[Federal Register Volume 84, Number 217 (Friday, November 8, 2019)]
[Notices]
[Pages 60410-60429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24426]



[[Page 60410]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-7011-N-50]


30-Day Notice of Proposed Information Collection: Public Housing 
Annual Contributions Contract for Capital and Operating Grant Funds: 
30-Day Notice of Proposed Information Collection: Agency Information 
Collection Activities: Public Housing Annual Contributions Contract for 
Capital and Operating Grant Funds

AGENCY: Office of the Chief Information Officer, HUD.

ACTION: Notice.

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SUMMARY: HUD has submitted the information collection described below 
to the Office of Management and Budget (OMB) for review and approval, 
in accordance with the Paperwork Reduction Act. The public housing 
program provides Operating Funds and Capital Funds to public housing 
projects owned and operated by public housing agencies (PHAs), subject 
to the terms and conditions contained in the federal award, HUD-53012.
    HUD has revised the federal award based on current applicable 
statutes and regulations as well as in response to public comments 
received during the public comment period provided for by the 60-Day 
Notice of Proposed Information Collection. These revisions are more 
thoroughly described below. One notable revision is that HUD has 
revised the title of the public housing federal award; previously 
entitled Public Housing Annual Contributions Contract for Capital and 
Operating Grant Funds, the award will now be entitled Annual 
Contributions Terms and Conditions for the Public Housing Program. For 
clarity and consistency, the award will continue to be referred to as 
``ACC.'' Additionally, mixed-finance provisions in the proposed ACC 
have been removed from the revised ACC and will instead be included in 
an ACC amendment; a model mixed-finance ACC amendment is published 
herewith.
    This publication is to provide notice to PHAs of the revisions and 
to give PHAs the opportunity to comment on such revisions. The purpose 
of this notice is to allow for an additional 30 days of public comment. 
Please note that the 30-Day Notice of Proposed Information Collection 
for the Moving to Work Amendment to Consolidated Annual Contributions 
Contract is published elsewhere in this issue of the Federal Register.

DATES: Comments Due Date: December 9, 2019.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposal. Comments should refer to the proposal by name and/or OMB 
Control Number and should be sent to: HUD Desk Officer, Officer of 
Management and Budget, New Executive Office Building, Washington, DC 
20503; fax: 202-395-5806; email: [email protected].

FOR FURTHER INFORMATION CONTACT: Colette Pollard, Reports Management 
Officer, QDAM, Department of Housing and Urban Development, 451 7th 
Street SW, Washington, DC 20410; email Colette Pollard at 
[email protected] or telephone 202-402-3400. Persons with hearing 
or speech impairments may access this number through TTY by calling the 
toll-free Federal Relay Service at (800) 877-8339. This is not a toll-
free number. Copies of available documents submitted to OMB may be 
obtained from Ms. Pollard.

SUPPLEMENTARY INFORMATION: This notice informs the public that HUD has 
submitted to OMB a request for approval of the information collection 
described in Section A. The Federal Register notice that solicited 
public comment on the information collection for a period of 60 days 
was published on December 27, 2018 at 83 FR 66729.

A. Overview of Information Collection

    Title of Information Collection: Annual Contributions Terms and 
Conditions for the Public Housing Program.\1\
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    \1\ The previous title was Public Housing Annual Contributions 
Contract for Capital and Operating Grant Funds.
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    OMB Approval Number: 2577-0075.
    Type of Request: Revision of a currently approved collection.
    Form Number: HUD-53012.\2\
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    \2\ The forms listed in the 60-Day Notice were ``HUD-52840A, 
HUD-53012A, HUD-53012B.'' HUD forms HUD-53012A and HUD-53012B have 
been combined into one form, HUD-53012. HUD is not revising HUD-
52840A, the Capital Fund Program (CFP) Amendment to the Annual 
Contributions Contract (ACC), with this proposed information 
collection. The HUD-52840A (exp. 01/31/2021) is available at 
HUDCLIPS, https://www.hud.gov/program_offices/administration/hudclips/forms. If HUD continues to use the HUD-52840A, it will be 
incorporated into the ACC as an amendment. The forms approved as 
part as OMB Control Number 2577-0075 that are not being revised at 
this time are: HUD-51999; HUD-52190A; HUD-52190B; HUD-52840A; HUD-
52860, HUD-52860B, HUD-52860C; HUD-52860; HUD-52860E, and HUD-
52860F, HUD-52860G, HUD-5838 and HUD-5837 (expiration date of 01/31/
2021).
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    Description of the need for the information and proposed use: The 
proposed Annual Contributions Terms and Conditions for the Public 
Housing Program (ACC) is necessary to establish the basic terms and 
conditions for a PHA's public housing program and requires the PHA to 
manage and operate its public housing projects in accordance with the 
United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) (1937 Act) 
and all applicable HUD requirements.
    This 30-Day Notice of Proposed Information Collection provides PHAs 
with notice of revisions to the current ACC form HUD-53012. The ACC 
published in this notice updates HUD-53012 to streamline the ACC. In 
order to further streamline the ACC and in response to public comments 
received, the ACC published in this notice deletes or revises several 
ACC provisions published in the 60-Day Notice of Proposed Information 
Collection. Those revisions are summarized in Section E of this notice. 
Additionally, HUD has summarized public comments and provided responses 
to those comments in Section F of this notice.
    Respondents: Public housing agencies.
    Total Estimated Burdens: The burden costs associated with this 
collection are as follows:

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                                     Number of                             Responses per    Burden hour    Annual burden    Hourly cost
     Information collection         respondents    Frequency of response       annum       per response        hours       per response        Cost
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HUD-92577 ACC...................           3,107  1 each................               1            1.00           3,107          $52.88        $164,298
Mixed-Finance Amendment.........              94  1 each................               1            1.00              94           52.88           4,970
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    The burden costs shown represent burden associated with a one-time 
execution of the ACC for all PHAs and the burden represented with each 
one-time transactional execution of a Mixed-Finance Amendment to the 
ACC, with

[[Page 60411]]

94 such transactions estimated to occur in any given year. Previously, 
in the 60-Day PRA Notice published on December 27, 2018 at 83 FR 66729, 
HUD over-estimated the estimated burden hours associated with the 
execution of the ACC and the Mixed-Finance ACC Amendment. The burden 
hours did not account for the fact that the ACC and Mixed-Finance ACC 
Amendment have been streamlined and no longer repeat statutory and 
regulatory requirements. Additionally, the burden hours included the 
hours estimated for all HUD forms that are part of OMB Control Number 
2577-0075, not just the ACC and the Mixed-Finance ACC Amendment. During 
the 60-Day comment period, HUD received no comments related to the 
estimated burden hours.

B. Solicitation of Public Comment

    This notice is soliciting comments from members of the public and 
affected parties concerning the collection of information described in 
Section A on the following:
    (1) Whether the proposed collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) The accuracy of the agency's estimate of the burden of the 
proposed collection of information;
    (3) Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    (4) Ways to minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated collection techniques or other forms of information 
technology, e.g., permitting electronic submission of responses.
    HUD encourages interested parties to submit comments in response to 
these questions.

C. Authority

    Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 
Chapter 35.

D. Background

    In 1995 the Department of Housing and Urban Development (HUD) 
issued PIH Notice 95-44 which transmitted Consolidated Annual 
Contributions Contract (ACC), Form HUD-53012A and Form HUD-53012B. The 
forms were intended to replace the 1969 Consolidated ACC(s) (Form HUD-
53011), and any amendments to the ACC, between HUD and HAs with respect 
to low-rent and homeownership public and Indian housing projects. HUD 
noted that:
    [t]he revised ACC eliminates the recitation of the specific 
statutory, regulatory and executive order requirements to which a HA is 
subject with respect to its public or Indian housing projects. Instead, 
the HA is made subject to ``all applicable laws, executive orders and 
regulations,'' whether or not these authorities are specifically 
incorporated by reference in the ACC. The purpose of this revision is 
to minimize the scope of the requirements contained in the ACC, so that 
this document can remain a living and vital contract even after 
statutes, executive orders and regulations to which a HA is subject are 
enacted, promulgated, amended or repealed. With the execution of this 
revised ACC, HUD intends to eliminate the obsolescence that has 
developed over time in the existing ACC as a result of the enactment of 
new legislation and the promulgation of new regulations that conflict 
with specific requirements contained in the ACC.
    HUD is further revising the ACC to achieve the goals first 
articulated in 1995, to ``eliminate specific statutory, regulatory and 
executive order requirements to which a PHA is subject . . . and to 
minimize the scope of the requirements contained in the ACC.'' HUD's 
intent is to include those terms and conditions that apply to the 
acceptance and use of federal financial assistance for the public 
housing program which are necessary to ``insure the lower income 
character of the project involved in a manner consistent with the 
public housing agency plan'' (42 U.S.C. 1437d), and that are not 
already specifically included in HUD regulations at Title 24 of the 
Code of Federal Regulations (CFR), the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards (``Uniform Guidance'' at 2 CFR part 200), and/or made applicable 
by statute.
    HUD initially proposed a revised ACC through an information 
collection Paperwork Reduction Act (PRA) 60-day Notice soliciting 
public comment issued on March 1, 2016 at 81 FR 10651. The changes were 
primarily additional requirements applicable to mixed-finance and 
public housing development, and clarifications and updates consistent 
with the Uniform Guidance. HUD received no public comments on the 60-
day notice. On September 6, 2017, HUD issued a 30-day notice soliciting 
public comment at 82 FR 42106, and no comments were received. HUD 
received considerable feedback on the ACC it issued. As a result, HUD 
decided to re-open the ACC a second time for additional public comment. 
On December 27, 2018 HUD published a revised ACC in the Federal 
Register via a second PRA notice at 83 FR 66729. This notice provided 
60-days for the public to comment on the revised ACC. The comments 
received are summarized in Section F of this notice.

E. Overview of Significant Changes Made to the ACC

    The following represents the most notable changes to the ACC. 
However, other changes have also been made which may not be identified 
below because they are editorial or non-material and minor changes. The 
ACC should be reviewed in its entirety to determine the exact nature 
and scope of these revisions. HUD has posted a document online that 
provides a side-by-side comparison of the ACC proposed in the 60-Day 
Notice and the ACC proposed in this 30-Day Notice. The side-by-side 
document is available at https://www.hud.gov/program_offices/public_indian_housing/programs/ph/capfund/2018pi/acc.
     The revised agreement is retitled slightly to more clearly 
reflect its purpose. The new title is the Annual Contributions Terms 
and Conditions for the Public Housing Program. For clarity and 
consistency, the agreement will continue to be referred to as ``ACC.''
     In the 1995 ACC, the PHA was made subject to ``all 
applicable laws, executive orders and regulations,'' whether or not 
these authorities are specifically incorporated by reference in the 
ACC. The ACC published in the 60-day notice on December 27, 2018 
contained similar language in Section 3 of the ACC (HUD Requirements). 
The revised ACC requires the PHA to administer its Public Housing Funds 
in compliance with all ``Public Housing Requirements,'' which include 
the United States Housing Act of 1937 (1937 Act), HUD regulations at 
Title 24 CFR, the Uniform Guidance, appropriations acts, and ``other 
federal statutes, regulations and executive orders applicable to Public 
Housing Funds and Public Housing Projects,'' as they exist now and 
amended in the future, whether or not those requirements are 
incorporated by reference in the ACC.
     HUD deleted the following definitions: Annual 
Contributions Contract, Consolidated Contributions Contract, 
Cooperation Agreement, Fiscal Year, Grant Funding Exhibit, Operating 
Costs (Operating Expenditures or Operating Expenses), Operating 
Receipts, Operating Reserve, Program, Program Receipts, and Replacement 
Reserve Account.

[[Page 60412]]

     HUD has used the term ``public housing funds'' in a manner 
that defines such term in Section 1. Additionally, in Section 1, HUD 
has included by reference to existing regulations at Title 2 Part 200 
of Code of Federal Regulations (CFR) the following terms: Federal 
award, federal financial assistance, and recipient; and Section 2 has 
included by reference to existing regulation at 24 CFR 905.108 the 
definition of ``public housing project.'' In Section 2, the term Public 
Housing Requirements is also defined. Finally, HUD has included a new 
Section 11--Remedies, in response to public comments.
     HUD has responded to public comments by excluding all 
mixed-finance specific language in the revised ACC. HUD has determined 
that, to the extent PHAs need mixed-finance terms that vary from what 
is stated in the ACC, HUD will continue to work with PHAs on project-
specific solutions, including the use of the revised mixed-finance 
amendment (a copy of HUD's revised model document is published 
herewith), adding language to Regulatory and Operating Agreements that 
are required for mixed-finance development, or adding language to the 
restrictive covenant.
     HUD has deleted the following sections from the 60-day 
published ACC: Section 1--Definitions, Section 2--Mission of HUD and 
PHA, Section 4--Cooperation Agreement, Section 9--Accounts, Records and 
Government Access, Section 14--HUD in Possession of Project(s). Please 
refer to Section G of this notice to review a chart summarizing these 
deletions as well as the existing statutory or regulatory public 
housing requirements that already apply to PHAs.
     HUD has retained but revised in part the following 
sections from the 60-day published ACC: Section 3--HUD Requirements 
(retained in part at Section 2), Section 5--Declaration of Restriction 
Covenants (retained in part at Section 4), Section 6--Disposition and 
Encumbrances (retained in part at Section 3), Section 7--Insurance 
Requirements (retained in section 5), Section 8--Employer Requirements 
(retained at Section 6), Section 10--Grant Funding (revised and 
retained in part at Section 1), Section 11--Depository (revised and 
retained in part at Section 7), Section 12--Termination of a Project 
(revised and retained in part at Section 10), Section 13--Notices, 
Defaults, Remedies (retained in part at Section 9), Section 15--
Conflicts of Interests (revised and retained in part at Section 8), 
Section 16--Civil Rights and Employment Requirements (retained in part 
at Section 6), Section 17--Members or Delegates to Congress (HUD has 
retained prohibition in Section 8), Section 18--Rights of Third Parties 
(retained at Section 12), and Section 19--Waiver or Amendment (revised 
and retained at Section 13).

F. Summary of Public Comments Responding to the 60-Day Information 
Collection Notice

    HUD received 79 comments on the revised ACC published on December 
27, 2018 through www.regulations.gov. The comments can be found on the 
www.regulations.gov website at https://www.regulations.gov/docket?D=HUD-2018-0103. HUD also received two additional letters 
relating to the proposed ACC outside of the formal public comment 
process: A letter from a public housing agency forwarded by Congressman 
H. Morgan Griffith and a letter from Senator Charles E. Grassley.

ACC Generally

    Comment: Commenters disagreed with HUD's characterization of the 
ACC as a grant agreement for a variety of reasons. Commenters asked: If 
the new ACC is substantively the same as the old ACC, why is HUD 
revising it? Others felt that HUD was misinforming the public about its 
ACC changes when HUD stated that it was simply adding requirements 
applicable to mixed-finance public housing development and making minor 
clarifications. Finally, some commenters felt HUD's primary motivation 
for proposing these changes was its loss in the United States Court of 
Federal Claims in suits contesting the Department's funding 
distribution method used in 2012.
    HUD Response: The changes update the ACC to reflect that the Office 
of Management and Budget (OMB) revised its Uniform Guidance which 
applies to all agencies that award federal financial assistance (with 
regard to the public housing program, these requirements were formerly 
covered in HUD regulations at 24 CFR part 85). The revised ACC ensures 
that the Uniform Guidance is applied consistently, and that all PHAs 
are subject to the same terms and conditions applicable to public 
housing funds.
    Additionally, the changes are intended to achieve the goals first 
articulated in 1995 to eliminate ``the recitation of the specific 
statutory, regulatory and executive order requirements to which a HA is 
subject . . .'' (See PIH Notice 95-44 transmitting the 1995 ACC). This 
revision further minimizes the scope of the requirements contained in 
the ACC. Since 1995 there have been numerous changes to the specific 
statutory, regulatory and executive order requirements to which a PHA 
is subject with respect to its public projects. For example, on October 
24, 2013 HUD revised the Capital Fund Program at 24 CFR part 905 (78 FR 
63770). Part 905 combines and streamlines the former legacy public 
housing modernization programs, including the Comprehensive Grant 
Program, the Comprehensive Improvement Assistance Program and the 
Public Housing Development Program (which encompasses mixed-finance 
development).
    More than 400 PHAs continue to operate under the 1969 version of 
the ACC, which was developed prior to the conversion of the public 
housing program from a loan program. In 1995, HUD noted PHAs that 
failed to execute the revised ACC would continue to be governed by 
requirements contained in their existing ACC with HUD, which in certain 
instances was more restrictive than requirements established in the 
revised 1995 ACC (e.g., the revised 1995 ACC eliminated the requirement 
under section 307(A) of the 1969 version concerning the need for a 
comparability analysis of PHA personnel policies and the 1969 ACC term 
for PHA procurements set at two years with a one-year option with the 
approval of HUD).
    The ACC, pursuant to section 6(a) of the 1937 Act, sets forth the 
terms and conditions deemed necessary by HUD to insure the low-income 
character of public housing projects and that PHAs act in accordance 
with Public Housing requirements. The ACC governs PHA conduct in 
connection with its acceptance and receipt of federal assistance. While 
addressing past litigation outcomes is not a principal purpose for 
HUD's revisions to the ACC, HUD makes clear in the current version that 
HUD has never contemplated money damages for action or inaction by HUD 
with respect to the ACC. Nothing in the revised ACC forecloses avenues 
for judicial relief from any HUD action that is arbitrary, capricious 
or contrary to law.
    Comment: A commenter stated that PHAs are confused, anxious, and 
concerned as to what HUD's changes are trying to remedy.
    HUD Response: The revised ACC ensures that the Uniform Guidance is 
applied consistently, and that all PHAs are subject to the same terms 
and conditions applicable to public housing funds. Additionally, the 
changes eliminate specific statutory, regulatory and executive order 
requirements to which a PHA is subject and to minimize the scope of the 
requirements contained

[[Page 60413]]

in the ACC. There have been many changes to the public housing program 
since 1995, which require that PHAs be more familiar with specific 
regulatory requirements, and the 1969 or 1995 ACC versions may be 
inconsistent or misleading.
    Comment: Commenters disagreed with HUD's ``redefining'' of the ACC 
as a grant agreement, and stated that the ACC is, and has always been, 
a contract, and should consistently refer to itself as such. A comment 
stated that Congress and HUD have consistently failed to view the 
existing public housing CACC as a contract and need to treat public 
housing contracts in the same way as the contracts for Project Based 
Section 8.
    HUD Response: The Public Housing program, which was initially a 
loan program, was changed by Congress to a direct grant program in 
1987, through which HUD awarded grants for the development and 
operation of public housing (see sections 112 and 119 of the Housing 
and Community Development Act of 1987, Public Law 100-242 (approved 
Feb. 5, 1988) (the HCD Act)). Consequently, in 1988, HUD implemented 
OMB Circular A-102, ``Grant Awards and Cooperative Agreements with 
State and Local Governments,'' by codifying its provisions in 24 CFR 
part 85 (March 11, 1988, 53 FR 8025, 8650). HUD made the public housing 
program subject to 24 CFR part 85. Below is the statement HUD made 
regarding Part 85 applicability to the public housing funding (53 FR 
7875):
    HUD previously took the position that annual contributions for 
public housing development and modernization were not subject to 
Circular A-102 requirements because the Federal assistance to public 
housing agencies (PHAs) was in the form of loans and loan guarantee 
commitments made by HUD. The Department's current method of funding 
public housing development and modernization by means of capital grants 
(as opposed to loans, as in the past) has the effect of subjecting 
public housing development and modernization funding to A-102 
requirements. Public housing operating subsidies are administered as 
grants and therefore are also appropriate for A-102 grant management 
treatment [emphasis added].
    Accordingly, as a result of the changes to the program made by the 
HCD Act, since 1988, HUD consistently administered the public housing 
program subject to the requirements of 24 CFR part 85 (until such 
requirements were superseded by the Uniform Guidance). In addition to 
codifying A-102 at 24 CFR part 85, HUD codified the provisions of OMB 
Circular A-133, ``Audits of States, Local Governments and Non-Profit 
Organizations,'' in 24 CFR parts 84 and 85 in 1997 (November 18, 1997, 
62 FR 61617), and such other circulars related to grants management. In 
the intervening years since codifying the guidance in these circulars, 
HUD has cross-referenced applicable provisions of 24 CFR part 85 
throughout program regulations, including applicable regulations for 
public housing development, modernization and operating funding.
    The 1995 version of the ACC was revised against the backdrop of 
these above-mentioned statutory and regulatory requirements (e.g., 24 
CFR 941.103 (ACC definition), Sec. Sec.  941.612, and 968.103). 
Consequently, the ACC, when it was revised in 1995 was an agreement 
related to the receipt of public housing grant funding. In 1998, when 
the public housing funding was fully converted to formula funding, HUD 
continued to use the same version of the ACC and continued to subject 
the formula funding and public housing program to the requirements of 
24 CFR part 85. Nothing in the rulemaking processes for the Operating 
Fund regulation or the Capital Fund regulation changed the form of the 
funding that was being provided by HUD, and the Operating Fund and 
Capital Fund Rules specifically included and made applicable the 
requirements of Part 85. HUD's proposed changes to the ACC were 
consistent with Congressional intent first expressed 1987.
    Comment: HUD is seeking to ``redefine'' terms to position 
themselves more favorably and insulate themselves from future 
challenges/litigation.
    HUD Response: HUD notes the consistency of its position in 
litigation regarding the characterization of the federal financial 
assistance provided for the public housing. Furthermore, such funding 
is provided subject to a broad array of statutory and administrative 
requirements, including appropriations acts. HUD's changes to the ACC 
were not proposed in response to litigation, but HUD is aware of 
litigation surrounding the ACC. HUD makes clear in the current version 
that HUD has never contemplated money damages for action or inaction by 
HUD with respect to the ACC. Nothing in the revised ACC forecloses 
avenues for judicial relief from any HUD action that is arbitrary, 
capricious or contrary to law.
    While the United States Court of Appeals for the Federal Circuit 
determined the Performance-Based Annual Contributions Contract (PBACC) 
to be a procurement contract, no such court has made such a 
determination with respect to the public housing ACC. In the absence of 
legislation to the contrary, HUD is required to continue to administer 
the public housing program consistent with the HCD Act of 1987, and 
other applicable requirements.
    Comment: ``Operating Receipts'' and ``Program Receipts'' are 
interrelated terms, and changes to one affect the others. Commenters 
said that ``program receipts,'' previously called ``operating 
receipts,'' had been broadened. One commenter said ``this could 
potentially recapture de-federalized funds and require HUD approval for 
uses of all forms of income and proceeds produced by projects. The new 
definition restricts the use of all program and operation funds to 
public housing expenditures, which potentially captures de-federalized 
funds.'' Similarly, other commenters expressed concerns that ``the 
categories covered by `program receipts' has been broadened and could 
potentially allow HUD to ``recapture de-federalized funds and require 
HUD approval for uses of all forms of income and proceeds produced by 
projects.'' Another commenter said ``[t]he definitions of Operating 
Reserves, Operating Costs, Operating Receipts, and Program Receipts are 
interrelated. HUD should explain and justify these definitions within 
the framework of the APA.'' More specific concerns related to the 
definition of Operating Receipts was that ``broadening this definition 
to include `Program Receipts' results in controlling non-federal 
resources earned by PHAs and the refederalization of fees paid into a 
PHA's Central Office Cost Center.''
    Finally, a number of comments expressed concerns about HUD's having 
``restricted the definition of the term `operating expenses' or 
`operating expenditures' to those costs which may be charged against 
Operating Receipts in accordance with the CACC and HUD requirements.'' 
A commenter noted that ``[i]t is unclear what impacts these definition 
changes will have on reserves and offsets of reserve balances for 
operation expenses and . . . requests further clarity on these proposed 
changes as they appear to be an attempt to change statutory funding 
obligations.''
    HUD Response: Operating Receipts is a term that was already defined 
in the 1995 version of the ACC. The changes between the 1995 ACC and 
the proposed ACC published in the 60-Day Notice were slight, and were 
made primarily to align the term with the Uniform Guidance, and to make 
the definition more consistent with 24 CFR

[[Page 60414]]

part 905, subpart F. Because PHAs are already bound by HUD regulations, 
including the requirements of the Uniform Guidance, HUD has deleted 
this definition from the ACC since it is adequately covered by 
regulations.
    Additionally, HUD considers the following definitions: Operating 
Costs (Operating Expenditures or Operating Expenses), Operating 
Reserve, Program, Program Receipts, and Replacement Reserve Account, to 
be unnecessary due to regulatory coverage; and they have also been 
deleted. The determination of eligible costs and the use of program 
funds are covered by the Uniform Guidance and HUD regulations at Title 
24 CFR, specifically those regulations at Parts 905 and 990.
    As to concerns regarding the broadening of the term ``program 
receipts,'' HUD agrees that HUD cannot regulate PHA activity outside of 
the public housing program. However, program income (as that term is 
defined at 2 CFR 200.80), non-rental income (as covered by statute and 
by regulations determined by HUD), and proceeds from the sale of public 
housing real property are already subject to federal statutes and 
regulations. HUD has deleted the term ``program receipts'' as it is 
redundant of regulatory and statutory requirements. HUD has no 
intention of changing statutory funding obligations, and notes that 
public housing funding is subject to various statutory requirements, 
including funding requirements in the appropriations acts, HUD 
regulations, and the Uniform Guidance.

PHA Mission

    Comment: Many commenters indicated that the PHA mission needs to be 
developed locally with public input and approval of its Board of 
Commissioners rather than by contract with HUD. Commenters noted that 
the addition of a requirement to comply with all applicable HUD 
requirements, coupled with changes in the proposed Section 3 of the 
ACC, unfairly imposes any HUD non-regulatory provisions, and the 
Mission statement should be removed.
    HUD Response: The ACC mission statement incorporated the essential 
PHA requirements under Sections 2(a) and 3(a) of the 1937 Act, (42 
U.S.C. 1437 note, and 1437a respectively), and has been part of the 
1969 and 1995 ACC versions. By accepting public housing funds, the PHA 
makes itself subject to the statutory requirement that property funded 
with public housing assistance including dwelling units assisted with 
public housing funds be rented only to low income families. Because the 
mission statement is unnecessary and redundant of statutory and 
regulatory requirements, this section has been deleted from the ACC. 
PHAs are required to administer their Public Housing Funds in 
compliance with all ``Public Housing Requirements'' which include the 
1937 Act, HUD regulations at Title 24 CFR, the Uniform Guidance, 
appropriations acts, and ``other federal statutes, regulations 
executive orders applicable to Public Housing Funds and Public Housing 
Projects,'' as they exist now and are amended in the future, whether or 
not those requirements are incorporated by reference in the ACC.

HUD Requirements

    Comment: Most commenters objected to including HUD-issued notices, 
forms, and agreements as HUD requirements because, the commenters 
state, these requirements do not have a regulatory or statutory basis.
    HUD Response: The HUD Requirements section was added to the ACC as 
a reminder. PHAs are already required in the 1995 version of the ACC to 
comply with ``all applicable laws, executive orders, and regulations 
that are not specifically incorporated [in the ACC] by reference''; and 
under 24 CFR 905.108, to comply with HUD-issued ACC and amendments, HUD 
notices, all applicable federal statutes, executive orders and 
regulatory requirements, as amended. All required forms are issued 
through the Paperwork Reduction Act process with public opportunity to 
comment or are required by the regulations, which were properly 
promulgated under the APA. However, to lessen confusion, the HUD 
Requirements section has been deleted from the ACC, and the term ``HUD 
Requirements'' has been replaced with the term used in existing 
regulations at 24 CFR 905.108, ``Public Housing Requirements.''
    Comment: MTW PHAs stated that requiring compliance with HUD's 
notices, forms, and agreements would reduce MTW flexibilities.
    HUD Response: The MTW Standard Agreement contains a provision that 
it ``supersedes the terms and conditions of one or more ACCs between 
the Agency and HUD, to the extent necessary for the Agency to implement 
its MTW demonstration initiatives as laid out in the Agency's Annual 
MTW Plan, as approved by HUD.'' This provision covers regulatory or 
statutory waivers granted under the MTW Agreement and provisions in PIH 
notices implementing provisions thereof to the extent of a conflict 
between the authorized MTW activity and the Public Housing Requirement. 
The MTW ACC amendment for the MTW expansion, similarly, amends the ACC 
to the extent necessary to allow the agency to participate in the MTW 
demonstration in accordance with the MTW Operations Notice. Because the 
MTW ACC Amendment requires compliance with all HUD requirements not 
exempted by the MTW Operations Notice, language has been added to that 
document to clarify the applicability of subregulatory guidance 
impacting MTW authorizations.

Cooperation Agreement

    Comment: ``HUD should not have prior approval of Cooperation 
Agreements entered into with local governments to address local needs. 
Ratification or review to protect federal interest should be 
sufficient. HUD has no right to inject itself into local negotiations 
over changes to Cooperation Agreements.'' One commenter also noted that 
``HUD's proposed involvement in local cooperation agreements will 
potentially upend `win-win' arrangements between PHAs and local 
governments that have ultimately benefited its tenants and communities 
for years.'' Additionally, one commenter noted that ``[w]hile Section 4 
of the proposed ACC requires a Cooperating [sic] Agreement to be in 
effect, Cooperation Agreements do not apply to mixed finance projects 
that have made an election pursuant to Section 35(f) of the United 
States Housing Act of 1937, as amended.''
    HUD Response: HUD's requirement concerning a local cooperation 
agreement is authorized by statute and regulations. Specifically, 
Section 5(e)(2) of the of the 1937 Act provides that Federal financial 
assistance to PHAs shall not be made unless the governing body of the 
locality involved enters into an agreement with the PHA providing for 
the local cooperation required by the 1937 Act. In order to implement 
this requirement, HUD requires PHAs to comply with the provisions of a 
Cooperation Agreement in the form prescribed by HUD, which form has not 
changed since 1968; and not terminate or amend the Cooperation 
Agreement without prior written approval of HUD. HUD has a statutory 
obligation to monitor and ensure the proper use of public housing 
funds. However, in light of HUD's determination that this agreement 
should not unnecessarily repeat statutory or regulatory requirements, 
the proposed Section 4 has been deleted as the requirement for the HUD-
prescribed Cooperation Agreement is in the 1937 Act, and HUD 
implementing regulations at 24 CFR part 905.

[[Page 60415]]

    The ACC provides general terms that apply to all housing 
authorities. As noted by the commenter, Section 35(f) of the 1937 Act 
allows for a PHA to choose to exclude mixed finance projects from the 
Section 6(d) tax exemption and the Cooperation Agreement. If a PHA does 
not make that election, a Cooperation Agreement is required. If a PHA 
makes that election, HUD regulations implement this requirement at 24 
CFR 905.606(a)(8), and an express statement is not needed.

Declaration of Restrictive Covenants

    Comment: One commenter stated that the ``DOT [Declaration of Trust] 
signed by the PHA restricts the use of the units deeded to the PHA. 
Units are to be used by low-income families.'' Another comment noted 
that the use of ``shall'' in the proposed Section 5.a means this is a 
requirement (vs. prior 1995 version that said ``may''), and that ``HUD 
ought to clarify its reasoning behind this modification as it removes 
PHA discretion and as such may negatively impact current project 
implementation.''
    HUD Response: The proposed Section 5 was updated to reflect 
statutory and regulatory requirements that have been in effect since 
the public housing program was a loan program--namely the use of 
restrictive covenants to ensure the long-term use restrictions mandated 
by the 1937 Act. For more than 30 years the form instrument prescribed 
by HUD was a ``Declaration of Trust.'' See Form HUD-52190 (current DOT 
form available at https://www.hud.gov/hudclips). The requirement that 
the Declaration of Trust be the first recorded document against public 
housing property is longstanding and ensures the long-term use of 
public housing projects by low-income families. See 24 CFR 905.108 
(definition of Declaration of Trust), 905.304, and 905.505(c)(4). The 
use of ``may'' in Section 5.a of the 1995 version of the ACC applies to 
the form of the instrument but not to the requirement for order of 
recordation. Because of the mixed-finance program, HUD began to allow 
the use of other HUD-approved instruments otherwise known as 
declarations of restrictive covenants, and the change in language is 
not intended to change this practice; however, the recordation 
requirement is long-standing, and any exceptions have always required 
HUD approval.
    Comment: One commenter said ``[t]hough Section 5.b of the proposed 
ACC requires a declaration be recorded against the Project `prior to 
the recordation of any other encumbrance,' such requirement is 
inconsistent with HUD's practice, and we advise HUD to instead require 
such only `unless otherwise approved by HUD.' ''
    HUD Response: The general requirement for any form of restrictive 
covenant is that it be the first recorded document. See 24 CFR 
905.505(c)(4). We believe waiver of the ACC provision (now located at 
Section 4--Restrictive Covenants) is sufficient to allow HUD to 
approve, after a finding of good cause, those circumstances when a 
restrictive covenant is not recorded prior to the recordation of other 
encumbrances.

Disposition and Encumbrances

    Comment: A commenter stated as to proposed Section 6:
     6.a: The general covenant against disposition and 
encumbrances does not acknowledge that mixed finance projects will need 
to enter into mortgages, use restrictions, and other encumbrances to 
finance the projects. Accordingly, we would recommend HUD clearly state 
that mixed finance projects will instead only be subject to the 
provisions contained in the proposed Section 6.b.
     6.b: Modifications are required in order to be consistent 
with the standard language in prior HUD mixed finance deals that has 
been vetted extensively with lenders and investors.
    HUD Response: The HUD regulations at Title 24 CFR (in particular 
those provisions at 24 CFR part 905, subpart F) address the concerns 
raised by the commenter. HUD has not incorporated any mixed-finance 
specific language in the revised ACC. However, in response to comments 
HUD has revised the model Mixed-Finance Amendment. To the extent PHAs 
need commitments for mixed finance approvals beyond what is stated in 
the ACC, HUD will continue to work with PHAs on project-specific 
solutions, including the use of a mixed-finance amendment, adding 
language to the Regulatory and Operating Agreements that are required 
for a mixed-finance development, or adding language to the restrictive 
covenant.
    HUD notes that it has revised the proposed published version of 
Section 6. Additionally, Section 3 of the revised ACC published herein 
makes specific reference to the Public Housing Requirements, which 
include 42 U.S.C. 1437p and HUD regulations at 24 CFR part 970.
    Comment: One commenter included a markup of proposed Section 6:
BILLING CODE 4210-67-P

[[Page 60416]]

[GRAPHIC] [TIFF OMITTED] TN08NO19.104


[[Page 60417]]


[GRAPHIC] [TIFF OMITTED] TN08NO19.105


[[Page 60418]]


[GRAPHIC] [TIFF OMITTED] TN08NO19.106


[[Page 60419]]


[GRAPHIC] [TIFF OMITTED] TN08NO19.107

BILLING CODE 4210-67-C
    HUD Response: As previously stated, HUD has decided not to 
incorporate any mixed-finance specific language in the revised ACC but 
has revised the model Mixed-Finance Amendment. To the extent PHAs need 
commitments for mixed finance approvals beyond what is stated in the 
ACC, HUD will continue to work with PHAs on project-specific solutions, 
including the use of a mixed-finance amendment, adding language to the 
Regulatory and Operating Agreements that are required for a mixed-
finance development, or adding language to the restrictive covenant.

Insurance

    Comment: HUD failed to allow for PHA's professional judgment on 
risk and cost benefit of various types of insurance as well as ignoring 
state law on tort immunity. Commenters requested that HUD indicate what 
is adequate coverage. Commenters stated it is unnecessary for HUD to 
collect and monitor Certifications of Insurance.
    HUD Response: HUD's primary concern is making sure that public 
housing projects acquired, developed and assisted with federal 
assistance, and public housing assets are covered from losses. This 
provision has been in place since the 1969 ACC. The list of mandatory 
and recommended, but optional insurance is consistent with, or required 
by, 2 CFR 200.447 and 24 CFR

[[Page 60420]]

965 subpart B, and identifies those ``costs of insurance required or 
approved and maintained, pursuant to the Federal award'' that are 
allowable (2 CFR 200.447(a)). To further assist PHAs in understanding 
HUD's intentions, HUD refers PHAs to its explanatory guidance on 
insurance in PIH Notice 2016-13.
    HUD will continue to require Certifications of Insurance and 
require that PHAs keep copies of it in their records, and make them 
available for inspection, subject to Public Housing Requirements. The 
revised ACC removes the process of establishing a PHA self-insurance 
fund, because 24 CFR 965.205(c) details this process.

Employer Requirements

    Comment: Various commenters noted that a provision appearing in a 
previously proposed ACC limiting the use of funds made available under 
the 1937 Act for the salary, including bonuses, for PHA employees (30-
day notice published on September 6, 2017 at 82 FR 42106) is not 
included in the proposed ACC. These commenters assert that the 
elimination of this provision reflects HUD's understanding that it 
lacks Congressional authorization to limit the use of funds made 
available under the 1937 Act for PHA employee salaries.
    HUD Response: HUD disagrees with commenters asserting that HUD 
lacks Congressional authorization to limit the use of funds made 
available under the 1937 Act for PHA salaries; since Federal Fiscal 
Year (FFY) 2012, through HUD appropriations, Congress has imposed 
limits on the amount of Section 8 HCV and Section 9 funds PHAs may use 
for employee salaries. PIH Notice 2016-14 and PIH Notice 2018-13 detail 
PHA salary limitations and PHA reporting responsibilities. 
Additionally, for FY 2019, division G, title II, section 222 of the 
Consolidated Appropriations Act, 2019 (under the heading ``General 
Provisions--Department of Housing and Urban Development'') states: 
``None of the funds made available by this Act, or any other Act, for 
purposes authorized under section 8 (only with respect to the tenant-
based rental assistance program) and section 9 of the United States 
Housing Act of 1937 (42 U.S.C. 1437 et seq.), may be used by any public 
housing agency for any amount of salary, including bonuses, for the 
chief executive officer of which, or any other official or employee of 
which, that exceeds the annual rate of basic pay payable for a position 
at level IV of the Executive Schedule at any time during any public 
housing agency fiscal year 2019.'' PHAs remain subject to the 
provisions contained in HUD appropriations, regardless of incorporation 
into the Terms and Conditions agreement pursuant to Section 2 of the 
revised ACC.

Accounts, Records, and Government Access

    Comment: Section 9.b: Commenters state that the proposed Section 
9.b would interfere with PHA compliance with information requests 
pursuant to FOIA or local open records laws by requiring prior HUD 
approval before releasing information contained in HUD's systems of 
records. A few commenters express doubt that HUD would have the 
capacity to track and approve PHA submissions and requests in a timely 
fashion. A few commenters state that requiring HUD approval prior to a 
release of records, especially in response to a valid information 
request, could subject a PHA to liability for denying a request. 
Additionally, the proposed provision could make it more difficult for 
law enforcement entities to conduct investigations of issues such as 
public benefit fraud.
    One commenter stated that the proposed Section 9 does not make it 
clear that Section 9.b refers only to data held within HUD's systems of 
records. Another commenter states that section 9 would inhibit a PHA 
from operating in a transparent manner by limiting the release of 
information to stakeholders. A number of commenters assert that, as 
independent entities and political subdivisions of States, PHAs are not 
subject to HUD's control relating to transparency to the public.
    Comment: Section 9.c: Numerous commenters assert that the proposed 
Section 9.c of the proposed ACC would expose privileged communications, 
records, and information, including records protected by attorney-
client privilege, to HUD examination.
    Comment: Section 9.e: Several commenters state that the proposed 
Section 9.e of the ACC could impact the ability of PHAs to engage in 
data-sharing agreements and other arrangements with third-party 
services providers. One MTW PHA expresses concern that the proposed 
provision would hinder its ability to monitor, evaluate, and understand 
policy questions that guide its MTW activities. Numerous commenters 
stated that the proposed Section 9.e of the proposed ACC is overly 
broad and would open all records of a PHA agent or contractor, not just 
those records of work supporting the operation of public housing, to 
HUD inspection. These commenters assert that PHA contractors and 
partners will terminate their relationships with PHAs to protect their 
confidential records. Alternatively, a couple of commenters state that 
PHAs might have to pay higher costs to contractors or use substandard 
contractors because of the HUD record inspection requirements contained 
in the proposed Section 9.e. Several commenters express concern that 
HUD might misuse its access to contractor records to obtain records 
outside of HUD's authority. A few commenters suggest that the phrase 
``assists in fulfilling any obligation under this CACC'' is too broad 
and would capture too many activities. A couple of commenters assert 
that HUD would make PHAs liable for the actions of independent 
contractors and that it is unreasonable to impute contractor actions to 
a PHA that could be deemed a PHA violation of the ACC.
    HUD Response: HUD notes that the proposed Section 9 (or a similar 
provision) has been included in the 1969 and 1995 versions of the ACC. 
The change in language in the proposed 2018 version was to remind PHAs 
of their responsibility to make information available consistent with 
applicable statutory and administrative requirements, and that the 
maintenance of information and the prohibition on sharing particular 
information, such as tenant data, is prohibited by the same or similar 
statutory and administrative requirements, including regulations issued 
by HUD at title 24 CFR. HUD has removed the proposed Section 9 from the 
ACC because PHAs remain subject to statutory and regulatory 
recordkeeping and monitoring requirements (including HUD notices on 
HUD's system of records (SORN) (e.g., https://www.hud.gov/sites/documents/DOC_15179.PDF, and https://www.hud.gov/program_offices/officeofadministration/privacy_act/pia/fednotice/SORNs_LoB#pih) in 
connection with the use of financial assistance provided pursuant to 
the 1937 Act. HUD recognizes attorney-client privilege as a 
longstanding common law protection, and HUD does not unduly compel PHAs 
to disclose privileged or work product protected information. However, 
HUD reminds PHAs that the disclosure of information related to the 
public housing program is required to be shared for various reasons.
    Section 5(h)(1) of the 1937 Act (42 U.S.C. 1437c(h)(1)) provides 
that when a PHA carries out activities using financial assistance 
provided pursuant to the 1937 Act for the operation, modernization, and 
development of public housing, the PHA must allow HUD access to books, 
documents, and

[[Page 60421]]

records related to the activities. Section 5(h)(1) of the 1937 Act and 
2 CFR 200.336 also require that the HUD Inspector General, Comptroller 
General of the United States, and all of their authorized 
representatives, have the right to inspect a PHA's records that pertain 
to a public housing award. In the context of audits, pursuant to 2 CFR 
200.501(g), PHAs are ``responsible for ensuring compliance for 
procurement transactions which are structured such that the contractor 
is responsible for program compliance or the contractor's records must 
be reviewed to determine program compliance.'' To the extent that a PHA 
contractor is responsible for public housing program compliance (e.g., 
under a management contract), PHAs are responsible for ensuring that 
the contractor has adequate records. More specific recordkeeping 
requirements include, but are not limited to, the requirements at 24 
CFR 905.326 and 990.325.
    Other 1937 Act statutory requirements that concern recordkeeping or 
information sharing include section 42 U.S.C. 1437y (Provision of 
information to law enforcement and other agencies) and 42 U.S.C. 
1437n(e)(C)(4). Additionally, pursuant to Section 904 of the Stewart B. 
McKinney Homeless Assistance Amendments Act of 1988 (``McKinney 
Homeless Amendments''), tenant and participant income information 
required or necessary to be collected by a PHA, for the purpose of 
verifying income information pertinent to the applicant's or 
participant's eligibility or level of benefits, must be kept under the 
terms of the Privacy Act, as such terms are made applicable by HUD. The 
McKinney Homeless Amendments are implemented at 24 CFR part 5. Pursuant 
to 5 CFR 5.212(a), ``[t]he collection, maintenance, use, and 
dissemination of [social security numbers] SSNs, [Employer 
Identification Numbers] EINs, any information derived from SSNs and . . 
. EINs and income information under this subpart shall be conducted, to 
the extent applicable, in compliance with the Privacy Act (5 U.S.C. 
552a) and all other provisions of Federal, State, and local law. Thus, 
regardless of local open records laws, PHAs must retain records in 
compliance with the McKinney Homeless Amendments the Privacy Act as 
provided at 24 CFR part 5; other Public Housing requirements, including 
HUD SORNs; and are required to get HUD approval to release information 
maintained in HUD databases such as PIC.

Depository

    Comment: Commenters stated that this section imposes federal 
deposit and investment requirements on defederalized and non-federal 
fees paid to PHAs' COCC, as well as contributions from affiliates and 
subsidiaries. These commenters stated that HUD does not have the 
authority to so impose such requirements.
    HUD Response: Commenters misread the coverage of this requirement 
and HUD's changes. The General Depository Agreement (GDA) (HUD-51999) 
has been a requirement in the 1969 and 1995 ACC versions. The GDA is 
just one part of HUD's implementation requirements imposed on HUD with 
regard to the disbursement of federal funds before such funds have been 
expended. Additionally, the GDA requirement applies to Public Housing 
Funds, disposition proceeds and program income, and other funds that 
are restricted, by statute or regulations, in their use, and/or are 
received by or held for the account of the PHA in connection with the 
development, operation, improvement and disposition of its public 
housing property. These funds are to be insured or fully and 
continuously collateralized above the federal insurance limits per the 
General Depository Agreement and Department of the Treasury statutes 
and regulations, including but not limited to 31 CFR part 202. HUD has 
slightly revised this section in the ACC.
    The changes to the ACC are not intended to address any future 
changes to the Public Housing requirements regarding COCC.

HUD in Possession of Project(s)

    Comment: Commenters stated that the proposed ACC must clarify that 
a PHA's decision to subject its mixed-finance public housing units to 
real estate taxes should not result in a violation of section 14.b(6) 
of the ACC published in the 60-Day Notice, which states that 
``termination of tax exemption (either real or personal property) on 
behalf of a Project covered under the CACC'' constitutes a substantial 
default. Commenters also recommend HUD insert the following sentence to 
the proposed section 14.e to ensure HUD will not disturb a compliant 
mixed finance Owner Entity's rights: ``Notwithstanding the forgoing, 
for Mixed Finance projects, so long as the Owner Entity shall not be in 
default of its obligations related to such a project, HUD shall not 
exercise any rights under this sub-section 13.e. in such a manner as to 
disturb the Owner Entity's and other participating parties' rights 
under any Project agreements.''
    HUD Response: The proposed Section 14 has been removed from the 
ACC. HUD believes the provision is essentially redundant of 
requirements at title 24 of the CFR, specifically 24 CFR part 907. 
However, HUD has retained in the new section 9 (Substantial Default) 
the standard for default under such ACC. Section 9 does not retain the 
specific requirements for mixed finance public housing projects, which 
are included in the model Mixed-Finance Amendment. The ACC provides 
general terms that apply to all housing authorities. To the extent PHAs 
need commitments for mixed finance approvals beyond what is stated in 
the ACC, HUD will continue to work with PHAs on project-specific 
solutions, including the use of a mixed-finance amendment, adding 
language to the Regulatory and Operating Agreements that are required 
for a mixed-finance development, or adding language to the restrictive 
covenant. Whatever the project-specific solution, HUD would continue to 
make clear that a PHA that subjects its mixed-finance public housing 
units to real estate taxes is not in a violation of Public Housing 
requirements.

Conflict of Interest

    Comment: Many commenters objected to what was mistakenly understood 
to be a ``new written conflict of interest'' standard for board 
members. Commenters also stated that HUD lacks the authority to impose 
such a requirement and the requirement may conflict with existing state 
and local conflict of interest requirements involving public officials.
    HUD Response: This is not a new conflict of interest standard for 
board members. Sections 19 and 515 respectively, of the 1995 and 1969 
versions of the ACC had conflict of interest provisions that covered 
board members. Section 15.a. of the proposed ACC provides that PHAs 
must maintain written standards of conduct covering conflicts of 
interest and governing the performance of its board members, 
executives, and employees engaged in the administration and operation 
of Projects covered by the ACC. This requirement is consistent with the 
Uniform Guidance at 2 CFR 200.112 and 200.318, which requires that PHAs 
maintain written standards of conduct covering conflicts of interest. 
For clarity HUD has revised the provision at Section 8 of the ACC. 
Because PHAs are already bound by the Uniform Guidance, HUD revised the 
section to reflect coverage when PHAs are using

[[Page 60422]]

public housing funds for its procurements (as required by the Uniform 
Guidance); HUD includes members and delegates to Congress in the 
covered classes for purposes of evaluating conflicts in PHA hiring and 
procurement. Additionally, Section 8.e of the revised ACC repeats the 
language in Section 14 of the 1995 version that public housing funds 
cannot be used ``to pay any compensation for the services of members of 
the PHA's Board of Commissioners.''

Civil Rights and Employment Requirements

    Comment: A number of commenters stated that a sentence in the 
Section 16.d of the proposed ACC, ``Civil Rights and Employment 
Requirements,'' should be removed as irrelevant: ``The HA may, 
consistent with applicable law and regulation, utilize work 
requirements when and where appropriate.'' One commenter added that the 
inclusion of this sentence could confuse PHAs and result in the 
implementation of polices that harm vulnerable families.
    HUD Response: HUD agrees with commenters that the inclusion of the 
sentence would have been confusing; additionally, consistent with HUD's 
removal of provisions that repeat existing statutory and regulatory 
requirements, the proposed Section 16 has been removed from the final 
ACC, but it has been retained in part and moved to Section 6 of the 
ACC. Additionally, HUD includes by reference under Section 2 (Public 
Housing Administration) PHA obligations to comply with statutory and 
regulatory civil rights requirements. PHAs are also reminded that 
section 5A of the 1937 Act states that PHAs ``will carry out the public 
housing agency plan in conformity with title VI of the Civil Rights Act 
of 1964 [42 U.S.C. 2000d et seq.], the Fair Housing Act [42 U.S.C. 3601 
et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C. 
794], and title II of the Americans with Disabilities Act of 1990 [42 
U.S.C. 12131 et seq.], and will affirmatively further fair housing.''

Waiver or Amendment

    Comment: A commenter suggested a need for an expiration date for 
waivers and amendments to be agreed to in writing by HUD and the PHA. 
Another commenter suggested that HUD must seek written agreement from 
HAs to any proposed changes. Other comments noted that the ``most 
responsible approach for HUD to take is for it to negotiate the 
revision of the ACC with industry groups who then, if the negotiations 
are fruitful, encourage their members to agree to the amendments.'' 
Commenters stated that ``the revised ACC provides that the contract can 
be amended in writing, presumably only by HUD. Such a contract is an 
illusory contract.'' Commenters stated that [t]he appropriate method to 
implement a new CACC would be to work with representatives of local 
housing authorities to arrive at a mutually agreeable product that 
could be adopted by PHAs without controversy.''
    HUD Response: Section 19 of the proposed ACC published in the 60-
Day Notice stated that ``[t]his agreement may be amended in writing.'' 
This provision was not intended to provide HUD with the ability to 
unilaterally revise the ACC during its term. Pursuant to section 6(a) 
of the 1937 Act, HUD is authorized to change the ACC terms and 
conditions as the Secretary deems necessary, but these changes will not 
alter the ACC terms and conditions applicable to prior year public 
housing funds. In response to the comments, HUD has revised the ACC to 
make clear that a PHA may request an amendment to the ACC. 
Additionally, upon a request of a PHA, HUD may waive administrative 
provisions in the ACC, based on a finding of good cause. HUD cannot 
waive statutory prohibitions.

Paperwork Reduction Act (PRA), Administrative Procedures Act (APA), and 
Negotiation

    Comment: A few commenters state that use of the Paperwork Reduction 
Act (``PRA'') is not a legitimate means with which to promulgate public 
comment on the proposed ACC. A number of commenters assert that the 
proposed ACC does not collect information, so the PRA does not apply. 
Many commenters add that PRA standards for public comments do not 
satisfy Administrative Procedures Act requirements. As noted by a few 
commenters, while the Federal Register PRA notice provides a 
description of proposed ACC revisions, it does not provide an 
explanation of the underlying rationale, public policy purpose or 
benefits, or statutory or regulatory basis of the proposed ACC 
revisions. Additionally, these commenters assert that PRA does not 
require HUD to formally respond to comments received. A few commenters 
state that HUD's actions in revising the ACC are ``arbitrary and 
capricious,'' and they assert that the proposed ACC Federal Register 
notices have been deceptive. Finally, several commenters criticize 
HUD's burden hour chart and cost estimate as being unrealistic.
    A number of commenters state that HUD must promulgate changes to 
the public housing ACC pursuant to Administrative Procedures Act (APA) 
rulemaking rather than pursuant to PRA. Several commenters added that 
statutory changes may also be required because the proposed ACC 
includes significant substantive changes from the prior ACC.
    HUD response: Information collection can occur by a number of 
vehicles in addition to standard government forms. As discussed above, 
the Public Housing program has been a grant program since 1987. The ACC 
is an information collection under the definitions in 5 CFR 
1320.3(c)(1), which states that a collection of information may be in 
any form or format, including an agreement. The ACC is a form with an 
OMB form number; therefore, review and public comment under the PRA are 
appropriate.
    Contrary to statements in the comments, the PRA process does 
require solicitation of and response to public comments (see 5 CFR 
1320.5(a)(1)(F) (requiring ``A summary of the public comments received 
under Sec.  1320.8(d), including actions taken by the agency in 
response to the comments''). In fact, HUD received 79 comments and is 
here responding to the issues raised as well as providing its rationale 
for proposed ACC revisions. HUD revises the ACC pursuant to its 
inherent authority under the Department of Housing and Urban 
Development Act (42 U.S.C. 3531 et seq.), and section 6 of the 1937 
Act. A primary purpose of this revision is to minimize the scope of the 
requirements contained in the ACC and to ensure that Public Housing 
requirements are uniformly applied. More than 400 PHAs continue to 
operate under the 1969 version of the ACC. The revised ACC ensures that 
the Uniform Guidance is applied consistently, and that all PHAs are 
subject to the same terms and conditions applicable to the receipt of 
public housing funds.
    Regarding the assertion that the proposed ACC Federal Register 
notices have been deceptive, HUD has taken steps to clearly identify 
the provisions that have been deleted, revised or retained. However, 
the ACC should be reviewed in its entirety to determine the exact 
nature and scope of any revisions.
    As to the comment on the burden hour statement, HUD's prior 
experience indicates that it is reasonable.

[[Page 60423]]

    Comment: Some commenters argue that even if HUD followed APA 
rulemaking requirements, APA rulemaking is not the appropriate method 
by which to amend the public housing ACC because a regulation cannot 
override or amend contract terms. A couple of commenters assert that 
HUD must withdraw the proposed ACC and negotiate revisions to the 1995 
ACC with PHAs. One commenter asserts that the proposed ACC needs to be 
reviewed by ``an independent legal authority'' to determine its 
fairness and compliance with statutes.
    HUD response: Pursuant to section 6(a) of the 1937 Act, and section 
200.38(b) of the Uniform Guidance, the Secretary has the authority to 
include in the ACC such covenants, conditions, or provisions as he may 
deem necessary in order to insure the low-income character of public 
housing projects and that PHAs act in accordance with Public Housing 
requirements; the Secretary is not obligated to negotiate with PHAs as 
it is within his discretion what terms and conditions related to the 
federal award are ``necessary.'' Accordingly, the Secretary, through 
the ACC, establishes the necessary terms and conditions related to the 
award of public housing funds. The terms and conditions of the ACC 
published in this notice do not override or amend prior versions of the 
ACC. The ACC terms and conditions apply to a PHA's public housing 
funding received after execution. Prior awards of public housing 
funding received by a PHA while subject to either the 1969 or 1995 ACC 
will continue to be governed by the terms of those ACCs. To the extent 
commenters were concerned that the ACC did not comply with relevant 
statutes, the revised ACC minimizes the scope of the ACC requirements, 
and eliminates the recitation of specific statutory and regulatory 
requirements. As noted earlier, the PRA process requires solicitation 
of and response to public comments.

Implementation of ACC

    Comment: Several commenters stated that the new ACC must include 
Board and Executive review and approval and signature by both HUD and 
Housing Authorities.
    HUD Response: The ACC serves as notice of the terms and conditions 
that attach to HUD's award and the PHA's request for, acceptance, and 
use of federal financial assistance. Execution of the ACC represents 
acceptance of those terms and conditions undergirding all instruments 
subsequently executed to provide public housing funding, including, but 
not limited to SF-424 forms, Operating Fund budget letters, competitive 
grant agreements, etc. Pursuant to Section 1.a of the ACC published in 
this notice, such funding instruments will be incorporated into the ACC 
as amendments or funding exhibits.
    HUD agrees that entering into the ACC requires Board and Executive 
Review. HUD expects the Board and Executive Review approval would be 
conducted as part of same process engaged by PHAs before making 
submissions for financial assistance through the Operating Fund and 
Capital Fund formulas (e.g., using an SF-424 form). Electronic 
signatures are permissible for HUD programs, and that option will be 
made available for the ACC; however, HUD has added a signature line for 
PHAs on the revised form for those PHAs that prefer or are required 
under State law to effectuate agreements by a wet signature.
    Comment: Two commenters did not think that drawing down funds 
should result in an agreement between HUD and the PHA. One argued that 
PHA staff lack authority to bind the PHA, which could make the 
agreement unlawful or against the PHA's internal governing procedures.
    HUD Response: A PHA's drawdown of funds is a certification by the 
PHA that the funds are being drawn for, or in connection with, an 
eligible activity under the public housing program. Federal financial 
management requirements are based on the presumption that the personnel 
in a PHA's organization who drawdown funds are authorized to do so. 
Consequently, PHA employees should not be drawing down funds or taking 
any other actions on behalf of the PHA without proper authority. Every 
draw down or use of funding must be in compliance with HUD statutes, 
regulations and other HUD requirements. It is incumbent on PHAs (not 
HUD) to ensure that PHA personnel are authorized to act on their 
behalf.

Moving to Work

    Comment: MTW agencies commented that HUD was precluded from 
revising the ACC by the 2016 appropriations act language extending the 
current MTW agreements and by language regarding the ACC in the MTW 
Standard Agreement.
    HUD Response: HUD disagrees. The new ACC does not amend the MTW 
Standard Agreement. The MTW Standard Agreement provision stating that 
the agreement supersedes the terms of the ACC to the extent of a 
conflict between the ACC and a HUD-approved MTW activity continues to 
apply to the new ACC.
    Comment: MTW agencies raised concerns that the new ACC would change 
the funding formulas provided under those agreements and that it would 
allow HUD to circumvent statutory requirements regarding offsets of MTW 
PHA reserves.
    HUD Response: The funding language in Attachment A of the MTW 
Standard Agreement varies among MTW agencies. The majority of MTW 
agencies do not have a unique funding formula for public housing funds 
in their MTW agreements and receive public housing funds in accordance 
with the same formulas and requirements as non-MTW PHAs. Agencies with 
specific alternative formulas for public housing funds in their MTW 
Agreements continue to have those same provisions in their MTW 
Agreements under the new ACC. Further, the MTW Agreements were amended 
in 2016 to incorporate the statutory provision prohibiting offset of 
reserves equal to four months of operating expenses.

G. Chart Summarizing Statutory or Regulatory Public Housing 
Requirements Deleted From the ACC Proposed in the 60-Day Notice

------------------------------------------------------------------------
                                                       Existing public
                                                    housing requirements
                                  30-Day notice         that apply to
 60-Day notice proposed ACC       proposed ACC       deleted portions of
                                                      the 60-Day notice
                                                        proposed ACC
------------------------------------------------------------------------
Sec. 1--Definitions.........  Deleted.............  ``Cooperation
                                                     Agreement'' (24 CFR
                                                     905.108);
                                                     ``Operating Costs''
                                                     (24 CFR 990.115);
                                                     ``Operating
                                                     Receipts'' (2 CFR
                                                     200.80, Sec. 9(k)
                                                     and Sec. 18(a)(5)
                                                     of the 1937 Act);
                                                     ``Program
                                                     Receipts'' (2 CFR
                                                     200.80); ``Public
                                                     Housing'' (24 CFR
                                                     905.108);
                                                     ``Replacement
                                                     Reserve Account''
                                                     (Sec. 109 of HOTMA,
                                                     P.L. 114-201).
Sec. 2--Mission of HUD and    Deleted.............  Sec. 2(a), Sec.
 HA.                                                 3(b)(1) (``low-
                                                     income housing''
                                                     and ``public
                                                     housing'') and Sec.
                                                     3(b)(6) (``Public
                                                     Housing Agency'')
                                                     of the 1937 Act.

[[Page 60424]]

 
Sec. 3--HUD Requirements....  Sec. 2--Public        ``Public housing
                               Housing               requirements,'' 24
                               Administration        CFR 905.108.
                               (deletes compliance
                               with HUD notices).
Sec. 4--Cooperation           Deleted.............  Sec. 5(e)(2) of the
 Agreement(s).                                       1937 Act and 24 CFR
                                                     905.108.
Sec. 5--Declaration of        Sec. 4--Restrictive   Sec. 9(d)(3) and
 Restrictive Covenants.        Covenants (deletes    9(e)(3) of the 1937
                               description of        Act and 24 CFR
                               instrument terms      905.108
                               and mixed-finance     (``Declaration of
                               provisions).          Trust,''
                                                     ``Declaration of
                                                     Restrictive
                                                     Covenant''); 24 CFR
                                                     905.304(a); and 24
                                                     CFR 905.505(c);
                                                     [Mixed-finance
                                                     provisions will be
                                                     included in a mixed-
                                                     finance ACC
                                                     amendment].
Sec. 6--Disposition and       Sec. 3--Encumbrances  Sec. 18 of 1937 Act
 Encumbrances.                 (deletes general      and 24 CFR part 970
                               disposition           [Mixed-finance
                               requirements and      provisions will be
                               mixed-finance         included in a mixed-
                               provisions).          finance ACC
                                                     amendment].
Sec. 7--Insurance             Sec. 5--Insurance     24 CFR 965.205(c)
 Requirements.                 Requirements          [Mixed-finance
                               (deletes self-        provisions will be
                               insurance provision   included in a mixed-
                               and mixed-finance     finance ACC
                               provisions and        amendment].
                               optional insurance
                               coverage).
Sec. 8--Employer              Sec. 6--Civil Rights  Civil rights laws,
 Requirements.                 and Employer          e.g., Title VI of
Sec. 16--Civil Rights and      Requirements          the Civil Rights
 Employment Requirements.      (deletes civil        Act of 1964 (42
                               rights provisions     U.S.C. 2000d; 24
                               summarizing civil     CFR part 1); the
                               rights                Fair Housing Act
                               requirements).        (42 U.S.C. 3601-
                                                     3619; 24 CFR part
                                                     100); section 504
                                                     of the
                                                     Rehabilitation Act
                                                     of 1973 (29 U.S.C.
                                                     794; 24 CFR part
                                                     8); (the Age
                                                     Discrimination Act
                                                     of 1975 (42 U.S.C.
                                                     6101[not]6107; 24
                                                     CFR part 146); the
                                                     Americans with
                                                     Disabilities Act
                                                     (Pub. L. 101-336,
                                                     approved July 26,
                                                     1990; 28 CFR part
                                                     35); Executive
                                                     Order 11063 on
                                                     Equal Opportunity
                                                     in Housing (24 CFR
                                                     part 107);
                                                     Executive Order
                                                     11246 on Equal
                                                     Employment
                                                     Opportunity, as
                                                     amended by
                                                     Executive Order
                                                     11375 (41 CFR part
                                                     60); and Executive
                                                     Order 12892 on
                                                     Affirmatively
                                                     Furthering Fair
                                                     Housing.
Sec. 9--Accounts, Records,    Deleted.............  Sec. 5(h)(1) of the
 and Government Access.                              1937 Act; 2 CFR
                                                     200.336; 2 CFR
                                                     200.501(g); 24 CFR
                                                     905.326; 24 CFR
                                                     990.325; 42 USC
                                                     1437y and
                                                     1437n(e)(C)(4);
                                                     Sec. 904 of
                                                     McKinney Homeless
                                                     Amendments (42 USC
                                                     3544); and 5 CFR
                                                     5.212(a).
Sec. 10--Grant Funding......  Sec. 1--Annual        24 CFR 905.108
                               Contributions Terms   (``Public Housing
                               and Conditions        Requirements''
                               (a.k.a. ACC)          include ``all
                               (revised and          applicable federal
                               deletes specific      statutes,''
                               information about     including
                               funding               appropriations
                               calculations).        acts); 24 CFR part
                                                     905, subpart D
                                                     (Capital Fund
                                                     formula); and 24
                                                     CFR part 990,
                                                     subparts B-E
                                                     (Operating Fund
                                                     formula).
Sec. 11--Depository.........  Sec. 7--Depository    N/A.
                               (no significant
                               deletions).
Sec. 12--Termination of a     Sec. 10--Termination  N/A.
 Project.                      (no significant
                               deletions).
Sec. 13--Notices, Defaults,   Sec. 9--Substantial   Sec. 6(j) and Sec.
 Remedies.                     Default (deletes      6(g)(2) of the 1937
                               notice and            Act; and 24 CFR
                               possession            part 907,
                               provisions and        particularly 24 CFR
                               deletes mixed-        907.5 [Mixed-
                               finance provisions).  finance provisions
                                                     will be included in
                                                     a mixed-finance ACC
                                                     amendment].
Sec. 14--HUD in Possession    Deleted.............  Sec. 6(j)(3)(H) of
 of Project(s).                                      the 1937 Act.
Sec. 15--Conflict of          Sec. 8--Conflict of   2 CFR 200.318(c) and
 Interest.                     Interest (deletes     Sec. 2(b)(1) of the
Sec. 17--Members or            procurement           1937 Act; 24 CFR
 Delegates to Congress.        conflicts of          part 964, subpart
                               interest and          E.
                               resident board
                               member requirement).
Sec. 18--Rights of Third      Sec. 12--Rights of    N/A.
 Parties.                      Third Parties (no
                               deletions).
Sec. 19--Waiver or Amendment  Sec. 13--Waiver or    N/A.
                               Amendment (no        N/A.
                               significant
                               deletions).
                              Sec. 11--Remedies
                               (did not appear in
                               60-day notice
                               version of the ACC,
                               therefore no
                               deletions).
------------------------------------------------------------------------


    Dated: November 5, 2019.
Colette Pollard,
Department Reports Management Officer, Office of the Chief Information 
Officer.

Annual Contributions Terms and Conditions for the Public Housing 
Program

U.S. Department of Housing and Urban Development

Office of Public and Indian Housing

    1. Annual Contributions Terms and Conditions (a.k.a. ACC)--This 
agreement between the Department of Housing and Urban Development (HUD) 
and a Public Housing Agency (PHA) establishes HUD's basic terms and 
conditions for the PHA's federally funded public housing program, and 
is authorized pursuant to the United States Housing Act of 1937 (the 
1937 Act), (42 United States Code (U.S.C.) Sec.  1437 et seq.).
    a. The ACC includes any funding exhibits, or amendments, to the 
ACC; and supersedes any previous ACC, or consolidated contributions 
agreement for the public housing program.
    b. The ACC together with the PHA's written submissions for public 
housing funds including but not limited to, the SF-424 (or successor 
document) and any exhibits to the SF-424 reflecting HUD's commitment to 
provide such financial assistance, constitutes a federal award which is 
not awarded under the Federal Acquisition Regulations.
    c. Public housing funds are federal financial assistance provided 
to a PHA pursuant to the 1937 Act for the development or operation of 
public housing and include public housing formula funding. Public 
housing formula funding is provided as non-competitive federal awards 
for:
     Capital funding provided to a PHA pursuant to section 9(d) 
(42 U.S.C. 1437g(d) of the 1937 Act (the Public Housing Capital Fund 
program), and
     operating funding provided to PHAs pursuant to section 
9(e) (the Public Housing Operating Fund program) (42 U.S.C. 1437g(e)) 
of the 1937 Act.
    d. The terms ``federal award'' ``federal financial assistance'' and 
``recipient'' are defined in 2 Code of Federal Regulations (CFR) 
(Version 2018) at Sec. Sec.  200.38, 200.40(a)(1), and 200.86 
respectively.

[[Page 60425]]

    2. Public Housing Administration. The PHA shall administer its 
public housing program for the provision of decent, safe, and sanitary 
housing to eligible families in accordance with this agreement and 
Public Housing Requirements. The PHA shall comply with, and shall 
ensure compliance by, any contractors or subcontractors with, the 
Public Housing Requirements.
    a. Public Housing Requirements include but are not limited to:
     The 1937 Act as it exists now and as it may be amended in 
the future;
     Regulations issued by HUD at Title 24 of the CFR and the 
Uniform Guidance at 2 CFR part 200 as they exist now and as they may be 
amended in the future;
     Appropriations acts, as they exist now and amended in the 
future; and
     Other federal statutes, regulations and executive orders 
applicable to Public Housing Funds and Public Housing Projects; as they 
exist now and as they may be amended in the future.
    b. Nothing herein shall release the PHA from compliance with all 
applicable laws, executive orders, and regulations (as they exist now 
or are amended in the future) applicable to the receipt, use, and 
maintenance of public housing funds and public housing projects that 
are not specifically incorporated herein by reference. The term 
``public housing project'' is defined in 24 CFR 905.108.
    3. Encumbrances. Except for dwelling leases with eligible families 
for public housing dwelling units and normal uses associated with the 
operation of dwelling units, the PHA shall not encumber (including the 
pledge as collateral for a loan) a public housing project or portion 
thereof, public housing funds, or other public housing assets without 
the prior written approval of HUD.
    4. Restrictive Covenants. Promptly upon the PHA's acquisition, 
development, or assistance of any real property with public housing 
funds, the PHA shall, consistent with Public Housing Requirements, 
execute, file for record (prior to the recordation of any other 
encumbrance), and maintain an instrument against the property (which 
may be in the form of a declaration of trust, declaration of 
restrictive covenant, or such other document), as approved or 
prescribed by HUD.
    5. Insurance Requirements. Consistent with 24 CFR 965.205 the PHA 
shall procure adequate insurance to protect the PHA from financial loss 
resulting from various hazards.
    a. Mandatory Insurance Coverage. The following types of insurance 
are required:
    1. Commercial Property. Each policy must be written with a blanket 
limit, on a replacement cost basis, and with an agreed value clause 
eliminating any coinsurance provision.
    2. Commercial General Liability.
    3. Workers Compensation and Employers Liability.
    4. Owned and Non-Owned Automobile Liability.
    5. Theft, Disappearance, and Destruction, only if the amount of 
cash and checks on hand at any one time exceeds the amount prescribed 
by HUD.
    6. Employee Dishonesty.
    7. Boiler and Machinery only if steam boilers have been installed.
    8. Flood Insurance for property located in a flood plain, as 
determined in the Federal Government's National Flood Insurance 
Program.
    9. Lead-Based Paint Liability for PHAs undergoing lead-based paint 
testing and abatement.
    b. Optional Insurance Coverage. Subject to the Cost Principles of 
the Uniform Guidance, the following insurance coverage is recommended 
and can be purchased if the PHA determines that exposure exists:
    1. Boiler and Machinery coverage is recommended if there is 
extensive central, conditioning, electrical transformers, or similar 
equipment.
    2. Directors and Officers or Public Officials Liability.
    3. Law Enforcement Liability: Highly recommended where the exposure 
exists, and the Commercial General Liability insurer has excluded 
coverage.
    4. Fidelity Bond Coverage. The PHA is recommended to carry adequate 
fidelity bond coverage, as required by HUD, of its officers, agents, or 
employees handling cash or authorized to sign checks.
    c. Authorized Insurance Companies. Insurance must be purchased from 
an insurance company or other entity that is licensed or duly 
authorized to write insurance in the State where the PHA is located. At 
each renewal, the PHA shall promptly have certificates of insurance 
submitted by the insurers to HUD describing the types of coverage, 
limits of insurance, policy numbers, and inception and expiration 
dates.
    d. Waivers. Requests for waivers of this section not to purchase 
any form of required insurance, must be submitted in writing to HUD for 
approval and include specific justification and risk analysis.
    e. Restoration--Unless the PHA received prior written approval of 
HUD to the contrary, the PHA shall, to the extent that insurance 
proceeds permit, promptly restore, reconstruct, and/or repair any 
damaged or destroyed Public Housing Project, in accordance with all 
Public Housing Requirements.
    6. Civil Rights and Employer Requirements. Nothing herein shall 
release the PHA from compliance with all applicable civil rights laws, 
executive orders, and regulations applicable to the receipt, use, and 
maintenance of Public Housing Funds; and the operation and development 
of Public Housing Projects, that are not specifically incorporated 
herein by reference. The PHA shall comply with all State and Federal 
laws applicable to employee benefit plans and other conditions of 
employment.
    7. Depository. The PHA shall deposit and invest its public housing 
funds received by, or held for the account of, the PHA in connection 
with the development, operation, improvement, and disposition of its 
Public Housing Project in accordance with the terms of a General 
Depository Agreement (GDA). The GDA shall be in the form prescribed by 
HUD and must be executed by the PHA and the depository.
    a. Immediately upon the execution of a GDA, the PHA shall furnish 
to HUD an executed or conformed copy thereof as HUD may require. A GDA 
shall not be terminated except after 30 days' prior notice to HUD.
    b. The PHA shall maintain records that identify the source and 
application of funds in such a manner as to allow HUD to determine that 
all funds are and have been expended in accordance with Public Housing 
Requirements. Except as approved by HUD, and consistent with Public 
Housing Requirements, funds provided as separate federal awards are not 
fungible.
    8. Conflict of Interest. In addition to any Uniform Guidance 
conflict of interest requirements at 2 CFR Subpart D, PHAs are subject 
to the following conflict of interest requirements:
    a. Neither the PHA nor any of its contractors or subcontractors may 
enter into any contract or arrangement, including employment contracts 
or arrangements, in connection with the operation and administration of 
the public housing program in which any of the following classes of 
persons has any real or apparent interest, (direct or indirect), during 
his or her tenure or for one year thereafter:
    1. Any present or former member or officer of the PHA (except a 
present tenant commissioner who does not serve on the governing body of 
a resident corporation, and who does not occupy a policymaking position 
with the resident corporation, the PHA or a business entity), or any 
member of the officer's immediate family;

[[Page 60426]]

    2. Any employee of the PHA, or any contractor, subcontractor or 
agent of the PHA, who formulates policy or who influences decisions 
with respect to the programs, or any member of the employee's immediate 
family;
    3. Any public official, member of a governing body, or State or 
local legislator, who exercises functions or responsibilities with 
respect to the programs, or any member of such individual's immediate 
family; or
    4. Any member of the Congress of the United States; or resident 
commissioner. As used in this section, the term ``resident 
commissioner'' refers to an individual appointed to oversee a territory 
or possession of the United States of America, (e.g., Guam).
    b. The officers, employees, and agents of the PHA shall neither 
solicit nor accept gratuities, favors or anything of monetary value 
from residents of public housing or participants in programs covered by 
this agreement; nor enter into any financial arrangement (direct or 
indirect) with public housing residents or participants in program 
covered by this agreement. However, the PHA may set written standards 
for situations in which a gift is an unsolicited item of nominal value.
    c. Any member of the classes described in paragraph (a) of this 
section must disclose their interest or prospective interest to the PHA 
and HUD.
    d. The conflict of interest prohibition under this section may be 
waived by HUD for good cause if HUD is provided with written evidence 
that (1) a prohibited contract or arrangement is permitted under State 
and local law; and (2) the PHA Board of Commissioners supports the 
waiver.
    e. No Public Housing Funds may be used to pay any compensation for 
the services of members of the PHA's Board of Commissioners.
    f. For purposes of this section and the Uniform Guidance (or any 
succeeding requirements thereto) the term ``immediate family member'' 
means: spouse, domestic partner, mother, father, mother-in-law, father-
in-law, brother, sister, brother-in-law, or sister-in-law, or child of 
a covered class member (whether related as a full blood relative, or as 
a ``half'' or ``step'' relative, e.g., a half-brother or stepchild).
    9. Substantial Default. Upon the occurrence of a substantial 
default by the PHA, as determined by HUD, the PHA shall (1) convey to 
HUD title to the Project(s), or (2) deliver possession and control of 
the Project(s) to HUD if, in the determination of HUD (which 
determination shall be final and conclusive), such conveyance or 
possession is necessary to achieve the purposes of the 1937 Act. HUD 
shall also be entitled to any or all other remedies allowed by the 
Public Housing Requirements. A substantial default is a serious and 
material violation of any one or more of the covenants contained in 
this agreement, or as defined in the Public Housing Requirements.
    a. Events of substantial default under this agreement shall 
include, but shall not be limited to any of the following occurrences: 
(1) PHA's failure to maintain and operate the Public Housing Project in 
a decent, safe, and sanitary manner; (2) PHA's encumbrance of any 
Public Housing Project or portion thereof without HUD approval; (3) 
abandonment of any Public Housing Project or assets by the PHA, (4) the 
determination by HUD that the powers of the PHA to operate the public 
housing program in accordance with the provisions of this agreement or 
the Public Housing Requirements are curtailed or limited to an extent 
that will prevent the accomplishment of the objectives of this 
Agreement.
    b. Nothing contained in this agreement shall prohibit or limit HUD 
exercising any other right or remedy existing under applicable law, or 
available at equity. HUD's exercise or non-exercise of any right or 
remedy under this agreement shall not be construed as a waiver of HUD's 
right to exercise that or any other right or remedy at any time.
    10. Termination. If a Public Housing Project is disposed of 
(through sale or other method), all related public housing funds shall 
(in accordance with Public Housing Requirements) become part of another 
Public Housing Project administered by the PHA. If no other Public 
Housing Project exists, the remaining personal and real property 
(including any funds held under or required to be held under a GDA) 
shall be distributed as directed by HUD, consistent with Public Housing 
Requirements, which may include remittance to HUD.
    11. Breach. This agreement does not contemplate money damages as a 
remedy for a breach of the agreement by HUD.
    12. Rights of Third Parties. Nothing in this agreement shall be 
construed as creating any right of any third party to enforce any 
provision of this agreement, or to assert any claim against HUD or the 
PHA.
    13. Waiver or Amendment. The PHA may request a waiver or amendment 
to this ACC. Any administrative right that HUD may have under this ACC 
may be waived in writing by HUD for good cause.
Name:------------------------------------------------------------------
Signature and Title:---------------------------------------------------
Date:------------------------------------------------------------------
    Department of Housing and Urban Development
    PHA Acceptance: The PHA hereby accepts this agreement executed by 
the Department of Housing and Urban Development on the above date as a 
Recipient designated to receive federal financial assistance for public 
housing, and agrees to comply with the terms and conditions of this 
agreement, applicable Public Housing Requirements, and other 
requirements of HUD now or hereafter in effect, pertaining to the 
federal financial assistance provided the PHA for its public housing 
program.

Name:------------------------------------------------------------------

Signature and Title:---------------------------------------------------

Date:------------------------------------------------------------------

Public Housing Agency

Mixed-Finance Amendment

To the Annual Contributions Terms and Conditions for the Public Housing 
Program (ACC)

    I. On _____ the United States Department of Housing and Urban 
Development (``HUD'') and _____ (``PHA'') executed an Annual 
Contributions Terms and Conditions for the Public Housing Program 
(``ACC''), which establishes HUD's basic terms and conditions for the 
PHA's federally funded public housing grant programs.
    II. This Mixed-Finance Amendment to the ACC (``Mixed-Finance 
Amendment'') sets forth additional requirements that apply to the 
public housing units and related appurtenances (``Project Units'' or 
``Project''), which are being developed as part of the larger 
development known as _____ (the ``Development''), for which HUD 
approved a development proposal and related evidentiary documents 
(together known as the ``Development Proposal'') on _____.
    III. The following amendments are made to the ACC and shall apply 
to the Project Units and/or Project, unless otherwise approved by HUD.
    A. Section 3, Encumbrances: The requirements of Section 3 of the 
ACC are replaced with the following requirements:
    1. Neither the Project Units nor any part thereof shall be 
demolished or disposed of, encumbered in any way, or the assets of the 
Project pledged as collateral for a loan, other than in accordance with 
the terms of the Public Housing Requirements and only with prior 
written approval of HUD, so long as this Mixed-Finance Amendment

[[Page 60427]]

remains in force with respect to the Project, with the exception of:
    a. Mortgage, deeds of trust, and other financing arrangements 
approved as part of the Development Proposal;
    b. Dwelling leases with eligible families living in the Project;
    c. Conveyance or dedication of land for use as streets, alleys, or 
other public rights-of-way, and grants and easements for the 
establishment, operation and maintenance of public utilities approved 
as part of the Development Proposal;
    d. A memorandum of ground lease for record against the Project 
prior to recordation of the HUD restrictive covenant, as approved by 
HUD as part of the Development Proposal; and,
    e. Normal uses associated with operation of the Project.
    2. No transfer, conveyance, or assignment of the Project shall be 
made without the prior written approval of HUD of:
    a. Any interest of a managing member, general partner, or 
controlling stockholder (any such interest being referred to as a 
``Controlling Interest'') of the Owner; or
    b. a Controlling Interest in any entity which has a Controlling 
Interest in the Owner; or
    c. any other interest in the Owner, or in any partner or member 
thereof, prior to the payment in full of all equity contributions, as 
approved in the Development Proposal.
    3. Notwithstanding the foregoing, HUD consent is not required where 
a business organization that has a limited interest (non-controlling 
and non-managing) in the Owner transfers a non-controlling and non-
managing interest in the business organization, provided that the 
Owner:
    a. Provides HUD with written notice of such transfer; and
    b. certifies to HUD that the new owner of the limited interest 
remains obligated to fund its equity contribution in accordance with 
the terms of the organizational documents of the Owner.
    4. Notwithstanding the foregoing, the prior approval of HUD shall 
not be required for the exercise by the investor, i.e., limited 
partner, limited owner, etc. or its affiliates (``Limited Interest''), 
of their rights to remove a Controlling Interest of the Owner or 
partner or member thereof and to designate an affiliate of the Limited 
Interest as a substitute Controlling Interest under the terms of the 
Partnership Agreement or Operating Agreement, provided that HUD is 
given prior written notice of default and of the Limited Interest's 
intent to exercise its right of removal and appointment under the 
Partnership Agreement or Operating Agreement (the ``Notice''). However, 
HUD consent shall be required for the appointment of any permanent 
replacement Controlling Interest or substitute Controlling Interest 
beyond a 90-day period. Such 90-day period will commence on the date of 
the Notice (the ``Interim Replacement Period''). With notice and the 
prior written approval of HUD, the Interim Replacement Period may be 
extended for an additional 90 days to allow the Limited Interest to 
find a permanent replacement Controlling Interest acceptable to HUD, 
provided that prior to the expiration of such additional 90-day period, 
the substitute Controlling Interest demonstrates that the Limited 
Interest is continuing to fund (or has already funded) its equity 
contribution, as required under the Partnership Agreement or Operating 
Agreement, and that the Project continues to be operated in a manner 
consistent with the Public Housing Requirements.
    5. HUD and the PHA authorize a Controlling Interest to collaterally 
assign and pledge its interest in the Owner to a construction and/or 
permanent lender, and to allow a construction and/or permanent lender 
to exercise any of its rights pursuant thereto, so long as the 
construction and/or permanent lender gives prompt written notice to HUD 
at the time it exercises such rights (the ``Pledge Notice''). However, 
consent of HUD shall be required for the appointment of any permanent 
replacement Controlling Interest or substitute Controlling Interest 
(including construction and/or permanent lender or its Affiliates) 
extending beyond a 90-day period. Such 90-day period will commence on 
the date of the Pledge Notice (the ``Pledge Replacement Period''). With 
notice to the PHA and notice and prior written consent of HUD, the 
Pledge Replacement Period may be extended for an additional 90 days to 
allow construction and/or permanent lender to find a permanent 
replacement Controlling Interest acceptable to HUD and the PHA, 
provided that prior to the expiration of such additional 90-day period, 
the substitute Controlling Interest demonstrates that the Limited 
Interest is continuing to fund (or has already funded) its equity 
contribution as required by the Owner's Partnership Agreement (or, if 
the Owner is a limited liability company, the Owner's Operating 
Agreement) and that Project continues to be operated in accordance with 
the Public Housing Requirements.
    6. HUD will not unreasonably withhold, delay, or condition a 
request by the Owner for HUD's consent to an internal reorganization of 
the corporate or partnership structure of the Owner or any of the 
partners, members or stockholders of the Owner.
    B. Section 4, Restrictive Covenants: The requirements of Section 4 
of the ACC are replaced with the following requirements:
    1. The PHA shall require the Owner to execute and file on record 
against the Development, in the order approved by HUD, an instrument 
against the property (which may be in the form of a declaration of 
trust, declaration of restrictive covenants, or such other document as 
approved or prescribed by HUD) that encumbers the property and confirms 
the Owner's obligation to develop, maintain and operate the Project in 
compliance with the Public Housing Requirements. This instrument may 
not be modified, amended or released without the prior written approval 
of HUD.
    C. Section 5(e), Restoration: The requirements of Section 5(e) of 
the ACC are replaced with the following requirements:
    1. Taking or Casualty: In the event of a taking or threatened 
taking by condemnation or other exercise of eminent domain of all or a 
portion of the Development (collectively a ``Taking'') or the 
occurrence of a fire or other casualty resulting in damage to all or a 
portion of the Development (collectively a ``Casualty''), the following 
shall apply:
    The PHA shall promptly cause the restoration, reconstruction, and/
or repair (``Restoration'') of any damaged or destroyed property of the 
Development, but only to the extent that insurance proceeds or 
condemnation award proceeds (``Proceeds'') permit and only if 
Restoration is feasible. The obligation for Restoration, to the extent 
Proceeds and other funds (if any are made available by the Owner or the 
PHA) permit, is also a requirement with which the Owner must comply, if 
Restoration is feasible. In addition, each mortgagee must permit 
Restoration if Proceeds permit and if Restoration is feasible (rather 
than require application of Proceeds to reduce mortgage debt.)
    Restoration is deemed ``feasible'' if (without limitation), 
following Restoration, the financial viability of the Project would not 
be materially impaired from its condition prior to the casualty, 
including (without limitation) if tax benefits would not be materially 
reduced or if committed sources of debt or equity financing would not 
be relieved of their obligation to fund as a result of the Casualty.
    However, a mortgage may provide and a mortgagee may exercise (with 
HUD approval, as provided below), an option

[[Page 60428]]

to apply any Proceeds to repayment of the mortgage debt instead of 
restoration, if any of the following conditions is met in the 
reasonable determination of the mortgagee or, if different, the lender:
    a. There is no substantial certainty of sufficient funds for 
Restoration (whether from insurance proceeds, a condemnation award or 
settlement, or other funds that may be provided by the Owner, the PHA 
or other lenders);
    b. there is no substantial certainty that Restoration will be 
completed prior to the maturity date of the note secured by the 
mortgage;
    c. if the loan is a construction loan, there is no substantial 
certainty that committed and sufficient loan repayment sources will be 
available upon Restoration, completion and loan maturity;
    d. there is no substantial certainty that the operating income of 
the Development following Restoration will be sufficient to meet all 
operating costs and other expenses, payments for reserves, and loan 
repayment obligations relating to the Development;
    e. there is no substantial certainty that Restoration of the 
Development to a condition approved by lender will be completed prior 
to the earlier of the maturity date of the loan or any fixed date 
resulting from tax credit requirements or otherwise imposed by schedule 
sources of repayment for the loan.
    2. Restoration Is Not Feasible: In the event a lender, Owner and/or 
PHA determines that Restoration is not feasible, the PHA shall apply to 
HUD for approval not to restore the Project, which shall not be 
unreasonably withheld, conditioned or delayed. Upon HUD approval not to 
restore the project, Proceeds shall be applied as follows:
    a. To pay-off or reduce outstanding mortgage debt in accordance 
with the recordation order of the mortgage liens on the Development;
    b. to reduce any outstanding indebtedness of the Owner to the PHA 
for an unsecured loan;
    c. to reimburse the PHA for any funds disbursed to the Owner for 
development of the Development other than by loan. Such reimbursement 
shall include any funds provided by the PHA for predevelopment work or 
soft costs;
    d. to the Owner, in an amount equal to the amount that the Owner or 
its general partner or managing member is required to pay to any 
investor member or partner in connection with the Casualty or Taking, 
as provided for in the Owner's limited partnership agreement or 
operating agreement, such as repurchase of an interest, the triggering 
of ``credit adjusters'', or otherwise;
    e. to the Owner, to the extent not otherwise covered by paragraph 
(d), above, in an amount equal to the amount that the Owner is required 
to pay or distribute upon dissolution in accordance with its limited 
partnership agreement or operating agreement, including without 
limitation all debts of the Owner whether to third persons or to 
partners or members, and whether for funds advanced, property or 
services, but disregarding for this purpose any provision in the 
limited partnership agreement or operating agreement for distribution 
of residual funds.
    f. to the PHA an amount equal to the total ``cost of construction'' 
attributable to the Project Units, less the sum of (a), (b) and (c) 
above; and,
    g. to the Owner Entity.
    3. Restoration Is Feasible--Partial Loss: In the event lender, 
Owner Entity and/or PHA determine that Restoration is feasible and less 
than all of the dwelling units in the Development are damaged, 
destroyed or lost as a result of casualty or condemnation, the 
following provisions shall apply:
    a. If the Proceeds are sufficient to restore the Development to the 
same number of units that existed prior to the Casualty or Taking, the 
number of Project Units in the Development shall be the same number 
(and bedroom configuration) that existed prior to the Casualty or 
Taking.
    b. If the Proceeds are not sufficient to restore the Development to 
the same number of units that existed prior to the Casualty or Taking, 
the number of Project Units in the Development shall be the same 
percentage of the total number of units (and bedroom configuration) as 
existed prior to the Casualty or Taking.
    c. Any excess Proceeds remaining following redevelopment shall be 
distributed as follows:
    i. To pay-off or reduce outstanding mortgage debt in accordance 
with the recordation order of the mortgage liens on the Development;
    ii. to reduce any outstanding indebtedness of the Owner to the PHA 
for an unsecured loan;
    iii. to reimburse the PHA for any funds disbursed to the Owner 
Entity for development of the Development other than by loan. Such 
reimbursement shall include any funds provided by the PHA for 
predevelopment work or soft costs;
    iv. to the Owner, in an amount equal to the amount that the Owner 
or its general partner or managing member is required to pay to any 
investor member or partner in connection with the Casualty or Taking, 
as provided for in the Owner's limited partnership agreement or 
operating agreement, such as repurchase of an interest, the triggering 
of ``credit adjusters'', or otherwise;
    v. to the Owner, to the extent not otherwise covered by paragraph 
(iii), above, in an amount equal to the amount that the Owner is 
required to pay or distribute upon dissolution in accordance with its 
limited partnership agreement or operating agreement, including without 
limitation all debts of the Owner whether to third persons or to 
partners or members, and whether for funds advanced, property or 
services, but disregarding for this purpose any provision in the 
limited partnership agreement or operating agreement for distribution 
of residual funds;
    vi. to the PHA an amount equal to the total ``cost of 
construction'' attributable to the Project Units, less the sum of (i), 
(ii) and (iii), above; and,
    vii. to the Owner.
    4. Restoration is Feasible--Total Loss: In the event that all of 
the units in the Project are damaged, destroyed or lost as a result of 
casualty or condemnation, and lender, Owner and/or PHA determine that 
restoration is feasible, the following provisions shall apply:
    a. If the Proceeds are sufficient to restore the Development to the 
same number of units that existed prior to the Casualty or Taking, the 
number of Project Units in the Development shall be the same number 
(and bedroom configuration) that existed prior to the Casualty or 
Taking.
    b. If the Proceeds are not sufficient to restore the Development to 
the same number of units that existed prior to the Casualty or Taking, 
the number of Project Units in the Development shall be the same 
percentage of the total number of units (and bedroom configuration) as 
existed prior to the Casualty or Taking.
    c. Any excess Proceeds remaining following redevelopment, shall be 
distributed as follows:
    i. To pay-off or reduce outstanding mortgage debt in accordance 
with the recordation order of the mortgage liens on the Development;
    ii. to reduce any outstanding indebtedness of the Owner Entity to 
the PHA for an unsecured loan;
    iii. to reimburse the PHA for any funds disbursed to the Owner 
Entity for development of the Development other than by loan. Such 
reimbursement shall include any funds provided by the PHA for 
predevelopment work or soft costs;
    iv. to the Owner, in an amount equal to the amount that the Owner 
or its general partner or managing member is required to pay to any 
investor member

[[Page 60429]]

or partner in connection with the Casualty or Taking, as provided for 
in the Owner's limited partnership agreement or operating agreement, 
such as repurchase of an interest, the triggering of ``credit 
adjusters'', or otherwise;
    v. to the Owner, to the extent not otherwise covered by paragraph 
(iii), above, in an amount equal to the amount that the Owner is 
required to pay or distribute upon dissolution in accordance with its 
limited partnership agreement or operating agreement, including without 
limitation all debts of the Owner whether to third persons or to 
partners or members, and whether for funds advanced, property or 
services, but disregarding for this purpose any provision in the 
limited partnership agreement or operating agreement for distribution 
of residual funds;
    vi. to the PHA an amount equal to the total ``cost of 
construction'' attributable to the Project Units, less the sum of (i), 
(ii) and (iii), above; and,
    vii. to the Owner.
    5. The term ``cost of construction'' shall mean the total cost of 
developing the Development, less land acquisition costs, if any, 
included as part of the initial development budget.
    6. The above restoration requirements must be incorporated into or 
otherwise addressed by the Regulatory and Operating Agreement between 
the PHA and the Owner (and ground lease, if applicable) and all 
mortgage documents encumbering the Development shall be consistent with 
these provisions.
    D. Section 9, Substantial Default: In addition to the requirements 
of Section 9 of the ACC, the following shall constitute an event of 
substantial default under the ACC:
    1. The drawdown and/or expenditure of Public Housing Funds is in an 
amount greater than approved in the Development Proposal or in an 
amount greater than allowed by the Public Housing Requirements;
    2. a serious and material breach of any provision of the 
Development Proposal; and,
    3. a serious and material breach of any terms, covenants, 
agreements, provisions, or warranties of:
    a. The PHA, which in the opinion of HUD, adversely affects the 
performance obligations of the PHA, the Owner, and/or other 
participating parties; and
    b. the Owner, partner, or other participating party, made in any 
agreement or document submitted to HUD as part of the Development 
Proposal, which, in the opinion of HUD, adversely affects the 
performance obligations of the PHA, the Owner, partner, and/or other 
participating parties.
    4. HUD shall permit an Owner, partner, or lender to participate, 
and may in its discretion, permit any other party to the Development to 
participate in any appeal from a notice of substantial default 
delivered by HUD to the PHA pursuant to this Mixed-Finance Amendment or 
the Public Housing Requirements, with respect to the Project.
    5. During the term of any agreement between the PHA and Owner, and 
so long as the Owner shall not be in default of its obligations 
thereunder, HUD agrees that in the event of the substantial default by 
the PHA under this Mixed-Finance Amendment, HUD shall exercise any 
remedies or sanctions authorized by the ACC and this Mixed-Finance 
Amendment or the Public Housing Requirements, including taking 
possession of the PHA's interest in the Project, in such a manner as 
not to disturb the Owner's rights under any such agreements.
    6. Any rights of the mortgagee under a Note and First Mortgage (if 
any), including the right to exercise all remedies specified therein, 
shall not be subordinate to any other obligations imposed upon the 
Project, except as such obligations (a) shall be reflected in the HUD 
restrictive covenant approved by HUD, as provided for in Paragraph B of 
this Mixed-Finance Amendment, or a memorandum of lease (if applicable), 
and/or any other recorded instrument which shall have been recorded 
prior to the lien of the First Mortgage or (b) shall be the subject of 
a subordination agreement with such mortgagee.
    IV. Terms and Conditions: All other terms and conditions of the ACC 
shall remain applicable to the Project, unless otherwise waived or 
amended by HUD.
[Signature on the Following Page]
    In consideration of the foregoing covenants, the parties do hereby 
execute this Mixed-Finance ACC Amendment:

Housing Authority

By:--------------------------------------------------------------------
(signature)

Name:------------------------------------------------------------------

Title:-----------------------------------------------------------------

United States of America

Secretary of Housing and Urban Development

By:--------------------------------------------------------------------
(signature)

Name:------------------------------------------------------------------

Title:-----------------------------------------------------------------

Date:------------------------------------------------------------------

[FR Doc. 2019-24426 Filed 11-7-19; 8:45 am]
 BILLING CODE 4210-67-P