[Federal Register Volume 84, Number 197 (Thursday, October 10, 2019)]
[Notices]
[Pages 54630-54632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22134]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5630-N-13]


Rental Assistance Demonstration: Revised RAD Notice

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

ACTION: Notice.

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SUMMARY: The Rental Assistance Demonstration (RAD) provides the 
opportunity to facilitate the conversion of assistance of public 
housing properties and other HUD-assisted properties to long-term, 
project-based Section 8 rental assistance. This Federal Register notice 
announces the posting of the fourth revision to the RAD notice (Revised 
RAD Notice Revision 4, PIH-2019-23 (HA)/H-2019-09, REV-4) and solicits 
public comment on changed eligibility and selection criteria. As 
provided by the RAD Statute, this notice addresses the requirement that 
RAD may proceed after publication of notice of its terms in the Federal 
Register. This notice summarizes the key changes made in the Revised 
RAD Notice. This notice also meets the RAD Statute requirement to 
publish waivers and alternative requirements at least 10 days before 
effect, while this does not prevent the demonstration, as modified, 
from proceeding immediately.

DATES: Comment Due Date: November 12, 2019.
    Effective Dates: The Revised RAD Notice, PIH-2019-23 (HA)/H-2019-
09, REV-4, other than those items listed as subject to notice and 
comment or new statutory or regulatory waivers or alternative 
requirements specified in this notice, is effective October 10, 2019.
    The new statutory and regulatory waivers and alternative 
requirements are effective October 21, 2019.
    The items listed as subject to notice and comment will be effective 
upon November 12, 2019. If HUD receives adverse comment that leads to 
reconsideration, HUD will notify the public in a new notice immediately 
upon the expiration of the comment period.

ADDRESSES: Interested persons are invited to submit comments 
electronically to [email protected] no later than the comment due date.

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

SUPPLEMENTARY INFORMATION:

I. Background

    Originally authorized by the Consolidated and Further Continuing 
Appropriations Act, 2012 (Pub. L. 122-55, signed November 18, 2011) 
(2012 Appropriations Act), RAD allows for the conversion of assistance 
of public housing properties, Rent Supplement (Rent Supp), Rental 
Assistance (RAP), Moderate Rehabilitation (Mod Rehab), Mod Rehab Single 
Room Occupancy (SRO), and Section 202 Project Rental Assistance 
Contract (202 PRAC) programs (collectively, ``covered programs'') to 
long-term, renewable assistance under Section 8.\1\ The most recent 
version of the RAD notice is PIH-2019-23 (HA)/H-2019-09, REV-4, located 
at https://www.hud.gov/sites/documents/RAD_Notice_Rev3_Final.docx.
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    \1\ The RAD statutory requirements were amended by the 
Consolidated Appropriations Act, 2014 (Pub. L. 113-76, signed 
January 17, 2014), the Consolidated and Further Continuing 
Appropriations Act, 2015 (Pub. L. 113-235, signed December 16, 
2014), the Consolidated Appropriations Act, 2016 (Pub. L. 114-113, 
signed December 18, 2015), the Consolidated Appropriations Act, 2017 
(Pub. L. 115-31, signed May 4, 2017), and the Consolidated 
Appropriations Act, 2018 (Pub. L. 115-141, signed March 23, 2018). 
The statutory provisions of the 2012 Appropriations Act pertaining 
to RAD, as amended, are referred to as the RAD Statute in this 
notice.
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II. Key Changes Made to RAD

    The following highlights key changes to RAD that are included in 
the Revised RAD Notice:
    First Component (Public Housing Conversions):
    1. Extends all resident rights to households that will reside in 
non-RAD Project Based Voucher (PBV) units placed in a Covered Project 
so as to facilitate the standard protection or residents (see section 
1.6);
    2. Increases resident notice requirements to ensure adequate 
communication with residents throughout the conversion process (see 
Section 1.8);
    3. Establishes a mechanism for public housing agencies (PHAs) to 
enter into partnerships in order to pool resources or capacity with 
each other so as to effectively convert properties through RAD (see 
Section 1.5.A.M);
    4. Allows limited rent increases for public housing conversions to 
Project

[[Page 54631]]

Based Rental Assistance (PBRA) contracts in certain scenarios, 
including in designated Opportunity Zones (see Section 1.7.A.5);
    5. Modifies the requirements for portfolio awards so as to provide 
PHAs greater flexibility in staging the conversion of their properties 
(see Section 1.9.C);
    6. Streamlines Capital Needs Assessment (CNA) requirements to 
eliminate the submission of the CNA Tool when certain conditions have 
been met (see Section 1.5.A);
    7. Introduces a ``Concept Call'' so that PHAs can receive 
confirmation that project plans are sufficiently advanced to submit a 
Financing Plan (see Section 1.12.C);
    8. Prohibits PHAs from entering debt into the Earned Income 
Verification ``Debts Owed'' module purely as a result of the End of 
Participations Form HUD-50058 that is required to be submitted into 
Public and Indian Housing Information Center (PIC) as part of the 
conversion (see Section 1.13.B);
    9. Broadens the use of ``tiered'' environmental reviews so that 
streamlined submissions are needed for certain 24 CFR part 50 reviews; 
requires the use of the HUD Environmental Review Online System (HEROS) 
for Part 50 reviews; and requires radon testing for PBRA and PBV 
conversions (see Attachment 1A);
    10. Establishes policy that RAD rents will be updated every two 
years and the updated rents will be applied to new awards issued after 
those established dates (see Attachment 1C);
    11. Establishes a priority for ``Section 3'' employment and other 
economic opportunities for residents of public housing or Section 8 
assisted housing (see Section 1.4.A.15).
    Second Component (202 PRAC, Mod Rehab, Mod Rehab SRO, Rent Supp, 
RAP Conversions):
    1. Implements the provision of the 2018 Consolidated Appropriations 
Act authorizing the conversion of 202 PRAC projects to Section 8 PBRA 
or PBV contracts;
    2. Streamlines Capital Needs Assessment (CNA) requirements for Mod 
Rehab conversion to eliminate the submission of the CNA Tool when 
certain conditions have been met;
    3. Broadens the use of ``tiered'' environmental reviews so that 
streamlined submissions are needed for certain Part 50 reviews; 
requires the use of the HUD Environmental Review Online System (HEROS) 
for Part 50 reviews; and requires radon testing for PBRA and PBV 
conversions;
    4. Provides an ability for owners of converting SRO properties 
serving the homeless to establish a preference that facilitates 
permanent supportive housing;
    5. Fully establishes resident right of return and the prohibition 
against re-screening for existing residents; and
    6. Establishes a final date that any remaining RAP properties may 
make a submission of conversion under RAD.
    7. Clarifies the requirements with respect to Section 8 PBRA/PBV 
and the Davis-Bacon Act of 1931 by stating that execution of a Section 
8 PBRA or PBV contract through RAD that provides rental assistance to 
previously assisted units does not trigger Davis-Bacon prevailing wage 
requirements (prevailing wages, the Contract Work Hours and Safety 
Standards Act, and implementing regulations, rules, and requirements). 
However, to the extent that construction or rehabilitation is performed 
on nine or more units that will be newly assisted as a result of the 
conversion transaction (including, without limitation, through transfer 
of assistance), such construction or rehabilitation is subject to 
Davis-Bacon prevailing wage requirements. For more information, see 
section VI of this notice, below.

III. Changes Subject to Notice and Comment

    The Revised RAD Notice makes changes to some of the selection and 
eligibility criteria for conversions of public housing under the First 
Component. Pursuant to the RAD Statute, these changes must be made 
available for public comment before they are effective. Please submit 
all comments to [email protected]. As indicated above, the following changes 
will be effective on November 12, 2019. If HUD receives adverse 
comments that lead to reconsideration, HUD will notify the public in a 
new notice immediately upon the expiration of the comment period.
    The changes subject to notice and comment are:
    1. Removing restrictions on certain HOPE VI properties that are 
under 10 years old; and
    2. Eliminating the selection of applications based on previously 
established ``Priority Categories'' so that HUD reviews applications on 
a first-come, first serve basis. In the event that a waiting list 
forms, establishes the priority selection of applications for 
properties located in designated Opportunity Zones.

IV. New Waivers and Alternative Requirements

    The RAD Statute provides that waivers and alternative requirements 
authorized under the First Component must be published by notice in the 
Federal Register no later than 10 days before the effective date of 
such notice. HUD has previously published its waivers and alternative 
requirements for RAD, on July 26, 2012 (77 FR 43850), July 2, 2013 (78 
FR 39759), June 26, 2015 (80 FR 36830), and January 19, 2017 (82 FR 
6615).
    So as to facilitate the uniform treatment of residents and units at 
a Covered Project, this notice subjects any non-RAD PBV units located 
in the Covered Project to certain waivers and alternative requirements 
applicable to RAD units, including:
    1. Site selection--Compliance with PBV Goals. Provision Affected: 
Section 8(o)(13)(C)(ii) of the United States Housing Act of 1937 (the 
Act), 24 CFR 983.57(b)(1) and (c)(2). Waiver: HUD waives these 
provisions having to do with deconcentration of poverty and expanding 
housing and economic opportunity for the existing site.
    2. Phase-in of Tenant Rent Increases. Provision Affected: Section 
3(a)(1) of the Act, 24 CFR 983.3. Alternative Requirement: HUD is 
specifying alternative requirements to allow for the phase-in of tenant 
rent increases caused purely as a result of conversion.
    3. Resident Procedural Rights. Provision Affected: 24 CFR 983.257, 
24 CFR 982.555(b). Alternative Requirement: HUD is specifying 
alternative requirements to require that PHAs provide adequate written 
notice of termination of the lease and establish a grievance process.
    4. Earned Income Disregard (EID). Provision affected: 24 CFR 
5.617(b). Waiver and Alternative Requirement: HUD is waiving this 
provision and allowing all tenants who are employed and currently 
receiving EID at the time of conversion to continue to benefit from 
this exclusion from income as a resident in the PBV project. EID will 
apply to residents in a PBV project with assistance converted under RAD 
regardless of the resident's disability status.
    5. When Total Tenant Payment Exceeds Gross Rent. Provision 
affected: 24 CFR 983.53(c), 24 CFR 983.258. Waiver and Alternative 
Requirement: HUD is waiving both of these provisions and requiring that 
the unit for current residents in the converting project be placed on 
and/or remain under the non-RAD PBV HAP Contract in the covered project 
when the family's TTP equals or exceeds the Gross Rent. Further, HUD is 
establishing the alternative requirement that until such time that the 
family's TTP falls below the gross rent, the rent to the owner for the 
unit will equal the

[[Page 54632]]

lesser of (a) the family's TTP, less the Utility Allowance, or (b) any 
applicable maximum rent under LIHTC regulations. During any period when 
the family's TTP falls below the gross rent, normal PBV rules shall 
apply.
    6. Under-Occupied Unit. Provision affected: 24 CFR 983.260. Waiver: 
HUD is waiving this provision in order to allow the family to remain in 
the under-occupied unit until an appropriate-sized unit becomes 
available in the Covered Project.
    7. Establishment of a Waiting List. Provision affected: 24 CFR 
983.251(c)(2). Alternative Requirement: HUD is specifying an 
alternative requirement in order to ensure that applicants on the PHA's 
community wide public housing waiting list have been offered placement 
on a Covered Project's site-based PBV waiting list.
    In addition, this notice announces two other waivers and 
alternative requirements:
    1. Jobs Plus. Provision affected: Jobs Plus provisions in the 
``Public Housing Capital Fund'' of Consolidated Appropriations Act, 
2014 (Pub. L. 113-76) or future appropriations acts. Waiver and 
Alternative Requirement: HUD is waiving the provision in the 
appropriation acts for FY14 and future years that limits Jobs Plus 
funds to provide grants to help public housing residents obtain 
employment and increase earnings. This waiver is necessary for the 
continued administration of the Jobs Plus grant at a target project 
after conversion. Jobs Plus grantees awarded FY14 and future funds that 
convert the Jobs Plus target projects(s) under RAD will be able to 
finish out their Jobs Plus period of performance unless significant 
relocation and/or change in building occupancy is planned. However, 
Jobs Plus target public housing projects must enroll public housing 
residents into the Jobs Plus rent incentive, JPEID, prior to 
conversion. Any resident of the Covered Project that had not enrolled 
prior to conversion is not eligible to enroll in JPEID but may utilize 
Jobs Plus services that predominantly benefit the former public housing 
residents who resided at the target project at the time of RAD 
conversion.
    2. Relocation requirements under Section 18 of the Act. Provision 
affected: Sections 18(a)(4) and 18(g) of the Act and 24 CFR 970.21. 
Waiver and Alternative Requirement: Where a PHA is combining the use of 
RAD and Section 18 at a project, HUD is waiving the relocation 
requirements governing Section 18 and applying the RAD relocation 
requirements to affected residents.

V. Revised RAD Notice Availability

    The Revised RAD Notice (PIH-2019-23 (HA)/H-2019-09, REV-4) can be 
found on RAD's website, www.hud.gov/RAD.

VI. Impact on 2015 Davis-Bacon Notice

    On March 9, 2015 at 80 FR 12511 (the ``March 9, 2015 Notice''), HUD 
published a notice in the Federal Register with details on how the 
Davis-Bacon requirements interact with the PBV program. The notice 
particularly addressed the applicability of Davis-Bacon requirements to 
projects selected as ``existing housing'' \2\ under the PBV program, 
including PBV existing housing under the second component of RAD 
(sometimes referred to as ``RAD 2''), which was covered in section 
II.C.
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    \2\ Existing housing is defined in 24 CFR 983.3.
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    HUD's General Counsel issued a legal opinion on August 13, 2019 
(the ``2019 Opinion''), concluding that Davis-Bacon requirements are 
not triggered by the rehabilitation of previously assisted units 
occurring in connection with a conversion of assistance under the 
second component of RAD. The 2019 Opinion superseded a 2014 opinion 
(the ``2014 Opinion'') from the Office of General Counsel regarding the 
applicability of Davis-Bacon wage rates to PBV existing housing under 
RAD 2. The 2019 Opinion noted that the 2014 Opinion did not give proper 
consideration to statutory text and was a departure from longstanding 
HUD interpretation and practice. The 2019 Opinion concluded that 
rehabilitation of already-assisted units and associated common areas 
that occur in connection with PBV and PBRA provided under RAD 2 does 
not constitute ``development'' of a new Section 8 project that would 
trigger the application of Davis-Bacon requirements under section 12(a) 
of the United States Housing Act of 1937. Instead, RAD 2 transactions 
in which the assisted units remain the same as those under the prior 
form of project-based assistance constitute a mere extension of 
existing assistance. The 2019 Opinion also noted that to the extent 
that construction or rehabilitation is performed on nine or more units 
that will be newly assisted with PBVs or PBRA under RAD 2 (including 
through transfer of assistance), this work would constitute development 
of an expanded project that would trigger the application of Davis-
Bacon to the same extent that it would apply to the non-RAD provision 
of PBVs or PBRA to projects that include units not assisted under a 
previous contract. Accordingly, section II.C. of the March 9, 2015 
Notice is withdrawn. The guidance in the remainder of the March 9, 2015 
Notice remains applicable to the rehabilitation of nine or more newly 
assisted existing units under RAD 2.

VII. Environmental Review

    A Finding of No Significant Impact with respect to the environment 
has been completed in accordance with HUD regulations in 24 CFR part 50 
that implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding is available for public 
inspection during regular business hours in the Regulations Division, 
Office of General Counsel; Department of Housing and Urban Development; 
451 7th Street SW, Room 10276; Washington, DC 20410- 0500. Due to 
security measures at the HUD Headquarters building, please schedule an 
appointment to review the Finding by calling the Regulations Division 
at 202-402-3055 (this is not a toll-free number). Individuals with 
speech or hearing impairments may access this number via TTY by calling 
the Federal Relay Service at 800-877-8339.

    Dated: October 4, 2019.
R. Hunter Kurtz,
Assistant Secretary for Public and Indian Housing.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2019-22134 Filed 10-9-19; 8:45 am]
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