[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Rules and Regulations]
[Pages 27133-27139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09298]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 891, 960, and 982

[Docket No. FR 5743-F-05]
RIN 2502-AJ36


Streamlining Administrative Regulations for Multifamily Housing 
Programs and Implementing Family Income Reviews Under the Fixing 
America's Surface Transportation (FAST) Act

AGENCY: Office of the Deputy Secretary, HUD.

ACTION: Final rule.

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SUMMARY: On December 4, 2015, the President signed the Fixing America's 
Surface Transportation Act (FAST Act) into law. The law contained 
language that allowed public housing authorities (PHAs) and owners to 
conduct full income recertifications for families with 90 percent or 
more of their income from fixed income every 3 years instead of 
annually. HUD issued an interim rule on December 12, 2017, to align the 
current regulatory flexibilities with those provided in the FAST Act. 
In addition, the interim rule sought to extend to certain multifamily 
housing (MFH) programs some of the streamlining changes that were 
proposed for and made only to the housing choice voucher (HCV) and 
public housing (PH) programs. This final rule finalizes the regulatory 
language to implement the FAST Act contained in the December 2017 
interim rule, with one change to clarify that owners are not required 
to make adjustments to non-fixed-income.

DATES: Effective June 8, 2020.

FOR FURTHER INFORMATION CONTACT: For questions, please contact the 
following people (the phone numbers are not toll-free):
    Multifamily Housing programs: Katherine Nzive, Director, Program 
Administration Office, Asset Management and Portfolio Oversight, 202-
402-3440.
    Housing Choice Voucher and Public Housing programs: Becky Primeaux, 
Director, Housing Voucher Management and Occupancy Division, 202-402-
6050 or Monica Shepherd, Director, Public Housing Management and 
Occupancy, 202-402-4059.
    Persons with hearing or speech impairments may access these numbers 
through TTY by calling the Federal Relay at 800-877-8339 (this is a 
toll-free number). The above-listed contacts may also be reached by 
mail at the following address: U.S. Department of Housing and Urban 
Development, 451 7th Street SW, Washington, DC 20410.

SUPPLEMENTARY INFORMATION: 

I. Background

    On January 6, 2015, at 80 FR 423, HUD proposed a rule to implement 
several statutory changes made in the Department of Housing and Urban 
Development Appropriations Act, 2014 and also make multiple 
administrative streamlining changes across several HUD programs. In 
that proposed rule, some of these additional streamlining changes 
applied only to the HCV and PH programs, not MFH programs.
    Prior to the issuance of the final rule, on December 4, 2015, the 
President signed the FAST Act (Pub. L. 114-94). While primarily a 
transportation law, section 78001 of the FAST Act also amended the 
United States Housing Act of 1937 to allow PHAs and owners in the HCV, 
PH, and project-based rental assistance (PBRA) programs to eliminate 
annual income reviews in some years by applying a cost of living 
adjustment (COLA) determined by the Secretary to fixed-income sources 
for families with incomes that are made up of at least 90 percent fixed 
income. The PHA or owner is not required to verify non-fixed income 
amounts for these families in years where no fixed-income review is 
required but is still required to use third-party documentation for a 
full income recertification every 3 years.

[[Page 27134]]

    On December 12, 2017, at 82 FR 58335,\1\ HUD published an interim 
final rule to implement the statutory provisions of the FAST Act and 
modify the earlier streamlining regulations so that the procedures for 
families meeting the 90 percent fixed-income threshold of the FAST Act 
are as similar as possible to those for families who receive some, but 
less than 90 percent, of their income from fixed-income sources. This 
rule finalizes that interim final rule, along with one clarification.
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    \1\ Please refer to this interim final rule for more background 
on changes made to HUD's regulations at that stage.
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II. Changes Made at the Final Rule Stage

    In response to public comment and as a result of further 
consideration of certain issues by HUD, this final rule makes one 
change to the December 12, 2017 interim final rule.
    In Sec.  5.657, the December 12, 2017 interim final rule made 
changes to an owner's option to apply a streamlined income 
determination to families receiving fixed income. In paragraph 
(d)(3)(i), the interim final rule stated that ``[f]or non-fixed income, 
owners may choose, but are not required, to make appropriate 
adjustments pursuant to'' the owner's obligation to conduct 
reexaminations and redeterminations of family income and composition. 
In this final rule, HUD is revising this sentence to read that ``[f]or 
non-fixed income, owners are not required to make adjustments pursuant 
to'' the owner's obligation to conduct reexaminations and 
redeterminations of family income and composition. HUD is making this 
change at the final rule stage to clarify that owners are not required 
to make such adjustments.
    Identical changes are made to the language regarding the PHA's 
option to apply a streamlined income determination to families 
receiving fixed income. These changes affecting PHAs are made to 
Sec. Sec.  960.257(c)(3)(i) and 982.516(b)(3)(i).

III. Discussion of Public Comments and HUD's Responses

    The public comment period on the interim final rule closed on 
January 11, 2018, and 15 public comments were received. Comments were 
submitted by individual members of the public, Fair Housing advocacy 
groups, housing associations, and PHAs. The following presents the 
significant issues and questions related to the interim final rule 
raised by the commenters, and HUD's responses to these issues and 
questions.

A. Comments of Support

    The comments were generally supportive. Commenters noted that it 
would reduce costs and make it easier for seniors to recertify income. 
Others supported the expansion of flexibilities and the streamlining of 
administrative changes across the HCV, PH and MFH programs, as it would 
reduce administrative burden on PHAs and MFH owners to make annual 
rental assistance adjustments and make it easier for program staff to 
apply consistent regulations.

B. Rule Applicability

    Issue: Single-family housing. Commenters asked whether the rule 
includes residential single-family housing.
    HUD Response: The FAST Act interim rule was, and this final rule 
is, only intended to include units assisted by multifamily housing 
programs overseen by the Office of Housing, as well as all Public 
Housing and Housing Choice Voucher units (both single- and 
multifamily).
    Issue: Project-Based Voucher (PBV) recertifications. Commenters 
stated that the rule does not explicitly state that families with PBV 
assistance qualify for triennial recertifications and requested that 
the rule include specific language stating that PBV-assisted households 
are eligible for triennial recertifications.
    HUD Response: Income recertification requirements for the PBV 
program follow HCV program rules and guidelines; therefore, the 
provisions related to reexamination of income apply to the PBV program.
    Issue: Additional guidance. Commenters asked that HUD include with 
each provision the program office to which the provision applies, a 
description of change, background information, effective date, and 
whether the provision is mandatory or discretionary.
    HUD Response: Applicability, description of change, background 
information, and effective dates will be further defined in program 
guidance. All provisions of this rule are discretionary.

C. Implementation

1. General Implementation
    Issue: Plans. Commenters asked whether, outside of Section 202 or 
Section 811, an owner would need to create a policy or update their 
Tenant Selection Plan to reflect their choice of implementing the 
streamlined method.
    HUD Response: If an owner chooses to implement streamlined methods, 
the tenant selection plan should be updated where the property's annual 
recertification requirements and interim recertification reporting 
policies are discussed.
    Issue: Contract amendments. A commenter asked how HUD plans to 
amend assistance contracts of owners.
    HUD Response: HUD does not believe that the changes made by the 
FAST Act interim rule necessitate a change in the assistance contracts 
of owners. The FAST Act interim rule made the following changes, none 
of which is addressed in a Housing Assistance Payment contract: (1) 
Streamlining certification of fixed income; (2) allowing for family 
declaration for assets under $5,000; and (3) allowing owners to make a 
utility reimbursement of $45 or less on a quarterly basis. For the 
Section 202 and Section 811 programs, the current regulations do not 
contain the requirements around utility reimbursements in general, 
leaving such requirements in the assistance contracts. Therefore, HUD 
is not including regulatory text to implement these new flexibilities 
in the final rule, but rather would be open to amending the assistance 
contracts of any owners interested in taking advantage of this 
flexibility. Owners of Section 202 and 811 properties should contact 
their Contract Administrator or Account Executive if they wish to 
request a contract amendment. To amend the 202 or 811 assistance 
contract, owners will need to submit the standard form of contract 
amendment which will be provided by HUD upon request. HUD will provide 
instructions for execution and submission with the standard contract 
amendment.
    Issue: Software. Commenters asked how the streamlining provisions 
will be implemented with MFH's Tenant Rental Assistance Certification 
System (TRACS). They asked whether the software packages will know what 
to do if owners and agents either opt in or out of the streamlined 
certifications. They suggested that some type of structure be 
implemented so that Management Occupancy Reviews can be conducted 
consistently across portfolios.
    HUD Response: The provisions in this rule can be handled by the 
current iteration of TRACS. Although streamlining certifications is now 
permitted by owners, form HUD-50059 is still required to be completed 
by owners and signed by tenants and submitted to TRACS. HUD will 
consider changes to TRACS that may make tracking streamlined years 
easier.
    Issue: Medical expenses. Some commenters were concerned that the 
rule does not address how to treat medical expenses for residents with

[[Page 27135]]

fixed income. They asked whether owners and agents should conduct full 
recertifications for residents with medical expense claims while 
conducting streamlined recertifications for residents that do not claim 
medical expenses. They suggested that HUD specifically address the fact 
that, while this rule does not incorporate the increased standard 
medical deduction and new threshold for deduction of allowable medical 
expenses or incorporate authority to use the past year's income and 
expenses that will be coming as the Housing Opportunity through 
Modernization Act (HOTMA) changes are implemented, HUD intends owners 
and agents to continue to provide annual adjustments for verified 
allowable medical expense deductions.
    HUD Response: The FAST Act and the interim rule provide 
administrative relief to PHAs and owners. PHAs and owners may elect a 
streamlined income determination for families on a fixed income. 
However, the provision only pertains to the verification of sources of 
income. PHAs and owners must continue to conduct third-party 
verification of deductions, including medical expenses deductions.
    HUD proposed a rule to implement income changes made by HOTMA, 
including medical expense deductions, published on September 17, 2019, 
at 84 FR 48820. HUD does not perceive a conflict between the FAST Act 
and HOTMA.
    Issue: Relationship with current regulations. Commenters asked that 
HUD reiterate that Notice H 2016-09 is still applicable and that owners 
may continue streamlined verification for all fixed income sources, 
regardless of overall percentage of total income.
    HUD Response: The Streamlining Administrative Regulations for PH, 
HCV, MFH, and Community Planning and Development programs final rule 
(81 FR 12353) and its implementing guidance in Notice H 2016-09 are 
still in effect alongside the provisions found in this rule.
    Issue: Fixed-income sources. Commenters asked that HUD expand 
qualified fixed-income sources to include Retirement Survivors and 
Disability Income and income from Federal, State, local and private 
pension plans if a family member receives such income through periodic 
payments at reasonable predictable levels.
    HUD Response: The definition of fixed income found in 24 CFR 
5.657(2)(iv) includes ``other sources'' that are subject to adjustment 
by a verifiable COLA or current rate of interest. Therefore, other 
sources of fixed income are already included, if the source falls 
within the framework established under this provision.
2. Income Verification
    Issue: Commenters asked when owners and agents can and cannot 
choose to verify non-fixed income. They asked whether owners and agents 
must always verify non-fixed income regardless of the percentage of the 
income that is fixed and if owners must adopt all provisions of the new 
rule if they choose to adopt any. They asked that HUD emphasize that 
housing agencies must apply annual reexaminations to households with 90 
percent fixed income, but that PHAs have discretion to apply such 
reexaminations to households with 100 percent fixed income.
    HUD Response: Section 78001 of the FAST Act amended the United 
States Housing Act of 1937 to allow PHAs and owners in the HCV, PH, and 
PBRA programs to eliminate annual income reviews in some years by 
applying a COLA determined by the Secretary to fixed income sources for 
families with incomes that are made up of at least 90 percent fixed 
income. The FAST Act did not require PHAs and owners to verify non-
fixed income amounts in years where no fixed-income review is required, 
but did require them to use third-party documentation for a full income 
recertification every 3 years.
    The interim final rule and this final rule both reflect the FAST 
Act by allowing PHAs and owners to use a COLA for fixed sources if such 
sources make up at least 90 percent of a tenant's income. HUD has made 
a slight adjustment in the regulatory text in this final rule to 
clarify the language in Sec. Sec.  5.657(d)(3)(i), 960.257(c)(3)(i), 
and 982.516(b)(3)(i) to emphasize that PHAs and owners are not required 
to make adjustments for non-fixed income in such instances when using 
streamlined income determinations.
    This rule does not alleviate the responsibility to conduct 
reexaminations each year, but rather changes the standards for income 
verification during those reexaminations. ``Reexaminations'' encompass 
more actions than income verifications. For example, reexaminations 
consider verifications of expenses related to deductions, verifications 
of family composition, compliance with the Community Service and Self 
Sufficiency requirement in the public housing program, etc.
    Issue: Triennial certifications. Commenters requested clarification 
of the 3-year verification. They asked whether an owner or agent must 
verify income at the beginning of every third year of tenancy or every 
three calendar years from the date a tenant moves in. They requested 
that HUD provide a common use form as a template or subsequent guidance 
or examples for owners or agents.
    HUD Response: The provisions of this rule are discretionary. Owners 
that choose to implement streamlined annual recertifications must use 
third-party verification of income at move-in for new tenants and for 
existing tenants at the first annual recertification after the rule 
becomes effective. Streamlined methods of verification of income may be 
applied to the annual recertification the year after third-party 
verified certification (year 2) and the next annual recertification 
(year 3). Third-party verification of income must be used for the 
following annual certification (year 4). HUD will not provide a common 
use form at this time.
    Issue: Staggered certifications. Commenters requested that PHAs be 
allowed to stagger implementation of triennial recertifications of 
assisted households to mitigate substantial increases in work at the 
end of each triennial period.
    HUD Response: Staggering recertifications has a potential impact of 
disparate treatment among similarly situated families. PHAs and owners 
choosing to implement triennial recertifications must afford all 
households the equal ability to utilize options in the final rule. HUD 
will not permit responsible entities to stagger recertifications.
    Income verifications following new admissions or interim 
reexaminations will naturally be staggered. Existing families will have 
had the first triennial verification 3 years after implementation. Any 
new admissions in the year following initial implementation for 
existing families will have income verification in the year following 
initial implementation and then 3 years after that.
    Issue: Using prior certifications. Commenters stated that HUD 
should allow the full certifications that owners and agents completed 
prior to the implementation of the rule on March 12, 2018, to qualify 
under the rule. They state that this would allow PHAs and owners to 
benefit from the rule despite its delayed implementation.
    HUD Response: The authority to utilize provisions of this rule was 
not granted until March 12, 2018. Certifications completed prior to the 
rule's implementation date cannot be included in the year 3 streamline 
certification cycle. Additionally, the

[[Page 27136]]

first eligible COLA-based certification is April 2019.
    Issue: Timing of implementation. Commenters asked that HUD make 
clear that for housing agencies that choose to implement annual 
reexaminations for fixed sources of income, lower voucher payment 
standards for existing households under the lease will take effect on 
the second annual recertification and not at the third. They also ask 
that HUD clarify that housing agencies will not be required to wait to 
implement triennial certifications.
    HUD Response: Payment standards and the timing of their application 
are not affected. PHAs are still required to process an annual 
recertification and submit to PIH Information Center. Triennial 
certifications may be implemented for new tenants at move-in and for 
current tenants on or after March 12, 2018, at the next annual 
recertification, following the update to the PHA's or owner's policy.
    Issue: Previously reported income. Commenters stated that housing 
agencies, owners, and managers should be allowed to use previously 
reported income in years 1, 2, or 3 for purposes of calculating tenant 
rent share and rent subsidy if the tenant has a transfer of unit, 
relocation, or port-out.
    HUD Response: For portability in the HCV program, the receiving PHA 
has discretion to accept the most recent calculation of income on the 
HUD-50058 or redetermine income. If the receiving PHA chooses to 
redetermine income, a full reexamination would need to be completed. 
For moves with continued assistance in the Voucher program or transfers 
within a Public Housing property, PHAs are permitted to continue with 
the streamlined schedule.
    For MFH programs, unit transfers cannot occur between properties. 
The new property must process a move-in certification and begin the 
streamlined process from the third-party verified move-in 
certification. For unit transfers within the property, owners are 
permitted to continue with the streamlined schedule unless the transfer 
involves circumstances that result in the family being unable to 
certify that 90 percent of income is fixed and fixed sources have not 
changed from the prior year.

D. Fraud and Confusion

    Issue: Increased fraud and unreported income. Some commenters 
stated that it will cause confusion and allow for mistakes, fraud, 
unreported income, and mass income discrepancies. They stated that 
decreased contact with households, especially non-elderly households 
with members who are able to function in the workplace while receiving 
traditional sources of fixed income, could create a rise of fraud, 
unreported earned income, and deceit in the recertification process. 
They also stated that confusion is more likely if some project 
residents verify annually while other verify every 3 years. They asked 
that bank statements continue to be reviewed to avoid fraud and 
unreported self-employment income.
    HUD Response: HUD acknowledges the commenters' stated concerns. The 
stated elements of risk were reviewed prior to publication of the rule. 
Provisions of this rule are discretionary. Further guidance will be 
provided by program offices for PHAs and owners who choose to implement 
provisions of the rule.
    Issue: Certifications. Commenters asked that the term ``three-year 
certification'' be clarified, as they state it is unclear whether 
residents must still provide annual certifications regarding assets and 
income. They recommend replacing the word ``certification'' with 
``declaration'' to avoid confusion with historical uses for the word 
certification.
    HUD Response: PHAs and owners must conduct reexamination of 
household income and composition at least annually. This requirement 
remains in effect and is completed during the annual recertification 
process. The rule streamlines the annual recertification process by 
modifying income and asset verification methods but does not impact the 
requirement to reexamine the household income and composition at least 
annually. Annual recertifications performed during the 3-year 
streamlined certification cycle will continue to be referred to as a 
certification.
    Issue: Declaration of income. Commenters asked whether a tenant can 
provide a single document declaring income or if documents must be 
obtained for each source of fixed income.
    HUD Response: For the annual recertification initiating the 3-year 
certification cycle, PHAs and owners must adhere to established 
verification methods. For the next two annual recertifications, if the 
tenant declares the income has not changed, there is no need to collect 
declarations for each source.
    Issue: Enterprise Income Verification. Some commenters asked that 
HUD include language from Notice H 2016-09 and Notice H 2010-19 on the 
use of the Enterprise Income Verification (EIV) System in the rule so 
that it is clear that owners must continue full income verification for 
residents with more than 10 percent of income from non-fixed sources 
and that owners may use current applicable interest rates available 
from public sources or tenant-provided, third-party generated 
documentation to determine interest income on net family assets.
    HUD Response: The provisions of the rule do not change established 
EIV requirements. EIV usage will be further defined in program 
guidance. Requirements related to determining interest income on net 
family assets are not changed are by this rule.

E. Increased Burden

1. Income verifications
    Issue: In general. Commenters stated that the changes seem more 
burdensome than the existing verification requirements and therefore 
owners and agents will be less likely to choose the proposed method. 
The commenters also stated that the rule would not be beneficial, as 
the COLA or rate of interest on an individual's source of fixed-income 
must be verified annually.
    HUD Response: PHAs and owners have discretion in implementing 
provisions in this rule. If the PHA or owner determines that the rule's 
provisions are not beneficial, implementation is not required. To aid 
in implementation, further guidance will be provided.
    Issue: 90 percent calculation. Commenters stated that the interim 
rule added the ``90 percent or more'' language to the streamlining 
final rule, which would cause owners and agents to conduct additional 
income calculations and could result in eligibility issues due to 
calculation errors.
    HUD Response: The FAST Act only permits streamlined determinations 
for all income (including income from non-fixed-income sources) when 
the family's income is 90 percent or more from fixed-income sources, so 
the additional calculation is required by the statute. HUD recognizes 
that this requirement entails a determination whether the 90 percent 
threshold is met. However, PHAs and owners still retain the option to 
not streamline determinations pursuant to the FAST Act, but rather only 
streamline individual sources of income, per the March 8, 2016, final 
rule (81 FR 12353).
    Issue: Layering of assistance. Some commenters stated that owners 
of projects with other affordability requirements or tenants who do not 
have 90 percent of income fixed may still need to certify annually, and 
therefore the proposed rule would not reduce burden. The commenters 
also

[[Page 27137]]

stated that monitoring reporting cycles will be an increased burden to 
project owners, as not all project residents will be on the same 3-year 
reporting cycle.
    HUD Response: It is understood that the streamlining efforts 
identified in the FAST Act may not be beneficial in all scenarios. 
Owners have the option of continuing to process annual recertifications 
of family income and composition as done prior to this rule being 
published. Owners must be aware of policies in other programs, however; 
HUD cannot comment on programs that are not subject to FAST Act 
provisions.
    Issue: Self-certification of assets. Commenters questioned whether 
allowing residents to self-certify assets of $5,000 or less will reduce 
administrative burden, as more effort may be used to monitor and 
determine the amount of tenant pension than just verifying the tenant 
pension.
    HUD Response: PHAs and owners may accept tenant self-certification 
for assets of $5,000 or less for years 2 and 3 of the streamlined 3-
year cycle. Provisions of the FAST Act affect the means by which income 
is identified. PHAs and owners have discretion in implementing 
provisions in this rule. If the rule's provisions are not beneficial, 
implementation is not required.
2. Use of Forms
    Issue: Form 9886. Commenters stated that HUD should not require 
fixed-income households to complete HUD's 9886 authorization form to 
access the Enterprise Income Verification each year. Instead, they 
state that the 9886 authorization form should only be required for full 
recertifications every 3 years. They ask that HUD extend the 9886 
authorization form for at least 15 months to allow housing authorities 
to benefit from triennial recertifications in early 2018.
    HUD Response: HUD acknowledges the stated concern and suggestion of 
the commenter. At this time, HUD is not extending the effective period 
of forms HUD 9886 and 9887.
    Issue: Reducing the number of forms. One commenter stated that HUD 
should not require PHAs to collect all of the currently required 
certification forms from fixed-income households during years 2 and 3 
of the triennial period.
    HUD Response: The required certification forms are in connection 
with other HUD regulatory and statutory requirements. HUD does not have 
the authority under this rule to discontinue the requirement to collect 
these forms.
    Issue: Bank statements. Commenters stated that it would be 
difficult to obtain six consecutive bank statements for family 
declarations of assets. They asked whether owners and agents would need 
to use the tenants' declaration of asset income similar to the tax 
credit program.
    HUD Response: For move-ins and annual recertifications initiating 
the 3-year streamlining cycle, PHAs and owners or agents must adhere to 
current program guidance. For years 2 and 3, the rule requires 
households to complete a declaration of assets of $5,000 or less.

F. Utility Allowances

1. Determination of Utility Allowance
    Issue: Setting allowances. Commenters stated that the utility 
allowance should not be a project-based allowance based on an 
artificial average. The commenters stated that the utility allowance 
should instead be based on the annual recertification process, wherein 
each resident provides its own bills in the annual certification 
process and the allowance is calculated as part of the resident's total 
tenant payment. The commenters stated that the utilities reimbursements 
should be made monthly, as it would otherwise be more difficult for 
accounting to issue checks.
    HUD Response: The process of determining utility allowance is 
outside the scope of this rule. PHAs and owners have discretion to 
utilize the provision of issuing utility reimbursements equal to or 
less than $15 per month on a quarterly basis. If it is determined that 
the provision will create administrative hardships, implementation is 
not required.
2. Requests for Clarification
    Issue: Hardships. Commenters requested clarification on what 
policies owners/agents should adopt to assist tenants that might 
experience a financial hardship under the rule. They stated that a 
tenant that receives a utility reimbursement has very limited or no 
income and therefore it would be difficult to determine what would 
constitute a hardship. They asked whether HUD has analyzed or 
calculated the amounts at which tenants may claim a financial hardship.
    HUD Response: Hardship policies for utility reimbursements will be 
addressed through program-specific guidance.
    Issue: Contract amendments. Commenters asked HUD to provide clarity 
on the process for 202 and 811 Project Rental Assistance Contracts 
(PRACs) to amend their assistance contracts to incorporate changes to 
utility reimbursement payments. They suggested HUD provide a 
centralized point of contact to assist owners with amending assistance 
contracts for this purpose.
    HUD Response: The provisions of this rule do not affect the 
regulation and program guidance governing the requirements of adjusting 
utility allowances. PHAs and owners must perform utility allowance 
adjustments in accordance with established guidance.
    Issue: Relationship with annual reexaminations. Commenters asked 
that HUD clarify that those housing agencies that implement annual 
reexaminations for fixed sources of income would still have to adjust 
tenant-paid utility allowances.
    HUD Response: The provisions of this rule do not affect the 
regulation and program guidance governing the requirements of adjusting 
utility allowances. PHAs and owners must perform utility allowance 
adjustments in accordance with established guidance.

G. COLA

1. Use and Adjustments of COLA
    Issue: COLA adjustment. Commenters stated that COLA should be 
adjusted so that all households pay their fair portion.
    HUD Response: The COLA is adjusted each year based on actual COLA. 
The changes in rent are based on the change in COLA. Changing the 
amount of the COLA is outside the scope of this rule.
    Issue: Which COLA to use. Commenters asked that housing agencies, 
owners, and managers use the Social Security Administration's COLA as 
the single COLA, unless requested otherwise by a household.
    HUD Response: The rule does not implicate the use of a single COLA. 
PHAs and owners or agents must use the COLA applicable to the income 
source.
2. Requests for Clarification
    Issue: When to start using COLA. Commenters stated that HUD should 
explicitly state that owners may begin to use the current SSA COLA as 
of the rule effective date of March 12, 2018, to adjust the overall 
total or each line item for the various sources of fixed sources of 
income. They also state that this factor should apply to all other 
income that comprise less than 10 percent of the total resident 
incomes, where the owner chooses not to verify them.
    HUD Response: The authority to utilize provisions of this rule was 
not granted until March 12, 2018. Certifications completed prior to the 
interim rule's implementation date cannot be included in the second or

[[Page 27138]]

third year of the streamline certification cycle. The first eligible 
COLA-based certification is April 2019. For families with 90 percent or 
more of their income from fixed sources, sources of non-fixed income 
need not be adjusted and must not be adjusted by a COLA, but the PHA or 
owner may choose to adjust sources of non-fixed income by the amount 
determined on the basis of third-party verification.
    The rule does not allow the use of a single COLA. PHAs and owners 
or agents must use the COLA applicable to the income source.
    Issue: Single COLA. Commenters asked that HUD provide more 
information on whether owners should use a current COLA and explicitly 
state that HUD will issue a notice before a single-value COLA can be 
implemented.
    HUD Response: The rule does not implicate the use of a single COLA. 
PHAs and owners or agents must use the COLA applicable to the income 
source.
    Issue: Required interim recertifications. Commenters stated that 
HUD should make explicit that interim recertifications are not required 
of housing agencies, owners, or managers when the COLA is to take 
effect, but the COLAs will instead be applied to household income on an 
annual basis at their lease anniversary.
    HUD Response: This rule requires that an adjustment be made at 
annual recertification. HUD is not prohibiting interim recertifications 
as a result of a change in the COLA. Tenants and owners must continue 
to follow the income recertification requirements identified in the 
lease agreement, and PHAs must follow the income recertification 
requirements in their policies.

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and therefore, subject to review by the Office of Management and Budget 
(OMB) in accordance with the requirements of the order. Executive Order 
13563 (Improving Regulations and Regulatory Review) directs executive 
agencies to analyze regulations that are ``outmoded, ineffective, 
insufficient, or excessively burdensome,'' and to modify, streamline, 
expand, or repeal them in accordance with what has been learned. 
Executive Order 13563 also directs that, where relevant, feasible, and 
consistent with regulatory objectives, and to the extent permitted by 
law, agencies are to identify and consider regulatory approaches that 
reduce burdens and maintain flexibility and freedom of choice for the 
public. This rule was not determined to be a ``significant regulatory 
action'' as defined in section 3(f) of the Executive order.
    As discussed in more detail in the December 12, 2017, interim final 
rule, this final rule continues to further HUD's efforts to streamline 
administrative requirements for owners receiving subsidies under the 
HCV, PH, PBRA, Section 202 and Section 811 programs. Specifically, this 
final rule continues to give PHAs and owners greater flexibilities in 
determining tenant families' income and assets, and in issuing utility 
reimbursements. The final rule also continues to provide PHAs and 
owners with the discretion to implement these changes. Some may choose 
the status quo; others will choose the streamlining alternative. By 
allowing voluntary implementation, HUD enables participants to choose 
their desired method of administration, which in many cases will 
presumably be the least-cost method. Given that an unknown number of 
PHAs and owners may choose the status quo, it is difficult to estimate 
the savings with precision. Based on the assumptions above, the interim 
final rule and this final rule expect aggregate savings to be 
approximately $31.2 million ($24.9 million from income verification + 
$0.6 million from utility reimbursement + $5.9 million from asset 
verification).

Executive Order 13771

    Executive Order 13771 entitled, ``Reducing Regulation and 
Controlling Regulatory Costs,'' was issued on January 30, 2017. The 
interim final rule, published on December 12, 2017, at 82 FR 58335, was 
considered an E.O. 13771 deregulatory action based on the cost savings 
mentioned above. This final rule does not make substantive changes to 
the interim final rule, and therefore does not contribute any 
additional cost savings. However, the final rule continues the 
potential for future cost savings established by the interim final 
rule.

Information Collection Requirements

    The information collection requirements contained in this final 
rule have been approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and 
assigned OMB control number 2502-0204. In accordance with the Paperwork 
Reduction Act of 1995, an agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information, 
unless the collection displays a currently valid OMB control number.

Environmental Review

    This final rule involves external administrative requirements and 
procedures related to calculation of HUD rental assistance that do not 
constitute a development decision affecting the physical condition of 
specific project areas or building sites. Accordingly, under 24 CFR 
50.19(c)(6), this final rule is categorically excluded from 
environmental review under the National Environmental Policy Act of 
1969 (42 U.S.C. 4321).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments nor preempt State law 
within the meaning of the Executive order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers applicable to 
the program affected by this final rule are 14.157, 14.181, 14.195, 
14.850, and 14.871.

List of Subjects

24 CFR Part 5

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

24 CFR Part 891

    Aged, Grant programs--housing and community development, 
Individuals with disabilities, Loan programs--housing and community 
development, Rent subsidies, Reporting and recordkeeping requirements.

[[Page 27139]]

24 CFR Part 960

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

24 CFR Part 982

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

    Accordingly, the interim rule amending 24 CFR parts 5, 891, 960, 
and 982, which was published at 82 FR 58335 on December 12, 2017, is 
adopted as final with the following changes:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

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

    Authority:  12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437d, 
1437f, 1437n, 3535(d); Sec. 327, Pub. L. 109-115, 119 Stat. 2936; 
Sec. 607, Pub. L. 109-162, 119 Stat. 3051 (42 U.S.C. 14043e et 
seq.); E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O. 
13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273.


0
2. In Sec.  5.657, revise the last sentence in paragraph (d)(3)(i) to 
read as follows:


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

* * * * *
    (d) * * *
    (3) * * *
    (i) * * * For non-fixed income, owners are not required to make 
adjustments pursuant to paragraph (b) of this section.
* * * * *

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

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

0
4. In Sec.  960.257, revise the last sentence in paragraph (c)(3)(i) to 
read as follows:


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

* * * * *
    (c) * * *
    (3) * * *
    (i) * * * For non-fixed income, the PHA is not required to make 
adjustments pursuant to paragraph (a) of this section.
* * * * *

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

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

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

0
6. In Sec.  982.516, revise the last sentence in paragraph (b)(3)(i) to 
read as follows:


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

* * * * *
    (b) * * *
    (3) * * *
    (i) * * * For non-fixed income, the PHA is not required to make 
adjustments pursuant to paragraph (a) of this section.
* * * * *

    Dated: April 27, 2020.
Brian D. Montgomery,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 2020-09298 Filed 5-6-20; 8:45 am]
 BILLING CODE 4210-67-P