to the program. To obviate such a scenario, HUD has, in this
final rule, adopted two separate ``dates of admission'' for the HCV
program for purposes of this provision: The date of voucher issuance
and the date of lease-up. Specifically, the endpoint of the 6-month
period during which a family member under the age of 6 years may be
added to the household is the date of voucher issuance; the 90-day
clock does not start ticking until the date of lease-up. (This
provision applies to the HCV/Project-Based Voucher (PBV), Rent
Supplement, Section 8, Sections 221(d)(3) and (d)(5), Section 236, 202/
811, and PH programs.)
2. Definition of Extremely Low-Income Families (Sec. Sec. 5.603,
903.7, 960.102)
The definition of an extremely low-income family in the final rule
is revised to include the phrase ``a very low-income family,'' which is
included in the statutory definition and was inadvertently omitted from
the proposed rule. (This provision applies to the HCV/PBV, Section 8,
and PH programs. It does not apply to the Rent Supplement, Section 235,
Section 236, Sections 221(d)(3) or (d)(5) programs.)
3. Use of Actual Past Income (Sec. 5.609)
For the reasons presented below, HUD has decided against pursuing
the regulatory changes included in the proposed rule.
4. Exclusion of Mandatory Education Fees From Income (Sec.
5.609(b)(9))
There is no change from the proposed rule. The final rule includes
fees within the definition of tuition. (This provision applies to the
HCV/PBV, Section 8, and PH programs. It does not apply to the Rent
Supplement, Section 236, Sections 221(d)(3) or (d)(5) programs.)
5. Streamlined Annual Reexamination for Fixed Incomes (Sec. Sec.
5.657, 880.603, 884.218, 886.124, 886.324, 891.410, 891.610, 891.750,
960.257, 982.516)
Based on comments submitted, this provision was revised
substantially from the proposed rule, which would have provided for a
streamlined annual reexamination of family income for any family whose
income consists solely of fixed sources. The final rule provides for a
streamlined income determination for any fixed source of income, even
if a person or a family with a fixed source of income also has a non-
fixed source of income. The final rule requires that, upon admission to
a program, third-party verification of all income amounts must be
obtained for all family members, and a full reexamination and
redetermination of income must likewise be performed every 3 years. In
the interim, a streamlined income determination may be performed for a
family member with a fixed source of income by applying to a previously
determined or verified source of income a cost of living adjustment
(COLA) or interest rate adjustment specific to each source of fixed
income. The COLA or current interest rate applicable to each source of
fixed income must be obtained either from a public source or from
tenant-provided, third-party generated documentation. In the absence of
such verification for any source of fixed income, third-party
verification of income amounts must be obtained.
While the final rule amends more regulatory provisions than the
proposed rule, the policy has not changed. Instead, there are cross-
references to 24 CFR 5.657(d), pertaining to the reexamination of
family income and composition in Section 8 project-based assistance
programs, inserted in various MFH regulations herein to avoid confusion
and ensure the policy is included in the regulations for all programs
this provision is intended to affect. (This provision applies to the
HCV/PBV, Section 8 (other than Moderate Rehabilitation), 202/811, and
PH programs. It does not apply to the Rent Supplement, Section 236,
Sections 221(d)(3) or (d)(5) programs.)
HUD recognizes that prior to the issuance of this final rule, the
Fixing America's Surface Transportation Act, or FAST Act, was signed
into law.\4\ Section 78001 of that Act modified the 1937 Act to allow
PHAs and owners to undergo full income recertification for families
with 90 percent or more of their income from fixed-income sources every
three years instead of annually. HUD believes that while the FAST Act
provisions and the provisions contained in this rule are very similar,
they offer different benefits; therefore, HUD is retaining the
flexibilities in this final rule and will issue implementation
regulations for the FAST Act separately.
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\4\ Public Law 114-94, signed December 4, 2015.
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6. Earned Income Disregard (EID) (Sec. Sec. 5.617, 960.255)
The proposed rule included a requirement that families maintain
continual employment in order to
[[Page 12356]]
obtain EID benefits over a straight 24-month period, and it allowed
families who received the full EID benefit and then subsequently
requalified for the benefit to obtain it again (i.e., the proposed rule
eliminated the maximum lifetime disallowance). The proposed rule also
included a carve-out for the HOPWA program, which retained the
provision unchanged.
In the final rule, all HUD programs to which the EID applies
(including the HOPWA program) are aligned, the lifetime disallowance is
retained, and the requirement to maintain continual employment is
dropped. Ultimately, the only change to the existing regulation adopted
in the final rule is that the benefit now applies for a straight 24-
month period, with a clear start date and end date, irrespective of
whether a family maintains continual employment during the 24-month
period. PHAs and grantees are no longer obliged to track employment
starts and stops, but only the start date, the 12-month date (on which
the amount of the disregard may change from 100 percent to not less
than 50 percent of earned income), and the 24-month (end) date.
For families enrolled and participating in EID prior to the
effective date of this regulation, the previous requirements will
continue to apply. (This provision applies to the HCV/PBV, HOME, HOPWA,
and PH programs. It does not apply to the MFH programs.) HUD intends to
publish a notice describing the changes and the administrative
requirements prospectively. For current recipients of the EID, HUD will
reiterate that regulations in effect immediately prior to this rule
will continue to apply until the benefit period expires for these
families.
B. HCV and PH Program Regulations
1. Family Declaration of Assets Under $5,000 (Sec. Sec. 960.259,
982.516)
Upon further consideration and in light of comments received, HUD
made a modest change to this provision from the proposed to the final
rule. The proposed rule would have authorized a PHA to rely on a
family's declaration starting with the first reexamination and going
forward indefinitely. In the final rule, a PHA must obtain third-party
documentation of assets every 3 years. The Office of Multifamily
Housing Programs in HUD's Office of Housing noted support for expansion
of this provision to its rental assistance programs and is issuing an
interim final rule to do just that.
2. Utility Reimbursements (Sec. Sec. 960.253, 982.514)
The proposed rule provides a PHA with the option of making utility
reimbursement payments ``quarterly,'' for reimbursements totaling $20
or less per quarter. For the final rule, this provision is modified
somewhat. The amount is raised to $45 or less per quarter. If the PHA
opts to make the payments on a quarterly basis, the PHA must institute
a hardship policy for the tenants if such payments would create a
financial hardship for them. Based on a request for clarification, this
provision was modified slightly for this final rule to make clear that
reimbursements must occur no less frequently than once every calendar-
year quarter. Additionally, HUD is issuing an interim final rule to
expand this provision to MFH programs.
C. PH Program Regulations
1. Public Housing Rents for Mixed Families (Sec. 5.520(d))
There is no change from the proposed rule. The final rule requires
PHAs to use the established flat rent applicable to the unit to
calculate rents for mixed families. The final rule also requires that a
mixed family's payment be equivalent to their total tenant payment
(TTP) when their TTP exceeds the flat rent.
2. Tenant Self-Certification for Community Service Requirements
(Sec. Sec. 960.605, 960.607)
Just as in the proposed rule, the final rule permits PHAs to accept
a tenant's signed self-certification of compliance with the community
service requirement. However, to better ensure compliance with the
community service requirement, HUD is requiring PHAs to review a sample
of self-certifications and validate their accuracy with the third-party
verification procedures currently in place. The PHA will also need to
notify tenants that any self-certification may be subject to such
validation.
3. Public Housing Grievance Procedures (Sec. Sec. 966.4 and 966.52
Through 966.57)
Upon further consideration and in light of comments received, HUD
has decided against pursuing regulatory changes pertaining to the
requirement that a PHA prepare a summary of any informal settlement.
HUD has also decided against pursuing changes related to the ability of
either party to a grievance to request, at their own expense, that a
transcript of a grievance hearing be prepared. Further, in light of
comments received, HUD has provided a clarification regarding the
Limited English Proficiency requirements related to grievance
procedures.
This final rule maintains the elimination of the requirement that
PHAs consult resident organizations before appointing a hearing
officer. However, in light of comments that residents should have input
into the selection process, HUD is requiring that PHAs include their
policies regarding the selection process in the tenant lease form,
which is subject to a 30-day comment period. Finally, the final rule
also maintains the elimination of the requirement that PHAs retain a
redacted copy of each hearing decision to be made available to
prospective complainants, and in the place of that requirement,
requires PHAs to maintain a log of hearing officer decisions as
described through HUD guidance.
4. Limited Vacancies (Sec. 990.150)
There is no change from the proposed rule. The final rule clarifies
that the number of vacant units eligible for operating subsidy must be
not more than 3 percent of the total units, on a project-by-project
basis.
D. HCV Program Regulations
1. Start of Assisted Tenancy (Sec. 982.309)
For the reasons presented below, HUD has decided against pursuing
the regulatory changes included in the proposed rule.
2. Biennial Inspections and the Use of Alternative Inspection Methods
(Sec. Sec. 982.405, 982.406, 983.103)
Upon further consideration, HUD made a change to this provision to
clarify that if an alternative inspection method employs sampling, the
PHA may rely upon that method only if HCV units are included in the
population of units forming the basis of the sample. In addition, in
response to public comments, HUD is requiring PHAs wishing to rely upon
inspection methods other than those conducted pursuant to the Low-
Income Housing Tax Credit (LIHTC) or HOME programs, or inspections
performed by HUD, to submit to HUD the protocol for the inspection
method they wish to use along with the PHA's analysis showing that the
desired protocol meets or exceeds HQS. A PHA must submit these
materials to HUD for approval and may not rely upon such alternative
inspection methods until such approval has been granted.
3. Housing Quality Standards (HQS) Reinspection Fees (Sec. 982.405)
The Department made modest changes to this provision based on
comments expressing concern about the
[[Page 12357]]
broad nature of this authority and requests for clarity about the
treatment of fees. The proposed rule would have authorized a PHA to
charge a reasonable fee if a cited deficiency remained upon
reinspection. The final rule states that the fee may be charged only if
an owner stated that a deficiency had been fixed and the deficiency is
found during reinspection to persist or if a reinspection conducted
after the expiration of the timeframe for repairs reveals that the
deficiency persists. With respect to the fee, the final rule makes
clear that any fees collected may be used only for activities related
to the provision of tenant-based assistance.
4. Exception Payment Standards for Providing Reasonable Accommodations
(Sec. Sec. 982.503, 982.505)
There is no change from the proposed rule. The final rule allows a
PHA to approve 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.
5. Family Income and Composition: Regular and Interim Examinations
(Sec. 982.516(c)-(e))
There is no change from the proposed rule. The final rule
eliminates the requirement that a voucher agency conduct a
reexamination of income whenever a new family member is added, aligning
the voucher and PH regulations.
6. Utility Payment Schedules (Sec. 982.517)
For the reasons presented below, HUD has decided against pursuing
the regulatory changes included in the proposed rule that would have
authorized a PHA to define ``unit type'' as simply ``attached'' or
``detached.''
III. Discussion of Public Comments and HUD's Responses
The public comment period on the proposed rule closed on March 9,
2015, and 92 public comments were received in response to HUD's January
6, 2015, proposed rule. Comments were submitted by individual members
of the public, Fair Housing advocacy groups, housing associations, and
PHAs. The following presents the significant issues and questions
related to the proposed rule raised by the commenters, and HUD's
responses to these issues and questions.
A. CPD, HCV, MFH, and PH Program Regulations
1. Verification of Social Security Numbers (Sec. 5.216)
Issue: Proposal Expansion. Commenters had several suggestions for
HUD to expand the proposed relief, including allowing relief if there
is a newly added family member over the age of six. Others suggested
that HUD simply establish a maximum time period during which a family
may receive a subsidy without providing a missing SSN instead of
allowing for two extension periods or that HUD should allow families to
self-certify as to having obtained SSNs. Commenters also stated that
the waiver should be allowed only if any enforcement action is
consistent with the Administrative and Continued Occupancy Policy
(ACOP) and/or the Administrative Plan and/or Tenant Selection Plan
(TSP).
HUD Response: Existing regulations permit a participant household
to add a new household member under the age of 6 years, even if that
household member lacks an SSN at the time of admission. The participant
household then has 90 days to obtain and provide documentation
necessary to verify the SSN of the new household member; the processing
entity may grant the household an additional 90-day extension. HUD's
intent in proposing changes to the regulations governing applicants is
to align the requirements for applicants with those that govern
participants, including with respect to enforcement. The changes
proposed above either go beyond the current requirements for
participant households or vary from those requirements. As such, they
are contrary to HUD's intent, and HUD declines to adopt them.
Issue: Expansion to Homeless Programs. Commenters asked HUD to
expand the proposal by providing waivers to allow PHAs to house
homeless individuals who are unable to provide documentation of their
SSN by giving the families 90 days to provide the information.
HUD Response: HUD agrees that adopting similar flexibility with
respect to homeless individuals who lack SSNs would facilitate HUD's
efforts to serve homeless families. However, HUD is unable to adopt
this recommended change at this time, because it is beyond the scope of
this rulemaking.
Issue: Timing of Waiver. Commenters asked HUD to use the date of
voucher issuance instead of the date of admission, as the date of
admission usually means the date of lease-up and does not account for
time for finding a unit and inspections.
HUD Response: HUD agrees with this comment and has adopted it in
this final rule.
Issue: Objections. Some commenters objected to the proposal,
stating that it would actually increase burden on PHAs. Others asked
HUD to modify its systems to properly accept a delayed certification
when there is a new child in the family or when a foster agency refuses
to provide the SSN. Commenters also asked HUD to allow the use of other
forms of identification, such as Individual Taxpayer Identification
Numbers.
HUD Response: Several of the comments provided pertain only
indirectly to the changes proposed by HUD and are therefore beyond the
scope of this rulemaking. With respect to the assertion that this
change may result in additional tracking and monitoring, HUD notes
that, for processing entities that typically request waivers in order
to house such families, the change reduces burden. In addition, the
change creates benefits that offset any modest burden. Specifically,
they eliminate a barrier that could otherwise prevent families from
being housed, requiring no greater monitoring and tracking than is
performed for participant households.
2. Definition of Extremely Low-Income (ELI) Families (Sec. Sec. 5.603,
903.7, 960.102)
Issue: Low-Income Families. Commenters stated that the proposed
change should not exclude households from meeting ELI eligibility who
are between 30 percent and 50 percent of area median income (AMI).
HUD Response: HUD agrees with the comment and has added ``very low-
income'' language to the final rule.
Issue: Requested Changes. Commenters stated that because the new
definition of ELI has delayed the release of income limits, the
proposal should not be finalized. Similarly, it was suggested that HUD
remove income targeting completely.
HUD Response: The final rule codifies the definition of ELI in
HUD's 2014 Appropriations Act. The FY 2014 Appropriations Act defines
``extremely low-income family'' to mean a very low-income family whose
income does not exceed the higher of 30 percent of AMI or the poverty
level. It would be contrary to the statutory change to delay in
proceeding with issuance of this final rule.
Income targeting is a statutory requirement of section 16 of the
1937 Act and cannot be removed through rulemaking without statutory
authority.
[[Page 12358]]
3. Use of Actual Past Income (Sec. 5.609)
Issue: Objections to the Proposed Change. Many commenters objected
to the proposal's requirement that a PHA use one definition of annual
income (either actual past income or projected income) for all families
in a program. Also, many commenters objected to the prohibition against
using both the past income provision and the provision authorizing a
streamlined annual reexamination for fixed-income families. Commenters
stated that these restrictions limit PHA discretion and therefore fail
to provide administrative savings to PHAs.
Additionally, commenters stated that the provision did nothing to
alleviate the burden associated with performing interim income
reexaminations. The commenters stated that many families experience
fluctuations in income over the course of a year, and that each time
this happens, a housing provider must calculate income based on
projected income, rather than past income. The commenters stated that
furthermore, the proposal required housing providers that adopted a
definition based on actual past income to calculate expenses for such
things as child care and medical care during the same 12-month period,
and it is difficult to have the same timeframes for all sources of
income.
Other commenters stated that using past income was not an accurate
way to set rent.
HUD Response: HUD agrees that the proposal provided minimal, if
any, streamlining benefit, and required impractical actions on the part
of housing providers in using the same time frames for income and
deductions. Given the concerns raised about the proposal, HUD has
decided not to adopt the use of actual past income in the final rule.
4. Exclusion of Mandatory Education Fees From Income (Sec.
5.609(b)(9))
Issue: Requests for Clarification. Some commenters supported the
change, but expressed doubt that this provided streamlining relief and
perhaps, instead, added to a PHA's burden, particularly in determining
the amount of fees charged and then verifying those fees. Others asked
for additional guidance on what fees would fall under this new policy.
HUD Response: HUD notes that this provision is included in the
rule, not as administrative relief, but to codify in regulation
language included in recent appropriations acts that has excluded from
income those amounts needed to pay mandatory student fees.\5\
Additional guidance from HUD regarding what constitutes such fees is
forthcoming in the form of a notice that relies on the Department of
Education definitions of tuition and fees. For example, a mandatory
education fee would include student service fees. That same notice will
provide guidance on how to verify fee information. (Note: Such fees are
already excluded for purposes of the PH program, pursuant to Sec.
5.609(b)(9).)
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\5\ See section 213 of the Transportation, Housing and Urban
Development, and Related Agencies Appropriations Act, 2015 (Pub. L.
113-235, approved Dec. 16, 2014).
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5. Streamlined Annual Reexamination for Fixed Incomes (Sec. Sec.
5.657, 960.257, 982.516)
Issue: Clarifications and Minor Changes. Commenters supported
streamlining reexaminations for families with fixed income, but asked
that HUD make some small changes. In addition to the many requests that
HUD permit both fixed-income streamlining and the use of actual past
income, commenters asked that HUD allow for streamlined reexaminations
even when the family does not have all of its income from fixed-income
sources or when some family members have a variable income and others
have a fixed income. Commenters also asked that either the regulatory
definition of ``fixed'' income be made more flexible or HUD grant PHAs
flexibility to establish their own definition.
HUD Response: As explained above, HUD has dropped the provision
that would have authorized PHAs and owners to define annual income as
``actual past income.'' At the same time, in response to comments, HUD
has revised this streamlined annual reexamination measure to provide
PHAs and owners with the option of conducting a streamlined income
redetermination for any fixed-income source, irrespective of whether an
individual or a family also has a non-fixed source of income. This
means that the regulation no longer requires a family to have 100
percent of its income from fixed sources, which resolves a number of
the concerns expressed by commenters. The final rule also adopts an
expanded list of fixed sources of income. With respect to income from
annuities or other retirement benefit programs, insurance policies,
disability or death benefits, or other similar types of periodic
receipts, if a family member receives income from any of these sources
and the income consists solely of periodic payments at reasonably
predictable levels, then the income source may be considered to be
``fixed.'' HUD believes that these changes respond to a number of the
comments received and will provide substantial relief to PHAs and
owners.
Issue: Objections and Significant Changes. Some commenters stated
that the proposal did not provide any streamlining benefit, and, to
fully streamline, HUD should eliminate or modify the medical expense
through methods like a standard deduction or self-certification of
medical expenses. Commenters expressed concern that allowing
streamlined recertification for fixed income families would allow such
families to overlook sources of income. Some stated that HUD should
still require annual income verifications, because some families would
have some members with fixed income and others with variable income.
HUD Response: While HUD is amenable to adopting several of the
suggestions made by commenters, HUD will not eliminate certain
requirements, such as the requirement to verify medical expenses and
otherwise calculate adjustments to annual income for fixed-income
families. For ongoing medical expenses, PHAs and owners already have
the option to determine anticipated expenses by calculating expenses
paid by the family in the 12 months preceding recertification. For past
one-time, nonrecurring medical expenses that have been paid in full,
PHAs and owners already have the option of including these expenses at
an initial, interim, or annual recertification; if such an expense has
not been paid in full but is instead being paid subject to a payment
plan, then the expense would be counted as anticipated either at the
time it occurs, through an interim recertification, or at an upcoming
annual recertification. Further, HUD will not adopt the use of self-
certification of medical expenses and other deductions, due to the risk
of improper payment. Along the same lines, the final rule makes clear
that a full examination of family income must be conducted upon
admission to a program. Also, for PHAs and owners that choose to adopt
the streamlined income redetermination, a full examination of family
income must be performed at least every 3 years.
6. Earned Income Disregard (Sec. Sec. 5.617, 960.255)
Issue: Definition of ``continually employed'' and effect on
employment. Several commenters requested that HUD modify the proposal
by clarifying the requirement that the family remain continually
employed.
[[Page 12359]]
In contrast to these commenters, other commenters suggested that
this change should not be made, because residents eligible for EID
would not be able to be continually employed for 24 months. Others
objected to allowing residents to re-qualify for EID, either because it
would create an additional burden on PHAs or because it could create an
incentive for individuals to leave jobs when the EID expires. Some
commenters expressed concern that a family losing the EID during the
24-month period would be able to qualify for a new EID period
immediately, allowing for an infinite time frame to receive the EID.
Commenters also suggested that HUD allow PHAs the option to allow the
EID time clock to run during periods of unemployment but disregard any
unemployment benefits an individual receives.
HUD Response: HUD has determined to drop the continuous employment
requirement from this rulemaking. For all HUD programs that require an
EID, HUD is retaining the ability of these residents to start and stop
employment and still retain the benefit of the EID. However, these
residents may only receive the benefit for up to 24 consecutive months
from the date of initial increase in annual income. If an individual
becomes eligible to receive the EID, the 24-month period will not stop
if the circumstance that triggered the EID ceases; however, if the
individual experiences an event that would again provide an EID benefit
during the 24-month period, then the individual will be provided the
rent incentive. This change eliminates the burdensome process of
tracking EID starts and stops over a 48-month time period, but still
provides some flexibility to tenants to receive the EID if they again
obtain employment.
HUD will retain the one-time EID eligibility. Specifically, after
the expiration of the 24-month period, individuals will be ineligible
to receive subsequent EID benefits. HUD believes that these changes
maintain the balance that HUD seeks to incentivize employment among
residents while reducing the burden of administering the benefit.
Issue: Exclusion in the second 12 months. Commenters asked that HUD
make the income exclusion 100 percent for the first year and 50 percent
for the second 12 months.
HUD Response: HUD disagrees with this suggestion. The statutory
language at section 3(d) of the 1937 Act requires PHAs to disregard 100
percent of any increase in income for the first 12 months. However, for
the second 12 months, PHAs must disregard not less than 50 percent of
any increase in income. PHAs have discretion during the second 12-month
period to disregard more than 50 percent of any increase in income.
Therefore, HUD will not adopt this suggested change.
Issue: Limiting the availability of EID. Commenters suggested that
HUD align the EID effective date with a family's annual reexamination
date. Others suggested that HUD should allow for income to be
calculated using actual past earned income for everyone in lieu of EID,
or that EID should be available only for individuals with disabilities.
Commenters also suggested that HUD should allow PHAs to implement EID
on their own reporting cycle.
HUD Response: HUD's intent in this rulemaking, with respect to EID,
is to streamline the EID tracking process by reducing the time during
which a program participant may be eligible to receive the benefit of
the EID. HUD believes the changes in this rulemaking also more closely
align to the statute that governs the EID. The changes suggested above
are inconsistent either with the statute or with HUD's intent in this
rulemaking. As a result, HUD will not adopt the suggested changes.
Issue: Additional guidance. HUD was asked for specific guidance for
families that have already started EID under the previous regulations.
HUD Response: HUD agrees with this comment and has revised the
final regulation to make clear that the previous regulations apply to
such families.
Issue: HOPWA carve-out. Some commenters stated that allowing HOPWA
to have an EID policy different from other programs with tenant
populations that have disabilities is unfair to the tenants in those
non-HOPWA programs.
HUD Response: HUD agrees with this recommendation and has
eliminated the HOPWA program carve-out in this final rule. The final
rule applies the EID uniformly to all families eligible for the
benefit.
Issue: Elimination of EID. Some commenters suggested HUD should
eliminate EID entirely, either because it clashes with PH's minimum
rent requirement or because the family self-sufficiency program is
better. Others stated that the EID should not be extended to the
Shelter Plus Care and Moderate Rehabilitation/Single-Room Occupancy
(SRO) programs. Some suggested that the EID time period should be
limited to only three months to discourage individuals from quitting
jobs at the expiration of the EID time period to avoid rent increases
or that the EID time period should be expanded to 48 months to allow
for more gradual rent increases.
HUD Response: As noted in response to an earlier comment, HUD's
intent in this rulemaking, with respect to EID, is to streamline the
EID tracking process by reducing the time during which a program
participant may be eligible to receive the benefit of the EID. HUD
believes the changes in this rulemaking more closely align to the
statute that governs the EID. The changes suggested above are
inconsistent either with the statute or with HUD's intent in this
rulemaking. As a result, HUD will not adopt the suggested changes.
B. HCV and PH Program Regulations
1. Family Declaration of Assets Under $5,000 (Sec. Sec. 960.259,
982.516)
Issue: Increasing Threshold. Many commenters asked that HUD
increase the maximum amount of assets that can be self-certified to
$10,000.
HUD Response: The final rule has not adopted this suggestion. The
$5,000 amount is consistent with other policies. Existing regulations
require housing providers to calculate the imputed income for assets
over $5,000. Also, the Internal Revenue Service permits housing credit
agencies and owners to accept a certification from families of assets
under $5,000. Commenters stated that there are few residents with
assets greater than $5,000.
Issue: Expansion to Admission. Some commenters asked that HUD
modify the proposal to allow families to use self-certification at both
admission and reexamination.
HUD Response: The final rule clarifies in the preamble that this
provision applies to families at reexamination. At admission, all
assets of a family will be verified as is the current practice. Also,
the final rule requires a PHA to obtain third-party documentation of
all family assets every three years.
Issue: Method of Certification. Commenters asked that HUD allow
families to certify to total assets instead of requiring declaration of
each separate asset.
HUD Response: A family's declaration of total assets may be
included on a single form with each asset listed. HUD will issue
further guidance about this provision of the final rule.
Issue: Expansion to Multifamily. Commenters asked that HUD allow
this provision to apply to multifamily housing as well.
HUD Response: The Office of Multifamily Housing Programs, which
operates various rental assistance programs, is issuing an interim
final rule to accomplish this expansion.
[[Page 12360]]
Issue: Larger Changes to the Proposal. Some commenters asked that
HUD eliminate the consideration of assets when determining income, as
income from assets usually has little, if any, effect on the amount of
rent paid by a family. Other commenters state that self-certification
does not actually reduce burden on PHAs and may actually increase work
for PHA staff.
HUD Response: Totally eliminating consideration of assets when
determining income is outside the scope of this rulemaking. HUD will
keep the suggestion in mind as it examines other opportunities to
streamline program requirements.
Additionally, this provision is optional for PHAs. A PHA may
continue to verify such assets at both admission and annual
reexaminations.
2. Utility Reimbursements (Sec. Sec. 960.253, 982.514)
Issue: Optional Nature of Provision. Commenters asked that HUD make
this policy optional or allow PHAs to determine the frequency with
which they make utility reimbursement payments. For example, some
commenters requested that HUD permit annual reimbursements.
HUD Response: The changes in this rulemaking are optional, and PHAs
that do not believe this provision is beneficial to their program
administration may continue to provide utility reimbursements monthly.
Nothing in this rulemaking permits a PHA not to provide a utility
reimbursement if such a reimbursement is due. Nor does the rulemaking
offer PHAs the option of making such payments less frequently than
quarterly.
Issue: Frequency of Payments. Commenters asked whether the
quarterly reimbursement period would be based on the calendar year or
when the family moves in. Others asked for clarification on whether the
payments are reimbursements or future payments.
HUD Response: The final rule has been modified to clarify that the
quarterly periods are to be based on the calendar year, not the move-in
date. However, HUD is not amending other policies governing when
utility reimbursements are sent.
Issue: Hardship Exemption. Commenters stated that HUD should not
allow any hardship exemption.
HUD Response: While the proposed rule did not contain a hardship
exemption, HUD has decided for some families, waiting for a quarterly
reimbursement amount may be untenable. Therefore, the final rule now
requires that if PHAs make quarterly reimbursements, the PHA must have
a hardship policy in place for tenants.
Issue: Quarterly Reimbursement Threshold Amount. Commenters
requested that HUD increase to $50 the maximum amount of reimbursements
that may be sent quarterly.
HUD Response: HUD agrees that raising the threshold for quarterly
reimbursements will increase the number of families under this
provision and expand the streamlining efforts. While not raising the
amount to $50 per quarter, HUD has raised the threshold to $45 per
quarter ($15 per month). Any burden placed on families due to this
higher amount is now offset by the requirement that PHAs opting to
issue quarterly utility reimbursements must include a hardship
exemption policy if the quarterly payments impose a financial hardship
on families.
Issue: Alternative Reimbursement Methods. Commenters asked that HUD
support options other than checks for making utility reimbursement
payments.
Some commenters suggested that quarterly reimbursements would not
help PHAs that use automatic deposits onto a debit card.
HUD Response: HUD supports the use of alternative utility
reimbursement methods, including debit cards. PHAs that choose to use
such alternative methods should ensure that such reimbursement methods
do not generate fees that must be paid by the tenant.
The use of quarterly reimbursement may benefit PHAs that use
automatic deposits. If it does not, then HUD expects that such PHAs
will not exercise this option.
Issue: Elimination of Low Reimbursement Amounts. Commenters asked
that HUD eliminate utility reimbursements that are less than $10 per
month or eliminate reimbursements entirely.
HUD Response: HUD does not agree that utility reimbursements for
amounts less than $10 per month should be eliminated. The elimination
of such reimbursements would violate sections 3 and 8 of the 1937 Act
(42 U.S.C. 1437a and 1437f), which require that families pay no more
than 30 percent of their annual gross income in rent for their assisted
housing. HUD has determined that such rental payments are for housing
and reasonable utilities costs. Therefore, eliminating a utility
reimbursement of any amount would result in some program participants
paying more than the maximum amount of rent that the family should pay.
HUD will not adopt the suggested change.
Issue: Setting Rents by Income Bands. Commenters stated that the
reimbursement burden would be completely eliminated if rents were
solely determined by income bands.
HUD Response: HUD does not have the statutory authority to permit
the use of rents based on income bands in the PH or HCV programs.
Therefore, HUD will not adopt this suggestion.
Issue: Direct Payments. Commenters stated that owners should be
able to submit utility payments directly to utility providers.
HUD Response: This rulemaking does not eliminate the option
available to PHAs to make direct payments to utility providers in lieu
of making utility reimbursement payments to tenants.
Issue: Prorated Reimbursements. Commenters stated that owners
should be given the option to prorate the utility allowance payment
based on any projected move out date; if a payment has already been
disbursed when a tenant moves out, the owner should be allowed to
offset the difference by using the security deposit, charging the
resident for the difference, or adjusting the voucher payment amount.
HUD Response: This rulemaking requires PHAs to make a prorated
utility reimbursement payment in the case of a family that moves out in
advance of the next scheduled quarterly reimbursement. Likewise, if a
family leaves the program with an outstanding credit from the PHA for a
utility reimbursement, the PHA must reconcile the credit with the
family prior to the expiration of the lease, in the case of PH, or when
the HAP contract terminates or shortly thereafter, in the case of the
HCV program.
C. PH Program Regulations
1. Public Housing Rents for Mixed Families (Sec. 5.520(d))
The comments received on this proposal were all positive and did
not urge any changes. Therefore HUD is adopting the proposal, unchanged
in the final rulemaking.
2. Tenant Self-Certification for Community Service and Self-Sufficiency
Requirement (Sec. Sec. 960.605, 960.607)
Issue: Review of Certifications. Several commenters stated that HUD
should not require PHAs to obtain third-party verification when
reviewing the self-certifications or should limit the times when a PHA
should follow up with a third party in the review of certifications.
HUD Response: HUD agrees that it would be unnecessarily burdensome
on PHAs to obtain additional third-party verification when reviewing
each self-
[[Page 12361]]
certification. HUD is not, therefore, mandating such a process when
reviewing tenant self-certifications. PHAs must, however, review the
self-certifications to ensure that they are complete and provide
sufficient information in order to follow up as necessary. Further, HUD
strongly encourages PHAs to investigate community service compliance
when there are questions of accuracy. Finally, in a change from the
proposed rule, HUD is requiring PHAs to validate a sample of self-
certifications and notify residents that their self-certifications may
be subject to such validation in order to ensure that residents remain
compliant with the community service and self-sufficiency requirement
(CSSR).
Issue: Objections to Self-Certification. Several commenters
objected to the proposal to allow self-certification, stating that it
would reduce compliance with the CSSR.
HUD Response: While HUD understands the concerns that some
residents may attempt to submit fraudulent self-certifications, the
changes permit, but do not require, PHAs to accept a tenant self-
certification of compliance with the CSSR in lieu of obtaining
independent third-party verification. PHAs that are concerned about the
potential for fraudulent self-certifications may continue to require
third-party verification of compliance for each eligible resident.
Issue: Elimination of Community Service Requirement. Several
commenters suggested that it would be better if HUD eliminated the
community service requirement for PH entirely.
HUD Response: The CSSR is mandated by section 12(c) of the 1937 Act
(42 U.S.C. 1437j(c)). HUD is therefore unable to eliminate the CSSR.
3. Public Housing Grievance Procedures (Sec. Sec. 966.4 and 966.52
Through 966.57)
Issue: Alignment. Commenters suggested that all grievance
procedures should be aligned across PH, Section 8, and MFH programs.
This would allow for only one administrative hearing for any action.
Other commenters suggested applying the revised definition of ``hearing
officer'' to the HCV program, as well.
HUD Response: In general, this streamlining rule aligns program
requirements where possible to simplify administration of HUD programs.
In the case of the PH program, which in some cases requires grievance
procedures that are beyond what is required under state/local law, it
would be impractical for HUD to seek to fully align the PH program with
other HUD rental assistance programs.
Issue: Hearing Postponements. Many commenters objected to language
in Sec. 966.56(c), which would limit the timing of any hearing
postponements to five days. The commenters stated that the provision
places unnecessary time restrictions, and timeframes should remain at
the discretion of PHAs on a case-by-case basis.
HUD Response: HUD's intent in this provision is to clarify, through
the use of plain language, the flexibility afforded to the hearing
officer regarding the length of time for which a hearing may be
postponed. The regulatory language was changed from ``not to exceed,''
to ``no more than.'' The change is not substantive, does not reduce the
flexibility afforded to the PHA, and is not disadvantageous to the
complainant. The final rule is unchanged from the proposed rule.
Issue: Limited English Proficiency (LEP) Requirements. Several
commenters expressed concern with the newly included LEP requirements
in Sec. 955.56. The commenters asked whether a PHA must provide
materials in multiple languages, and stated that PHAs should be allowed
to use common sense when providing LEP materials to complainants.
Other commenters asked that HUD expand the LEP requirements beyond
written materials to include providing translators at various
conferences and meetings and materials in other languages for any
notice related to a proposed adverse action. Some commenters stated
that written materials may be inappropriate, as some residents may be
illiterate in their spoken language.
Some commenters also disagreed with HUD's placement of the LEP
requirements under a heading of accommodations for persons with
disabilities, as limited English proficiency is not a disability.
HUD Response: HUD's intent in this provision is to clarify in the
regulations the LEP requirements already in place for the PH program.
On January 22, 2007,\6\ HUD published final guidance in the Federal
Register. This rulemaking does not introduce requirements that are
beyond what is included in HUD's final LEP guidance. The final rule has
been amended to clarify PHA obligations.
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\6\ See http://www.gpo.gov/fdsys/pkg/FR-2007-01-22/pdf/07-217.pdf.
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HUD agrees with the comments regarding the placement of the
language, and has moved the requirement to Sec. 966.56(g).
Issue: Due Process. Commenters suggested methods to assure due
process rights for complainants, including relying exclusively on local
courts or limiting the streamlined process only for drug activity. Some
commenters stated that PHAs should be required to set forth a basic
schedule, including witness lists and supporting documents and limiting
the types of testimony a PHA may introduce without allowing cross-
examination of witnesses. Commenters also asked that HUD provide
additional guidance on how flexible a PHA may be with certain
procedures, in order to reduce the exposure of PHAs to legal
challenges.
HUD Response: HUD's intent in this rulemaking is to remove overly
prescriptive process requirements for PH grievances, where those
requirements are not mandated by statute. The changes proposed above
either attempt to maintain or add to existing requirements. The changes
are not consistent with HUD's intent in this rulemaking; therefore, HUD
will not adopt these suggested changes.
Issue: Consultation with Residents in Appointing Hearing Officers.
Some commenters expressed concern that the proposal eliminates the
requirement for PHAs to consult with residents in appointing hearing
officers, stating that it damages residents' rights to impartial
hearings.
HUD Response: Requiring a process to consult with residents over
the selection of a hearing officer when PHAs ultimately have the final
say about whom to select would be an unnecessarily burdensome process
requirement, and therefore contrary to the intent of this rulemaking
which is to reduce burden. Further, PHAs still may, but are no longer
required to, consult with residents about the hearing officer. This
suggestion would maintain the current burdensome process and is
inconsistent with HUD's intent in this rulemaking. HUD will not adopt
this suggestion.
However, in light of these comments, HUD agrees that tenant input
into hearing officer selection process can be valuable. Therefore, HUD
is requiring that PHAs include their policies for selection of hearing
officers in the dwelling lease, which is subject to a 30-day comment
period before any changes can be made.
Issue: Informal Settlements. Commenters asked that HUD continue to
require the summary of informal settlements, stating that HUD could
provide a template in order to reduce administrative burden.
HUD Response: HUD agrees that there is value in the preparation of
the
[[Page 12362]]
summary, as it provides an opportunity for both parties to prepare for
any forthcoming grievance hearing. As such, HUD will not change the
previous requirement that a summary be prepared. HUD will explore
whether a template summary would be useful at reducing administrative
burden for PHAs.
Issue: Meeting Recordings and Transcripts. Commenters stated that
HUD should still require PHAs to allow residents to record a meeting
and have a transcript made, as elimination of this requirement doesn't
ease the burden to the PHA, but it eliminates a benefit for future
proceedings.
HUD Response: HUD agrees with this comment and this final rule
reinstates language making clear that any party to a grievance may
arrange to obtain a hearing transcript, at their own expense.
Issue: Retention of Hearing Officer Decisions. Commenters expressed
concern that HUD was eliminating the requirement that PHAs maintain
copies of decisions of hearing officers. Commenters stated that the
records are important to maintaining transparency for PHAs; the
commenters stated that electronic records would reduce burdens for
keeping the records.
HUD Response: HUD's regulation at 24 CFR 966.56(b)(1) requires that
tenants be afforded a hearing based on relevant facts related to the
specific grievance. HUD disagrees that prior decisions are necessarily
relevant to the individual facts related to a specific grievance
hearing. Further, the retention of such documents is time-consuming and
costly for PHAs. The suggested change is inconsistent with HUD's intent
in this rulemaking, which is to reduce administrative burden and
program costs. Therefore, HUD will not adopt the suggested change.
However, HUD agrees that basic information related to past hearing
decisions could be useful for HUD oversight and for ensuring
transparency in the process. Therefore, in lieu of the requirement to
maintain redacted hearing decisions and making such decisions available
to the public, HUD is requiring that PHAs maintain a simple log, as
described in forthcoming HUD guidance, that provides basic information
on past hearing decisions.
Issue: Informal Hearings. Commenters stated that HUD should
reinstate informal hearings prior to a formal grievance in order to
avoid more costly formal hearings whenever possible.
HUD Response: This final rulemaking did not eliminate the informal
hearing (i.e., informal settlement of grievance) prior to a formal
grievance hearing, as initially proposed. Requirements related to the
informal hearing are contained in 24 CFR 966.54.
4. Limited Vacancies (Sec. 990.150)
Issue: Consistency with local vacancy rates. Commenters stated that
PHAs should be allowed to maintain vacancy rates that are comparable
with that of the jurisdiction. Others asked HUD to set the allowed
vacancy rate at not less than 5 percent, as permitted in the LIHTC and
Project-Based Rental Assistance (PBRA) programs.
HUD Response: The limited vacancy provision allows for funding for
vacancies of up to 3 percent. Five other types of approved vacancies
are included in the existing regulation related to particular project
circumstances such as modernization, special uses, litigation,
disasters, and casualty losses as well as an appeal provision for
vacancies due to changing market conditions.
Issue: Effect on small agencies. Some commenters objected to new
language that the commenters stated would reduce subsidies to PHAs and
could destabilize small agencies. Others stated that the proposal does
not allow for consideration of market conditions or specific local
conditions for small PHAs, which would hurt struggling agencies.
HUD Response: The proposed language retains the special
consideration for PHAs with 100 units or less. HUD's Public Housing
Operating Fund (Operating Fund) regulations continue to allow for
appeals for changing market conditions and specific local condition.
Issue: Basis for calculation. Commenters asked that vacancies be
judged on a PHA-wide basis to permit balance of high-demand areas with
others where there is a low demand, because one or two vacancies could
cause a vacancy rate over 3 percent. The commenters stated that PHAs
should be allowed to manage their portfolio as a single program,
similar to the way the private sector would do so.
HUD Response: This clarification of the limited vacancy rule
retains the approach that funding is both determined and provided at a
project level. The foundation of the transition to asset management,
which was adopted by both PHAs and HUD at the time of promulgation of
the new Operating Fund rule, was for certain PHAs to migrate away from
PHA-level management and funding for those that converted to asset
management. Instead, funding, budgeting, accounting, and management are
all conducted at the project level. HUD recognizes each PHA's
discretion as a property and financial manager of real estate to group
buildings to optimize efficient property management and financial
viability. The Operating Fund regulations and HUD systems currently
allow PHAs to group buildings into a project(s) to best serve the
interests of the property and residents.
Issue: Lag time. Commenters objected to the change because
occupancy numbers being used are 12-18 months in the past, requiring
PHAs to operate on non-applicable past information.
HUD Response: The Operating Fund formula in 24 CFR part 990 is
based on use of historical performance data as a basis to fund current
year needs. The clarification of the limited vacancy language does not
modify the tenure of performance data used to calculate Operating
Subsidy eligibility.
Issue: Negotiated rulemaking. Some commenters stated that HUD
should stand by agreements reached through the negotiated rulemaking
process that established the current operating fund formula.
HUD Response: The clarification of the limited vacancies provision
is consistent with the negotiated rulemaking process.
5. Flat Rents (Sec. 960.253)
Issue: Phase-in of rent increases less than 35 percent. Commenters
asked that HUD reinstate an earlier policy that would allow PHAs to use
discretion in implementing any higher flat rents. This would have
allowed PHAs to phase in small flat rent increases--those below 35
percent--over a three-year period.
HUD Response: The initial discretion for phasing in small increases
was due to the fact that the changes in the 2014 Appropriations Act set
all flat rents at 80 percent of FMR, with no possibilities for
exceptions to that amount. HUD received indications that this might be
softened in a future year, permitting PHAs to set flat rents using more
localized market data. As a result, HUD used its discretion to limit
the impact of flat rent changes on PHAs and tenants by allowing the
higher rents to be phased in.
With the passage of the 2015 Appropriations Act, however, HUD
believes that PHAs have sufficient flexibility to set flat rents that
reflect the true market value of their units, and therefore the three-
year phase-in for small flat rent increases is unnecessary. However,
the statutory requirement to phase in increases exceeding 35 percent
for families already paying flat rents remains in the rule.
Issue: Deadline for compliance. Commenters asked HUD to extend the
[[Page 12363]]
January 1, 2016 deadline for flat rents to take effect.
HUD Response: This comment misinterprets the effective date of the
new flat rent requirements. HUD did not establish a hard deadline of
January 1, 2016 for new flat rents to take effect. PHAs were already
required to establish flat rents at no less than 80 percent of the
applicable FMR as required by PIH Notice 2014-12. That notice clarified
that PHAs were required to update flat rents no later than 90 days
after HUD published new, final FMRs. The 90-day effective date of new
flat rents based on new FMRs was also included in the interim rule and
the accompanying guidance provided through notice PIH 2015-13. Once HUD
publishes new final FMRs in any given year, PHAs will be required to
update flat rents within 90 days of the publication of those FMRs and
must begin applying them prospectively to new admissions and at family
annual recertifications. In years where HUD takes longer than 12 months
between the publication of new FMRs, PHAs are permitted to continue to
charge flat rents at the current FMR, SAFMR, or approved exception flat
rent amount until HUD publishes new FMRs and the 90-day effective date
has taken place.
Issue: Lowering rents when FMRs or SAFMRs decrease. Commenters
asked HUD for additional clarity on the requirements for when market
rents decrease, particularly whether PHAs retain discretion to reduce
flat rents when FMRs decrease.
HUD Response: PHAs must set flat rents at no less than 80 percent
of the FMR or SAFMR, or they may submit an exception request
establishing flat rents based on a market analysis. There is no such
requirement limiting a PHA from lowering a flat rent in years where the
FMR or SAFMR decreases. Therefore, in years where an FMR or SAFMR
decreases, PHAs have the discretion to lower flat rents, but they may
not set flat rents at less than 80 percent of the FMR or SAFMR unless
they submit a new exception request.
Issue: Rent reasonableness guidance. Commenters suggested that a
possible explanation for why flat rents have been set incorrectly in
the past is due to a lack of guidance from HUD on proper rent
reasonableness assessments.
HUD Response: While that may be true for some PHAs, HUD has heard
anecdotally that there were many reasons why flat rents may not have
been set correctly. However, in an effort to support PHAs when trying
to determine the market value of their public housing, HUD will publish
future guidance on rent reasonableness assessments for public housing.
Issue: Updating rent levels when an exception rent has been
requested. Commenters asked for additional clarification on what the
requirements were related to adjusting flat rent levels when the PHA is
intending to submit a request for exception rents.
HUD Response: In this initial year, any PHAs that submit exception
requests prior to the expiration of the 90-day period after the
publication of new FMRs may continue to charge flat rents at the
current levels until the PHA is notified of HUD's decision on their
exception request. However, if a PHA fails to submit an exception
request prior to the expiration of the 90 day period after the
publication of new FMRs, that PHA may still submit an exception
request, but must update flat rents to no less than 80 percent of the
FMR or SAFMR until such time that HUD notifies the PHA of its decision
on the exception request.
Issue: Flat rents and self-sufficiency. Commenters stated that PHAs
should have the discretion to set flat rents lower than 80 percent of
market rents in order to encourage families to become self-sufficient.
HUD Response: Flat rents themselves are intended to encourage self-
sufficiency. They are a maximum amount of rent that a family could be
charged; once a family begins to pay flat rent, any increases in income
do not have an effect on their rental payment. Because families have
the ability to choose between paying an income-based rent or a flat
rent, families that choose to pay flat rents are inevitably paying a
lower percentage of income than other public housing households which
is a self-sufficiency incentive. Therefore, HUD does not believe that
any additional discretion regarding flat rents is necessary to
encourage economic self-sufficiency.
Issue: Reduced exception rent requests. Commenters asked that PHAs
only be required to submit exception rent requests every three years
instead of annually.
HUD Response: HUD is bound by the statutory framework, which
stipulates that exception requests must be submitted if the applicable
FMR or SAFMR do not reflect the market value of a property. As such,
the statute requires a comparison of the FMR or SAFMR to a current
market study in order to determine whether the market value of a
property is less than the current FMR or SAFMR. Therefore, HUD does not
have the authority to permit PHAs to use market studies that are not
current for exception requests.
Issue: LIHTC rents and public housing flat rents. Commenters asked
for additional clarity on how the flat rents regulation impacts the
LIHTC rents.
HUD Response: PHAs that manage public housing units that were
developed or modernized using LIHTC must set maximum rents for such
units at the required maximum LIHTC rents, even if this is lower than
the minimum flat rent amount for a particular unit.
Issue: Opposition. Several commenters objected to the flat rent
policy entirely, stating that it would increase rent burden, cause
higher turnover, and negatively impact tenant employment.
HUD Response: Although HUD recognizes that there are consequences
to changes in flat rents, HUD believes that the changes included in the
FY 15 Appropriations Act, which have been included in this rulemaking,
provide sufficient flexibility to PHAs to set accurate, market-based
rents. Further, tenants concerned about rent burden are reminded that
they are provided a safeguard in this rulemaking from large annual
increases in rent, and they are always able to elect to pay the income-
based rent which is set at 30 percent of income.
D. HCV Program Regulations
1. Start of Assisted Tenancy (Sec. 982.309)
Issue: Objections. Many commenters objected to this proposal,
stating that landlords seek to lease units as quickly as possible, and
this could delay tenants from being able to move into their units. In
high-demand areas, this could reduce the number of landlords willing to
participate in the voucher program, limiting choice to voucher holders.
Many commenters also expressed concern that this would have negative
consequences for families that need to move immediately or
alternatively would cause tenants to have to move out of a unit before
being able to move into a new one. Other commenters stated that this
would concentrate administrative tasks into a single time of the month
for PHAs, actually increasing their burden.
HUD Response: HUD has decided against promulgating this change.
Several commenters favored the proposed change, but input from groups
ranging from landlords to tenant advocates suggested that the change
would have an adverse effect on the ability of HCV-assisted tenants to
access housing. While the proposed change would have been optional at
the discretion of the PHA, and HUD estimates that PHAs would choose not
to adopt any measure that would make
[[Page 12364]]
it more difficult for HCV-assisted tenants to access housing, HUD
ultimately decided that it could move forward with the change only if
it also required any PHA opting to implement the provision to also put
into place an exception policy for certain families (e.g., victims of
domestic violence) or situations (e.g., HAP terminations due to HQS
violations). Ultimately, requiring the adoption of an exception policy
would counter any administrative relief provided by implementing the
proposed change. Taking all of these factors into consideration, HUD
declines to include this provision in this final rule.
2. Biennial Inspections and the Use of Alternative Inspection Methods
(Sec. Sec. 982.405, 983.103)
Issue: HUD Systems. Commenters suggested ways that HUD could
improve its inspection procedures. Some commenters suggested that the
electronic systems be updated for biennial inspections, and others
asked for a centralized database for inspection reports and data, which
could then be accessed by PHAs in order to obtain the results of
alternative inspection methods. Some commenters stated that HUD should
review inspection protocols with input from PHAs and implement ``best
practices'' across the board. Commenters also asked for consolidating
inspection standards between HUD programs and LIHTC.
HUD Response: While these comments are helpful in that they specify
improvements to HUD systems that would simplify the inspection process,
advise of the burden that results from differences in inspection
protocols and standards, and point out at least one way in which an
expansion of this provision could bring about further streamlining,
they are either beyond the scope of this rulemaking or would require
statutory changes.
In addition, HUD's information technology investment decisions are
made enterprise-wide based on available resources as appropriated by
Congress. HUD will explore ways to move to electronic reporting systems
with available resources. In particular, HUD is considering the
creation of a national-level affordable housing database that could be
utilized in the way described.
Issue: Keep Proposal Optional. Some commenters stated that PHAs may
want to inspect properties more frequently for oversight purposes, and
therefore asked that biennial and alternative inspections remain
optional for PHAs.
HUD Response: As authorized by Congress and proposed in this
rulemaking, the use of biennial inspections is at the discretion of the
PHA; PHAs will retain the discretion to inspect annually any properties
that warrant more frequent attention. The same is true of alternative
inspection methods--their use is entirely at the discretion of the PHA,
per the statute and this rulemaking. Nothing in this final rule
requires a PHA to adopt biennial inspections or alternative inspection
methods.
Issue: Remediation Protocols. Commenters offered several
suggestions on how to remediate problems identified by alternative
inspections. Some stated that HUD should allow PHAs to rely upon the
remediation protocol of the alternative inspection method; there would
be no burden relief if PHAs have to conduct HQS inspections anyway for
units that failed the alternative inspection the first time. Some
commenters suggested that this could be satisfied by providing HUD with
a certification from the inspecting agency that the deficiencies have
been mitigated. Commenters stated that HUD should allow PHAs to decide
if they will conduct a remedial HQS inspection or rely on the owner to
provide proof of actions to remedy defects.
HUD Response: HUD is sympathetic to the suggestion that any
streamlining benefit of this provision is offset by the requirement
that a PHA inspect a property using HQS when the property has already
been inspected using an alternative inspection method and such method
reveals the existence of violations that would have resulted in a
``fail'' score under HQS. For an alternative inspection method that
employs sampling, however, as is the case with inspections of
properties subsidized with LIHTCs, any cited deficiencies that would
ultimately be corrected may exist as well in units not included in the
sample, including units occupied by HCV-assisted households. HUD has an
obligation to determine whether such deficiencies exist in units
occupied by such households and, if they do, to assure that the units
are once again brought into compliance with HUD's housing quality
standards.
PHAs are only precluded from relying on an alternative inspection
method if a property inspected pursuant to the method fails an
inspection. In all cases where a property passes an inspection, even if
deficiencies are identified, a PHA may rely upon the alternative
inspection method to demonstrate compliance with HUD's housing quality
standards. If a property fails an inspection due to identified
deficiencies, it may be the case that remedial actions taken pursuant
to the alternative inspection method fall short of what would be
required under HUD's housing quality standards.
In any circumstance in which a PHA is prohibited from relying on an
alternative inspection method, HUD declines, for the reasons identified
above, to adopt alternative remediation measures as a substitute for a
PHA's determination that a unit occupied by an HCV-assisted family
meets the requirements for occupancy and funding under the HCV program.
Issue: Reinspection Sampling. In the case of residents with tenant-
based vouchers living in mixed-finance properties, commenters stated
that HUD should authorize biennial inspection of a random sample of
units consisting of at least 20 percent of the contract units in each
building.
HUD Response: Congress specifically authorized the use of
alternative inspections, including inspections conducted pursuant to
requirements under the low-income housing tax credit (LIHTC) program.
The LIHTC program employs sampling. A PHA may adopt an alternative
inspection method that is specifically authorized by Congress or
approved by HUD and employs sampling.
Issue: Alternative Inspection Standards. Commenters suggested that
HUD require HUD's Real Estate Assessment Center (REAC) to approve or
disapprove a PHA's certification that an alternative inspection method
meets HUD standards prior to allowing the PHA to employ the alternative
inspection method.
HUD Response: HUD has adopted this suggestion in this final
rulemaking.
Issue: Local Jurisdiction Inspections. Commenters asked that HUD
allow PHAs to use inspections done for local jurisdictions, even when
the inspections are done by local agencies.
HUD Response: The statute authorizes PHAs to rely on inspections
conducted under a ``Federal, state, or local housing program.'' HUD
interprets a ``local housing program'' to include a local housing code.
Subject to the conditions established in this final rule, a PHA may
rely upon an inspection conducted pursuant to a local housing code to
meet its obligation to inspect units occupied by HCV-assisted tenants
during the course of a housing assistance payments contract. In order
to rely upon such an inspection, a PHA must submit a copy of the local
housing code to HUD, along with an analysis by the PHA showing that the
local housing code standard meets or exceeds HQS. Once HUD has reviewed
these materials, and then only if HUD approves use of the inspection
method, the PHA may rely upon it. The PHA must certify annually to HUD
that
[[Page 12365]]
the local housing code has not changed; if it has changed, then the PHA
must again obtain HUD approval to rely upon the standard, submitting a
copy of the revised code and an analysis showing that the revised
standard meets or exceeds HQS.
Issue: Objections. Some commenters expressed dissatisfaction with
the proposal, particularly with alternative inspections, and stated
that HUD should not continue with the proposal.
HUD Response: HUD is required by law to implement biennial
inspections and inspections via alternative inspection methods.
3. Housing Quality Standards (HQS) Reinspection Fees (Sec. 982.405)
Issue: Burden on PHAs and Deterrence to Landlords. Some commenters
objected to the proposal, stating that landlords would be reluctant to
pay reinspection fees and would therefore be deterred from
participating in the Section 8 program. Others stated that charging
fees to landlords would be a burden to PHAs, and therefore should
remain optional and up to the PHA to decide how to implement.
HUD Response: The proposed change made it optional for a PHA to
charge a reinspection fee, and this final rule retains the optional
nature of the provision. If a PHA has a concern that charging a fee may
deter landlords from participating in the program or may result in
additional work (i.e., securing payment of a fee, once assessed), then
the PHA will want to take these factors into consideration when
determining whether to impose a reinspection fee. As long as a PHA
complies with the requirements of this regulation when imposing a
reinspection fee, nothing in this regulation would constrain a PHA from
adopting local policies specific to the administration of such a fee.
For example, a PHA could specify in its Administrative Plan that an
owner will be charged a reinspection fee only after a second
reinspection reveals that the defect persists. PHAs will need to
determine whether and how best to use this reinspection fee authority,
based upon their local circumstances.
Issue: Use of Fees and When to Charge. Some commenters suggested
that the collected fees be added to administrative fee amounts
available to a PHA.
HUD Response: Fees will be included in a PHA's administrative fee
reserve and may be used only for activities related to the provision of
Section 8 tenant-based assistance.
Issue: Guidance. Several commenters asked HUD to provide additional
guidance on what constitutes a ``reasonable'' fee; such guidance will
be necessary to reduce PHA administrative burden.
HUD Response: HUD will issue guidance on what constitutes a
``reasonable'' fee.
Issue: When Charges May Be Assessed. Commenters asked that HUD
clarify the proposal to avoid charges for full HQS inspections instead
of merely for reinspections of previously identified deficiencies.
Others asked for information on how the proposal would relate to
special inspections that are not initial or regularly scheduled
inspections, or what would happen if a landlord or tenant does not
attend or allow entrance for the inspection. Commenters also asked that
HUD expand the proposal to allow for the charging of fees even when a
landlord has not indicated deficiencies have been corrected, when the
allotted time for repairs has expired but a pre-scheduled reinspection
reveals the repairs have not been made.
HUD Response: The final rule makes clear that a fee may be assessed
under two circumstances: First, if a landlord affirms that a repair has
been made and a subsequent reinspection shows that it has not and,
second, when the allotted period of time for making the repair has
lapsed and a reinspection shows that the repair has not been made,
whether or not the landlord has affirmed that it was.
Issue: Expansion of Proposal. Some commenters also suggested that
HUD expand the proposal to allow for fees for all reinspections. Others
stated that PHAs should be allowed to redirect funds from abated rents
to cover the costs of inspections instead of charging fees. Finally,
commenters stated that HUD should consider other incentives for
landlords, such as allowing tenants to pay rent into repair escrow
accounts.
HUD Response: HUD appreciates these suggestions and observations
but has declined to adopt them as part of this rulemaking.
4. Exception Payment Standards for Providing Reasonable Accommodations
(Sec. Sec. 982.503, 982.505)
Issue: Unit Special Features. Commenters stated that HUD should
include a consideration of special features of the unit when
establishing a reasonable rent between 110 percent and 120 percent of
area fair market rent (FMR).
HUD Response: There was strong support for retaining this provision
unchanged, and HUD has done so. A PHA must take special features into
consideration when there is a reasonable accommodation request. In
accordance with 24 CFR part 8, a PHA must provide a higher payment
standard if requested as a reasonable accommodation for a family that
includes an individual with disabilities. HUD's regulation implementing
section 504 of the Rehabilitation Act, at 24 CFR part 8, is referenced
in 24 CFR 982.505(d). In addition, under 24 CFR 8.28(a)(3), PHAs are
already required, when issuing a voucher to a family that includes an
individual with disabilities, to assist the family in locating an
available, accessible dwelling unit. For example, PHAs are required to
provide a current listing of available units known to the PHA.
Issue: HAP Funding. Commenters stated that PHAs will be challenged
to provide higher payment standards when HAP funding is already
constrained.
HUD Response: HUD acknowledges the concerns about funding
constraints. PHAs are nonetheless required to assist families that
include an individual with disabilities, including by providing a
higher payment standard as a reasonable accommodation, if the family
requests such an accommodation and it is necessary in order for the
family to obtain suitable housing.
5. Family Income and Composition: Regular and Interim Examinations
(Sec. 982.516(c)-(e))
Issue: Timing of Interim Examinations. Commenters supported this
proposal, but also asked that it remain optional for PHAs. Some asked
for further clarification from HUD regarding whether a PHA is required
to conduct an interim examination when a family member is added, and at
what point such an examination might be required. Several commenters
also pointed out that the new proposed language did not align
regulations between the PH and Section 8 programs.
HUD Response: HUD agrees with providing clarity to the proposed
change to 24 CFR 982.516. With the removal of paragraph (e) (``Family
member income''), HUD is removing from part 982 the requirement that a
PHA perform an interim examination whenever a new family member is
added. The corresponding regulation for the PH program (24 CFR 960.257)
contains no such requirement. The removal of paragraph (e) from Sec.
982.516 provides HUD with the opportunity to issue uniform guidance on
interims--in other words, guidance that will apply to both the PH and
HCV programs. Having reviewed data on the reasons for which interims
are requested and considering a number of alternatives, including
establishing thresholds below which
[[Page 12366]]
PHAs would not be required to conduct interims, HUD determined that the
greatest potential for streamlining lies in issuing uniform guidance.
Other options either created their own administrative challenges and/or
had the potential to have a negative effect on program participants.
For example, authorizing PHAs to limit interims to circumstances in
which a change in family income or composition would result in a rent
increase of some threshold dollar amount would require PHAs to
determine whether the threshold had been met, which would in itself be
a burdensome exercise. At the same time, a finding that the threshold
had not been met, resulting in no change to a family's rent, could
place a burden on tenants.
Issue: Discretion and Threshold Amounts. Several commenters
requested that HUD continue to leave policies regarding
recertifications up to the discretion of PHAs.
HUD Response: Nothing in this final rule alters PHA discretion with
respect to interims.
6. Utility Payment Schedules (Sec. 982.517)
Issue: Objections to the Proposal. Many commenters objected to the
proposal to consolidate the utility payment schedules. Some commenters
stated that the definition of ``attached'' and ``detached'' are
unclear, and HUD should provide additional information. Other
commenters stated that consolidating the schedules would penalize
tenants in certain types of units because energy use is not always
comparable under such broad categories. Some commenters suggested that
the proposal could raise fair housing issues by impacting larger
families in multi-bedroom units. Others stated that the proposed 60-day
notice was insufficient to protect tenants from decreased utility
allowances.
Some commenters stated that, in areas served by more than one PHA,
perhaps with differing policies on how to define unit types, the
proposal would create confusion for program applicants and
participants.
HUD Response: Considering the totality of the comments submitted on
the proposal to authorize PHAs to establish utility payment schedules
that limit ``unit type'' to either ``attached'' or ``detached,'' HUD
has decided against adopting this provision. HUD acknowledges comments
that the proposal may have an unintended and inequitable effect on
certain households, and believes this issue merits additional analysis
in order to determine the extent to which these outcomes may occur and
to weigh those outcomes against the benefits of streamlining. In
addition, comments focused on jurisdictional questions caused HUD to
realize that the proposal could create confusion--for program
applicants, especially--in the event PHAs with overlapping
jurisdictions opted to adopt different definitions of ``unit type''
(i.e., one relying on the traditional method and the other choosing to
define unit type as either ``attached'' or ``detached'').
Issue: Broader Utility Allowance Changes. Commenters asked HUD to
consider broader changes to utility allowances. Commenters suggested
that HUD completely eliminate utility allowance schedules or allow flat
utility allowances based on average per-bedroom size or household size.
Others suggested that HUD provide an annual utility cost adjustment
factor for each locale instead of requiring PHAs to calculate utility
costs on their own. Finally, some commenters suggested that HUD
establish a more equitable utility subsidy approach, accounting for
other forms of assistance, such as utility caps or utility credits.
HUD Response: Based on comments received, HUD recognizes that
having a holistic look at utility allowance calculations may be
merited. Should HUD initiate such a review, these comments will be
taken into consideration. The suggestions are, however, beyond the
scope of this rulemaking.
E. Other Comments
In addition to comments on specific proposals, commenters also
suggested regulatory and other changes that HUD could make for
streamlining and other burden-reducing benefits.
1. Enterprise Income Verification (EIV)/Information Verification
Issue: EIV Reports. Some commenters suggested that certain reports
(e.g., New Hires, New Move-In, Income Discrepancy) should not be used
as frequently, if at all. The commenters suggested that, to the extent
such reports provide useful information, the information could be
gathered at other times or using other methods.
HUD Response: HUD appreciates the comments regarding the use of the
various EIV reports. HUD understands that the information generated
through some reports may reflect delayed information. However, EIV has
significantly reduced improper payments in HUD's programs, and these
reports help PHAs and HUD to monitor program participants and address
discrepancies in a timely manner. Further, changes to EIV are beyond
the scope of this rulemaking.
Issue: EIV Use and Expansion. Many commenters suggested that HUD
modify the EIV system by adding additional income sources, including
past income, in the system or allowing verification of SSNs through
EIV. Other commenters suggested that HUD consider alternatives to EIV,
such as the Work Number or cooperative agreements with state agencies.
Finally, commenters asked for more frequent updates to EIV.
HUD Response: HUD appreciates the comments about how to improve or
supplement EIV; however, these suggestions are outside of the scope of
this rulemaking.
2. Income Determinations and Rent Settings
Issue: Calculation of Income. Commenters offered suggestions on
ways that they stated would be easier to calculate tenant income and
rent. Some stated that HUD should base rents on gross income, rather
than adjusted income. Others suggested that HUD modify the process for
deducting medical expenses from income by using past expenses or a
standard deduction. A standard childcare deduction was also proposed.
One commenter suggested that HUD consider the automation-based process
for certification and verification incorporated by the Affordable Care
Act.
Commenters also asked HUD to allow for less frequent income
reexaminations, either on a biennial or a triennial basis. This change
could be authorized based on family type (i.e., elderly, disabled) or
family income status (i.e., extremely low-income, very low-income).
Some commenters requested an increase in the minimum rent or that
HUD reinstate the ``frozen rental income'' regulation provision to
encourage tenants to have earned income. Others asked that HUD consider
limiting the inclusion of assets by only including actual income from
assets or only including assets disposed of for less than fair market
value for assets over a given threshold. Some stated that HUD should
count assets disposed of since the two previous annual reexaminations
instead of the previous two years.
Commenters stated that HUD should not allow tenants to claim no
income, but instead should require that all tenants maintain a minimum
income.
Finally, commenters stated that PHAs should not be required to
conduct rent reasonableness determinations when a PHA is using a fair
market rent determined by HUD or when a proposed rent has already been
approved by HUD or its administrator.
[[Page 12367]]
HUD Response: HUD requested comments from the public about other
opportunities to align requirements across programs, and HUD
appreciates receiving these additional comments. Some of the
suggestions are outside the scope of this rulemaking or would require
statutory change. However, HUD will consider these suggestions for
future streamlining changes.
HUD has taken actions on other suggestions. HUD's FY 2016 budget
proposes three-year recertification of income for fixed income
families, increasing the threshold for deduction of medical and related
care expenses, and a Utilities Conservation Pilot that would make it
easier for PHAs to access energy incentives from energy investments.
Also, HUD is conducting a rent reform demonstration to compare the
current rent structure in subsidized housing to an alternate structure
in terms of impact on household employment, earnings, hardship,
homelessness, and on simplification and cost of PHA administrative
processes.
3. Fees and Payments
Issue: Funding and Improper Payments. Many commenters provided
suggestions on how to improve and streamline payments to owners and
PHAs. Several suggested increased funding for administrative fees or
physical inspections. Other commenters stated that HUD should permit
voucher HAP reserves to be used for administrative purposes when the
administrative fee proration is below 90 percent.
Some commenters requested HUD freeze the rolling utility base to
allow PHAs to recoup savings from energy conservation methods. Others
asked HUD to allow expedited implementation of lower payment standards
in the voucher programs. Several commenters suggested that HUD revise
its process for determining project expense levels, accounting for the
age of properties and using the negotiated rulemaking inflation factor.
One commenter stated that HUD should permit rent increases to owners in
the HCV program only on a contract anniversary date.
Commenters also provided suggestions on reforming improper payment
procedures. A commenter asked that HUD not require owners to provide
proof of the costs involved in recovering improper payments. Commenters
also suggested that HUD not specify what makes repayment of improper
payments ``affordable'' to residents, as the current definition is
confusing and leads to extra work for staff.
HUD Response: As is the case on HUD's response to the preceding
issue, many of the comments are outside the scope of this rulemaking or
would require action by Congress, but HUD will consider these for
future streamlining changes. With respect to freezing the rolling base
to allow PHAs to recoup savings from energy conservation methods, this
is permitted now when a PHA has entered into an energy performance
contract.
4. Miscellaneous Suggestions
Issue: Broader Streamlining and Other Suggestions. Many commenters
had specific suggestions on how to align requirements and processes
across programs. Some suggested that HUD use the Public Housing
Administrative Reform Initiative to find some additional streamlining
suggestions. Others stated that HUD should have just a single entity
review grantee compliance with various program requirements instead of
allowing multiple agencies to have oversight.
Some commenters asked HUD to modify inspection protocols, including
by explicitly stating that a physical reinspection of deficiencies is
not required. Others stated that HUD should not use the Uniform
Physical Conditions Standards for HCV, but should continue to use the
HQS. Commenters further asked that HUD reconsider the requirement that
failed HQS items be reinspected prior to the HAP contract effective
date, instead allowing families to move in while the owner has 30 days
to repair the failed items.
Commenters also stated that HUD should limit requirements under
section 3 of the 1937 Act to only programs under the Office of Housing.
Others asked that HUD institute a threshold of activity below which
Section 3 requirements would not apply.
Some commenters asked that eligibility and reporting procedures be
standardized across housing programs both in HUD and across other
Federal agencies. Others stated that HUD should extend the zero-subsidy
time limit for voucher holders to align policies between the voucher
and PBRA programs. Many commenters also stated that HUD should allow
PHAs the discretion on whether or not to require community service in
PH, as it is not required in other HUD programs.
A commenter stated that HUD should incorporate policies from the
Multifamily Handbook into the PH and voucher programs to provide
additional information on how a PHA should consider a tenant family's
circumstances when they fail to recertify in a timely manner.
Some commenters stated that HUD should allow PHAs to be eligible
for Housing Trust Fund money for PH rehabilitation. Others asked that
HUD clarify that PHAs with 250 or more units of PH are still able to
use operating reserves for capital improvements.
Commenters also asked for clarity on the HCV Tenancy Addendum and
on qualifying for the Capital Fund Activity exclusion for environmental
assessments.
HUD Response: HUD will take these suggestions into consideration as
it seeks to identify additional opportunities to reduce the
administrative burden on PHAs and owners and to align the requirements
across programs, where feasible. The majority of these suggestions is
beyond the scope of this rulemaking, or would require statutory change.
However, for others, HUD can address through administrative guidance.
With respect to the suggestion that HUD thoroughly review the final
report of the Public Housing Administrative Reform Initiative, this
report is among the documents initially reviewed by HUD's streamlining
working group, which ultimately initiated this rulemaking.
Issue: Regulatory Relief in Property Assessment. Several commenters
asked HUD to suspend PHA plan requirements or for a moratorium on the
Physical Needs Assessment. Commenters asked for waivers of asset
management regulations affecting funding, such as cash transfers
between properties, fee caps, and Asset Management Project (AMP)
configurations. Commenters further asked for broad waivers under 24 CFR
part 5 and for the Public Housing Assessment System and Section Eight
Management Assessment Program to be advisory only for non-statutory
items. Finally, commenters stated that HUD should ensure that PHAs are
fully trained before any changes go into effect.
HUD Response: HUD remains interested in identifying opportunities
to reduce the burden on PHAs, owners, and grantees that administer
rental assistance. While the suggestions provided here are outside the
scope of this rulemaking, they are helpful in identifying for HUD areas
on which to focus attention. HUD will continue to look for
opportunities to streamline and simplify the administration of its
programs, and to align the requirements across programs, to the extent
feasible and reasonable, applying the same lens to future proposals as
it employed for this rulemaking effort. Specifically, any
[[Page 12368]]
proposal to relieve the administrative burden on PHAs, owners, and
grantees will need to be balanced against important tenant protections
and HUD's obligation to provide program oversight. With respect to
guidance and training, HUD is aware that PHAs, owners, and grantees may
have questions about how best to implement several of the provisions in
this rule. HUD will provide opportunities to address those questions,
through additional written guidance, training, and other means that
enable HUD to respond to requests for information.
Issue: Statutory Changes. Commenters requested changes that they
acknowledged would require congressional action. These proposals
include an earned income deduction for all families, eliminating
voucher portability, expanding Moving to Work, the Small Housing
Authority Reform Proposal, triennial recertification for fixed-income
families, increasing the flat deduction for elderly families or persons
with disabilities, increasing the medical expense deduction, or
eliminating eligibility differences among programs.
HUD Response: For several of these suggestions, HUD has previously
sought statutory change. In its FY14 budget proposal, for example, HUD
included several statutory changes that were ultimately enacted by
Congress and have now been implemented with the publication of this
final rule. HUD will continue to look for opportunities to streamline
and simplify the administration of its programs, and to align the
requirements across programs, to the extent feasible and reasonable,
applying the same lens to future proposals as it employed for this
rulemaking effort. Specifically, any proposal to relieve the
administrative burden on PHAs and owners will need to be balanced
against important tenant protections and HUD's obligation to provide
program oversight.
IV. Findings and Certifications
Executive Orders 12866 and 13563, Regulatory Planning and Review
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and, therefore, subject to review by the Office of Management and
Budget (OMB) in accordance with the requirements of the order.
Executive Order 13563 (Improving Regulation and Regulatory Review)
directs executive agencies to analyze regulations that are ``outmoded,
ineffective, insufficient, or excessively burdensome, and to modify,
streamline, expand, or repeal them in accordance with what has been
learned.'' Executive Order 13563 also directs that where relevant,
feasible, and consistent with regulatory objectives, and to the extent
permitted by law, agencies are to identify and consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public. This rule was determined to be a ``significant
regulatory action'' as defined in section 3(f) of Executive Order 12866
(although not an economically significant regulatory action, as
provided under section 3(f)(1) of the Executive Order).
As already discussed in this preamble, the regulatory changes by
this streamlining rule are designed to reduce administrative burdens on
PHAs, enable PHAs to better target assistance to families, and reduce
Federal costs. Some of the changes in this rule are due to statutory
changes enacted in the FY 2014 Appropriations Act and have specific
estimates of financial savings that may be expected (specifically the
change in the definition of ``extremely low-income'' and the cap on the
utility allowance). Other changes (biennial inspections, streamlining
income recertifications) may have estimates on savings generated by
Moving-to-Work (MTW) agencies that already implemented such
flexibilities. Some provisions of this rule, however, focus solely on
providing or revising regulatory provisions that reduce administrative
burdens on PHAs, but that are optional for PHAs to utilize.
Consequently HUD is unable to quantify costs and benefits for this rule
overall because of the flexibility provided.
The rule provides PHAs with the discretion as to whether they will
implement those regulations that provide alternatives means of
implementing several required administrative actions. HUD recognized
that there is a need for greater flexibility for PHAs to operate
programs that fit their communities and to use savings generated in
time from these provisions to better focus resources on their
operational priorities. However, savings are difficult to estimate as
the changes are not mandatory. HUD's FY2015 budget estimated Federal
savings for two of the provisions, changing the definition of
``extremely low-income'' and placing a cap on the utility allowance.
HUD's budget did not contain savings estimates for other provisions
which would yield efficiencies for PHAs, not HUD. For the provision
permitting biennial inspections, savings data comes from Moving-to-Work
(MTW) agencies experiences and reporting.
In FY2015, HUD estimated that the revised definition of extremely-
low income will reduce Federal costs by an estimated $155 million. The
change increases access to HUD rental assistance for working poor
families, in rural areas in particular. In such areas, median incomes
are often so low that families with a fulltime worker have incomes that
exceed 30 percent of AMI, even though the families remain below the
Federal poverty level. In the voucher program in particular, where 75
percent of vouchers issued each year must be targeted to ELI families,
this change will enable more working poor families to qualify for
voucher assistance.
Additionally, HUD estimated in its FY2015 budget that limiting the
utility allowance payment for tenant-based vouchers to the family unit
size for which the voucher is issued, irrespective of the size of the
unit rented by the family, will generate estimated savings of $50
million.
Permitting biennial inspections for HCV units will reduce the
administrative and financial burden on PHAs and high-performing
landlords and enable PHAs to concentrate their inspection resources on
the more marginal and higher-risk units. Of the 34 MTW agencies, 23
have adopted or proposed to adopt biennial inspection schedules. The
Cambridge Housing Authority estimated a net savings of $122,234, or
more than 3,737 hours of staff time in 2014 compared to 2008. The
Housing Authority of the County of San Mateo reduced the number of
inspections to approximately 2,086 annually from 4,172 and reported
savings of $52,150 in inspection costs. HUD believes that PHAs adopting
this flexibility will experience similar savings in time and costs.
Determining the complete amount of financial and time savings for
this rule is difficult because, as noted, the majority of the
provisions are discretionary for PHAs, and HUD believes that each PHA
will evaluate its own circumstances in financing and staffing and adopt
those provisions that are most cost-effective for them.
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
[[Page 12369]]
substantial direct compliance costs on state and local governments nor
preempt state law within the meaning of the Executive Order.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This rule reduces the administrative burden on PHAs, MFH owners, and
certain CPD grantees in many aspects of administering assisted housing.
Such PHAs, MFH owners, and CPD grantees, 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. As discussed above, many of the new provisions are
voluntary, and each PHA or MFH owner will be able to adopt the
streamlining provisions that offer the greatest benefit to them,
further reducing any negative effects on small entities. Therefore, the
undersigned certifies that this rule will not have a significant impact
on a substantial number of small entities.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
was made on the proposed rule 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
remains applicable to this final rule. The Finding is available for
public inspection during regular business hours in the Regulations
Division, Office of General Counsel, Department of Housing and Urban
Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500.
Due to security measures at the HUD Headquarters building, please
schedule an appointment to review the Finding by calling the
Regulations Division at 202-708-3055 (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.
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.
Paperwork Reduction Act
The information collection requirements contained in this 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.
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, 14.235, 14.241, 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 880
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 884
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements, rural areas.
24 CFR Part 886
Grant programs--housing and community development, Lead poisoning,
Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 891
Aged, Grant programs--housing and community development,
Individuals with disabilities, Loan programs--housing and community
development, Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 903
Administrative practice and procedure, Public 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 amends 24
CFR parts 5, 880, 884, 886, 891, 903, 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
[[Page 12370]]
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 (or, for the HCV program, the date of voucher
issuance), 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 (or, for the HCV program, the effective
date of the Housing Assistance Payment contract). The processing entity
must 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 must 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. In paragraph (c)(1)(v), remove the comma;
0
c. Revise paragraph (c)(2) introductory text;
0
d. In paragraphs (c)(2)(ii) introductory text and (c)(2)(iii), remove
the comma;
0
e. Revise paragraph (d); and
0
f. 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 must prorate the family's assistance as follows:
(i) Step 1. Determine the total tenant payment in accordance with
section 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.''
(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 total
tenant payment (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.
0
4. In Sec. 5.603(b), revise the definitions of ``Extremely low income
family'' and ``Total tenant payment'' to read as follows:
Sec. 5.603 Definitions.
* * * * *
(b) * * *
Extremely low-income family. A very low-income 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) Thirty (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.
* * * * *
Sec. 5.609 [Amended]
0
5. Amend Sec. 5.609(b)(9) by adding the phrase ``and any other
required fees and charges'' after ``tuition'' in the first sentence.
0
6. Amend Sec. 5.617 as follows:
0
a. Revise paragraph (a);
0
b. In paragraph (b), add the definition of ``baseline income'' in
alphabetical order; and
0
c. Revise paragraph (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 earned income provided
by this section is applicable only to the following programs: HOME
Investment Partnerships Program (24 CFR part 92); Housing Opportunities
for Persons with AIDS (24 CFR part 574); Supportive Housing Program (24
CFR part 583); and the Housing Choice Voucher Program (24 CFR part
982).
(b) * * *
Baseline income. The annual income immediately prior to
implementation of the disallowance described in paragraph (c)(1) of
this section of a person with disabilities (who is a member of a
qualified family).
* * * * *
(c) Disallowance of increase in annual income--(1) Initial 12-month
exclusion. During the 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
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 and phase-in. Upon the expiration of
the 12-
[[Page 12371]]
month period defined in paragraph (c)(1) of this section and for the
subsequent 12-month period, the responsible entity must exclude from
annual income of a qualified family at least 50 percent of any increase
in income of such family member as a result of employment over the
family member's baseline income.
(3) Maximum 2-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 (c)(2) of this section is limited to
a lifetime 24-month period. The disallowance applies for a maximum of
12 months for disallowance under paragraph (c)(1) of this section and a
maximum of 12 months for disallowance under paragraph (c)(2) of this
section, during the 24- month period starting from the initial
exclusion under paragraph (c)(1) of this section.
(4) Effect of changes on currently participating families. Families
eligible for and participating in the disallowance of earned income
under this section prior to May 9, 2016 will continue to be governed by
this section in effect as it existed immediately prior to that date
(see 24 CFR parts 0 to 199, revised as of April 1, 2016).
* * * * *
0
7. 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) Streamlined income determination. For any family member with a
fixed source of income, an owner may elect to determine that family
member's income, as required by paragraph (b) of this section, by means
of a streamlined income determination. A streamlined income
determination must be conducted by applying, for each fixed-income
source, the verified cost of living adjustment (COLA) or current rate
of interest to the previously verified or adjusted income amount.
(1) ``Family member with a fixed source of income'' is defined as a
family member whose income includes periodic payments at reasonably
predictable levels from one or more of the following sources:
(i) Social Security, Supplemental Security Income, Supplemental
Disability Insurance;
(ii) Federal, state, local, or private pension plans;
(iii) Annuities or other retirement benefit programs, insurance
policies, disability or death benefits, or other similar types of
periodic receipts; or
(iv) Any other source of income subject to adjustment by a
verifiable COLA or current rate of interest.
(2) An owner must use a COLA or current rate of interest specific
to the fixed source of income in order to adjust the income amount. The
owner must verify the appropriate COLA or current rate of interest from
a public source or through tenant-provided, third party-generated
documentation. If no such verification is available, then the owner
must obtain third-party verification of income amounts in order to
calculate the change in income for the source.
(3) For any family member whose income is determined pursuant to a
streamlined income determination, an owner must obtain third-party
verification of all fixed-income amounts every 3 years. Other income
for each family member must be determined pursuant to paragraph (b) of
this section.
PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW
CONSTRUCTION
0
8. The authority citation for part 880 continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and
13611-13619.
0
9. In Sec. 880.603, add paragraph (c)(4) to read as follows:
Sec. 880.603 Selection and admission of assisted tenants.
* * * * *
(c) * * *
(4) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING
PROJECTS
0
10. The authority citation for part 884 continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
0
11. In Sec. 884.218, add paragraph (d) to read as follows:
Sec. 884.218 Reexamination of family income and composition.
* * * * *
(d) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL
ALLOCATIONS
0
12. The authority citation for part 886 continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
0
13. In Sec. 886.124, add paragraph (d) to read as follows:
Sec. 886.124 Reexamination of family income and composition.
* * * * *
(d) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
0
14. In Sec. 886.324, add paragraph (d) to read as follows:
Sec. 886.324 Reexamination of family income and composition.
* * * * *
(d) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
PART 891--SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH
DISABILITIES
0
15. The authority citation for part 891 continues to read as follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d), and 8013.
0
16. In Sec. 891.410, add paragraph (g)(4) to read as follows:
Sec. 891.410 Selection and admission of tenants.
* * * * *
(g) * * *
(4) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
0
17. In Sec. 891.610, add paragraph (g)(4) to read as follows:
Sec. 891.610 Selection and admission of tenants.
* * * * *
(g) * * *
(4) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
0
18. In Sec. 891.750, add paragraph (c)(4) to read as follows:
Sec. 891.750 Selection and admission of tenants.
* * * * *
(c) * * *
(4) Streamlined income determination. An owner may elect to follow
the provisions of 24 CFR 5.657(d).
[[Page 12372]]
PART 903--PUBLIC HOUSING AGENCY PLANS
0
19. The authority citation for part 903 continues to read as follows:
Authority: 2 U.S.C. 1437c; 42 U.S.C. 1437c-1; Pub. L. 110-289;
42 U.S.C. 3535d.
0
20. In Sec. 903.7, revise paragraph (a)(1)(i) to read as follows:
Sec. 903.7 What information must a PHA provide in the Annual Plan?
* * * * *
(a) * * *
(1) * * *
(i) Families meeting the definition of extremely low-income
families in 24 CFR 5.603.
* * * * *
PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
0
21. 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
22. 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
(Sec. 5.603): Annual income, economic self-sufficiency program,
extremely low-income family, low-income family, tenant rent, total
tenant payment, utility allowance.
* * * * *
0
23. 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)(2);
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. 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.
(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 not less than once per calendar-year quarter, for
reimbursements totaling $45 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. PHAs exercising this option must have a hardship policy
in place for tenants.
(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) * * *
(2) The dollar amounts of tenant rent for the family under each
option, following the procedures in paragraph (f) of this section.
(f) Choice between flat and income-based rents. 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
[[Page 12373]]
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
24. Amend Sec. 960.255 as follows:
0
a. In paragraph (a), add the definition of ``baseline income'' in
alphabetical order; and
0
b. Revise paragraph (b) to read as follows:
Sec. 960.255 Self-sufficiency incentives--Disallowance of increase in
annual income.
(a) * * *
Baseline income. The annual income immediately prior to
implementation of the disallowance described in paragraph (c)(1) of
this section of a person who is a member of a qualified family.
* * * * *
(b) Disallowance of earned income--(1) Initial 12-month exclusion.
During the 12-month period beginning on the date on which 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 the annual income (as defined in Sec. 5.609 of this
title) of a qualified family any increase in the income of the family
member as a result of employment over the baseline income of that
family member.
(2) Phase-in of rent increase. Upon the expiration of the 12-month
period defined in paragraph (b)(1) of this section and for the
subsequent 12-month period, the PHA must exclude from the annual income
of a qualified family at least 50 percent of any increase in income of
such family member as a result of employment over the family member's
baseline income.
(3) Maximum 2-year disallowance. The disallowance of increased
income of an individual family member as provided in paragraph (b)(1)
or (b)(2) of this section is limited to a lifetime 24-month period. It
applies for a maximum of 12 months for disallowance under paragraph
(b)(1) of this section and a maximum of 12 months for disallowance
under paragraph (b)(2) of this section, during the 24-month period
starting from the initial exclusion under paragraph (b)(1) of this
section.
(4) Effect of changes on currently participating families. Families
eligible for and participating in the disallowance of earned income
under this section prior to May 9, 2016 will continue to be governed by
this section in effect as it existed immediately prior to that date.
* * * * *
0
25. In Sec. 960.257, revise the section heading and paragraphs (a)(2)
and (b) to read as follows:
Sec. 960.257 Family income and composition: Annual and interim
reexaminations.
(a) * * *
(2) For families who choose flat rents, the PHA must conduct a
reexamination of family composition at least annually, and must conduct
a reexamination of family income at least once every three years in
accordance with the procedures in Sec. 960.253(f).
* * * * *
(b) Interim reexaminations. (1) A family may request an interim
reexamination of family income or composition because of any changes
since the last determination.
(2) The PHA must make the interim reexamination within a reasonable
time after the family request. The PHA must adopt policies prescribing
when and under what conditions the family must report a change in
family income or composition.
(3) Streamlined income determination. For any family member with a
fixed source of income, a PHA may elect to determine that family
member's income by means of a streamlined income determination. A
streamlined income determination must be conducted by applying, for
each fixed-income source, the verified cost of living adjustment (COLA)
or current rate of interest to the previously verified or adjusted
income amount.
(i) ``Family member with a fixed source of income'' is defined as a
family member whose income includes periodic payments at reasonably
predictable levels from one or more of the following sources:
(A) Social Security, Supplemental Security Income, Supplemental
Disability Insurance;
(B) Federal, state, local, or private pension plans;
(C) Annuities or other retirement benefit programs, insurance
policies, disability or death benefits, or other similar types of
periodic receipts; or
(D) Any other source of income subject to adjustment by a
verifiable COLA or current rate of interest.
(ii) A PHA must use a COLA or current rate of interest specific to
the fixed source of income in order to adjust the income amount. The
PHA must verify the appropriate COLA or current rate of interest from a
public source or through tenant-provided, third party-generated
documentation. If no such verification is available, then the PHA must
obtain third-party verification of income amounts in order to calculate
the change in income for the source.
(iii) For any family member whose income is determined pursuant to
a streamlined income determination, a PHA must obtain third-party
verification of all income amounts every 3 years.
* * * * *
0
26. 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) Except as provided in paragraph (c)(2) of this section, 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, for purposes of recertification of income, 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.
(i) 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.
(ii) A PHA must obtain third-party verification of all family
assets every 3 years.
0
27. In Sec. 960.605, revise paragraphs (c)(2) through (5) to read as
follows:
Sec. 960.605 How PHA administers service requirements.
* * * * *
(c) * * *
(2) The PHA must give the family a written description of the
service requirement, and of the process for claiming status as an
exempt person and for PHA verification of such status. The PHA must
also notify the family of its determination identifying the family
members who are subject to the service requirement, and the family
members who are exempt persons. The PHA must also notify the family
that it will be
[[Page 12374]]
validating a sample of self-certifications of completion of the service
requirement accepted by the PHA under Sec. 960.607(a)(1)(ii).
(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 Sec. 5.105(a) of this title and
affirmatively further fair housing in all their activities in
accordance with the AFFH Certification as described in Sec. 903.7(o)
of this chapter.
0
28. 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 24 CFR
5.603(b)) 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.
(3) If a PHA accepts self-certifications under paragraph (a)(1)(ii)
of this section, the PHA must validate a sample of such self-
certifications using third-party certification described in paragraph
(a)(1)(i) of this section.
* * * * *
PART 966--PUBLIC HOUSING LEASE AND GRIEVANCE PROCEDURE
0
29. The authority citation for part 966 continues to read as follows:
Authority: 42 U.S.C. 1437d and 3535(d).
0
30. Revise Sec. 966.4(n) to read as follows:
Sec. 966.4 Lease requirements.
* * * * *
(n) Grievance procedures. (1) The lease must provide that all
disputes concerning the obligations of the tenant or the PHA must
(except as provided in Sec. 966.51(a)(2)) be resolved in accordance
with the PHA grievance procedures. The grievance procedures must comply
with subpart B of this part.
(2) The lease must include a description of the PHA's policies for
selecting a hearing officer.
* * * * *
0
31. Amend Sec. 966.52 by adding a 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
32. In Sec. 966.53, revise paragraphs (b), (d), and (e) to read as
follows:
Sec. 966.53 Definitions.
* * * * *
(b) Complainant shall mean 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. PHAs must describe their
policies for selection of a hearing officer in their lease forms as
required by Sec. 966.4, changes to which are subject to a 30-day
comment period as described in Sec. 966.3.
* * * * *
Sec. 966.54 [Amended]
0
33. Amend Sec. 966.54 by removing the phrase ``under Sec. 966.55''.
Sec. 966.55 [Removed]
0
34. Remove Sec. 966.55.
0
35. Amend Sec. 966.56 as follows:
0
a. Revise paragraph (a);
0
b. In paragraph (b)(2), remove the comma;
0
c. Remove paragraphs (c) and (f);
0
d. Redesignate paragraphs (d), (e), (g), and (h) as paragraphs (c),
(d), (e) and (f), respectively;
0
e. Revise redesignated paragraph (c); and
0
f. Add paragraph (g).
The revisions and addition read as follows:
Sec. 966.56 Procedures governing the hearing.
(a) The hearing must 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 must 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 5 business days or may make a determination
that the party has waived his right to a hearing. Both the complainant
and the PHA must be notified of the determination by the hearing
officer. A determination that the complainant has waived the
complainant's right to a hearing will 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.
* * * * *
(g) Limited English Proficiency. PHAs must comply with HUD's
``Final
[[Page 12375]]
Guidance to Federal Financial Assistance Recipients Regarding Title VI
Prohibition Against National Origin Discrimination Affecting Limited
English Proficient Persons'' issued on January 22, 2007 and available
at http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/promotingfh/lep-faq.
0
36. Revise Sec. 966.57 to read as follows:
Sec. 966.57 Decision of the hearing officer.
(a) The hearing officer must prepare a written decision, including
the reasons for the PHA's decision within a reasonable time after the
hearing. A copy of the decision must be sent to the complainant and the
PHA. The PHA must retain a copy of the decision in the tenant's folder.
The PHA must maintain a log of all hearing officer decisions and make
that log available upon request of the hearing officer, a prospective
complainant, or a prospective complainant's representative.
(b) The decision of the hearing officer will 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; or
(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 will 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
37. The authority citation for part 982 continues to read as follows:
Authority: 42 U.S.C. 1437f and 3535(d).
0
38. In Sec. 982.402 add a sentence at the end of paragraph (d)(2) to
read as follows:
Sec. 982.402 Subsidy standards.
* * * * *
(d) * * *
(2) * * * However, utility allowances must follow Sec. 982.517(d).
0
39. 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 paragraphs (f) and (g).
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 an initial inspection or
reinspection of the unit.
(f) The PHA may not charge the owner for the inspection of the unit
prior to the initial term of the lease or for a first inspection during
assisted occupancy of the unit. The PHA may establish a reasonable fee
to owners for a reinspection if an owner notifies the PHA that a repair
has been made or the allotted time for repairs has elapsed and a
reinspection reveals that any deficiency cited in the previous
inspection that the owner is responsible for repairing pursuant to
Sec. 982.404(a) was not corrected. The owner may not pass this fee
along to the family. Fees collected under this paragraph will be
included in a PHA's administrative fee reserve and may be used only for
activities related to the provision of Section 8 Tenant-Based Rental
Assistance.
(g) 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 in
accordance with Sec. 982.404(a)(3)), 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
40. Redesignate Sec. 982.406 as Sec. 982.407.
0
41. 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 inspection
requirement in Sec. 982.405(a) by relying on an alternative inspection
(i.e., an inspection conducted for another housing assistance program)
only if the PHA is able to obtain the results of the alternative
inspection.
(2) If an alternative inspection method employs sampling, then a
PHA may rely on such alternative inspection method to comply with the
requirement in Sec. 982.405(a) only if HCV units are included in the
population of units forming the basis of the sample.
(3) 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 requirement in Sec. 982.405(a) 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, in addition to meeting the requirements in
Sec. 982.406(c)(2), if applicable, before using the alternative
inspection method.
(c) Eligible inspection methods. (1) A PHA may rely upon
inspections of housing assisted under the HOME Investment Partnerships
(HOME) program or housing financed using Low-Income Housing Tax Credits
(LIHTCs), or inspections performed by HUD, with no action other than
amending its administrative plan.
(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 copy of the inspection method it
wishes to use, along with its analysis of the inspection method that
shows that the method ``provides the same or greater protection to
occupants of dwelling units'' as would HQS.
(i) A PHA may rely upon such alternative inspection method only
upon receiving approval from REAC to do so.
(ii) A PHA that uses an alternative inspection method approved
under this paragraph must monitor changes to the standards and
requirements applicable to such method. If any change is made to the
alternative inspection method, then the PHA must submit to REAC a copy
of the revised standards and requirements, along with a revised
comparison to HQS. If the PHA or REAC
[[Page 12376]]
determines that the revision would cause the alternative inspection to
no longer meet or exceed HQS, then the PHA may no longer rely upon the
alternative inspection method to comply with the inspection requirement
at Sec. 982.405(a).
(d) Results of alternative inspection. (1) In order for a PHA to
rely upon the results of an alternative inspection to comply with the
requirement at Sec. 982.405(a), a property inspected pursuant to such
method 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 inspection
requirement at Sec. 982.405(a).
(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
inspection requirement at Sec. 982.405(a).
(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 identified--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 inspection requirement at Sec.
982.405(a); 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 for a
property, the PHA must, within 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 identified
deficiencies.
(e) 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
42. 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 paragraph (b)(1)(iii) of this section, the'';
and
0
c. Revise paragraph (c)(2).
The revision and addition read as follows:
Sec. 982.503 Payment standard amount and schedule.
* * * * *
(b) * * *
(1) * * *
(iii) The PHA may establish an exception payment standard of not
more than 120 percent of the published FMR if required as a reasonable
accommodation in accordance with 24 CFR part 8 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.
* * * * *
(c) * * *
(2) Above 110 percent of FMR to 120 percent of published FMR. The
HUD Field Office may approve an exception payment standard amount from
above 110 percent of the published FMR to not more than 120 percent of
the published FMR (upper range) if the HUD Field Office determines that
approval is justified by either the median rent method or the 40th or
50th percentile rent method as described in paragraph (c)(2)(ii) of
this section (and that such approval is also supported by an
appropriate program justification in accordance with paragraph (c)(4)
of this section).
(i) Median rent method. In the median rent method, HUD determines
the exception payment standard amount by multiplying the FMR times a
fraction of which the numerator is the median gross rent of the
exception area and the denominator is the median gross rent of the
entire FMR area. In this method, HUD uses median gross rent data from
the most recent decennial United States census, and the exception area
may be any geographic entity within the FMR area (or any combination of
such entities) for which median gross rent data is provided in
decennial census products.
(ii) 40th or 50th percentile rent method. In this method, HUD
determines that the area exception payment standard amount equals
either the 40th or 50th percentile of rents for standard quality rental
housing in the exception area. HUD determines whether the 40th or 50th
percentile rent applies in accordance with the methodology described in
Sec. 888.113 of this title for determining FMRs. A PHA must present
statistically representative rental housing survey data to justify HUD
approval.
* * * * *
0
43. Revise Sec. 982.505(d) to read as follows:
Sec. 982.505 How to calculate housing assistance payment.
* * * * *
(d) PHA approval of higher payment standard for the family as a
reasonable accommodation. If the family includes a person with
disabilities and requires a payment standard above the basic range, as
a reasonable accommodation for such person, in accordance with part 8
of this title, the PHA may establish a payment standard for the family
of not more than 120 percent of the FMR.
0
44. 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.
(1) The PHA will have the option of making utility reimbursement
payments not less than once per calendar-year quarter, for
reimbursements totaling $45 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. PHAs exercising this option must have a
hardship policy in place for tenants.
(2) 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
45. Amend Sec. 982.516 as follows:
0
a. Revise the section heading;
0
b. In paragraph (a), revise the introductory text of paragraph (a)(2)
and add paragraph (a)(3);
0
c. Remove paragraph (e);
0
d. Redesignate paragraphs (b), (c), and (d) as paragraphs (c), (d), and
(e), respectively;
0
e. Add a new paragraph (b);
0
f. In redesignated paragraph (c), revise the paragraph heading; and
0
g. Revise redesignated paragraph (e)(2).
The revisions and addition read as follows:
Sec. 982.516 Family income and composition: Annual and interim
examinations.
(a) * * *
(2) Except as provided in paragraph (a)(3) of this section, the PHA
must
[[Page 12377]]
obtain and document in the tenant file third-party verification of the
following factors, or must document in the tenant file why third-party
verification was not available:
* * * * *
(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.
(i) 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.
(ii) A PHA must obtain third-party verification of all family
assets every 3 years.
(b) Streamlined income determination. For any family member with a
fixed source of income, a PHA may elect to determine that family
member's income by means of a streamlined income determination. A
streamlined income determination must be conducted by applying, for
each fixed-income source, the verified cost of living adjustment (COLA)
or current rate of interest to the previously verified or adjusted
income amount.
(1) Family member with a fixed source of income is defined as a
family member whose income includes periodic payments at reasonably
predictable levels from one or more of the following sources:
(i) Social Security, Supplemental Security Income, Supplemental
Disability Insurance;
(ii) Federal, state, local, or private pension plans;
(iii) Annuities or other retirement benefit programs, insurance
policies, disability or death benefits, or other similar types of
periodic receipts; or
(iv) Any other source of income subject to adjustment by a
verifiable COLA or current rate of interest.
(2) A PHA must use a COLA or current rate of interest specific to
the fixed source of income in order to adjust the income amount. The
PHA must verify the appropriate COLA or current rate of interest from a
public source or through tenant-provided, third party-generated
documentation. If no such verification is available, then the PHA must
obtain third-party verification of income amounts in order to calculate
the change in income for the source.
(3) For any family member whose income is determined pursuant to a
streamlined income determination, a PHA must obtain third-party
verification of all income amounts every 3 years.
(c) Interim reexaminations. * * *
* * * * *
(e) * * *
(2) At the effective date of a regular or interim reexamination,
the PHA must make appropriate adjustments in the housing assistance
payment in accordance with Sec. 982.505.
* * * * *
0
46. Amend Sec. 982.517 as follows:
0
a. Capitalize the first word in paragraph (b)(2)(i); and
0
b. Revise paragraph (d), to read as follows:
Sec. 982.517 Utility allowance schedule.
* * * * *
(d) Use of utility allowance schedule. 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.
* * * * *
PART 983--PROJECT-BASED VOUCHER (PBV) PROGRAM
0
47. 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
48. In Sec. 983.2 amend paragraph (c)(4) by removing the citation
``Sec. 982.406'' and adding in its place ``Sec. 982.407''.
0
49. Amend Sec. 983.103 by revising paragraph (d) and adding 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 sample of inspected contract
units in a building fail the initial inspection, then 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 an alternative inspection, 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
50. The authority citation for part 990 continues to read as follows:
Authority: 42 U.S.C. 1437g; 42 U.S.C. 3535(d).
0
51. 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 will
pay operating subsidy for a limited number of vacant units under an
ACC. The limited number of vacant units must 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 Sec. 990.265 (provided that the number
of eligible unit months does not exceed 100 percent of the unit months
for a project).
* * * * *
Dated: February 29, 2016.
Nani Coloretti,
Deputy Secretary.
[FR Doc. 2016-04901 Filed 3-7-16; 8:45 am]
BILLING CODE 4210-67-P