[Federal Register Volume 88, Number 160 (Monday, August 21, 2023)]
[Rules and Regulations]
[Pages 56764-56766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17737]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 880, 888, 903, 905, 964, 970, and 983

[Docket No. FR-6361-N-01]


Rental Assistance Demonstration: Supplemental Guidance on Revised 
RAD Notice

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

ACTION: Announcement of changes to the Rental Assistance Demonstration.

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SUMMARY: The Rental Assistance Demonstration (RAD) provides the 
opportunity to test the conversion of assistance of public housing 
properties and other HUD-assisted properties to long-term, project-
based Section 8 rental assistance. This document announces the posting 
of a supplement to the most current notice (Revised RAD Notice Revision 
4, H-2019-09/PIH-2019-23 (HA)). As provided by the RAD Statute, this 
document addresses the requirement that RAD may proceed after 
publication of notice of its terms in the Federal Register. This 
document summarizes the key changes made to the H-2019-09/PIH-2019-23 
(HA) through the RAD Supplemental Notice 4B, H-2023-08/PIH-2023-19 
(HA). This document also meets the RAD statutory requirement to publish 
waivers and alternative requirements at least 10 days before effect, 
while this does not prevent the demonstration, as modified, from 
proceeding immediately.

DATES: The RAD Supplemental Notice 4B, H-2023-08/PIH-2023-19 (HA) other 
than those items listed as new statutory or regulatory waivers or 
alternative requirements specified in this document, is effective 
August 21, 2023.
    The new statutory and regulatory waivers and alternative 
requirements are effective August 31, 2023.

ADDRESSES: Interested persons are invited to submit questions or 
comments electronically to [email protected].

FOR FURTHER INFORMATION CONTACT: William A. Lavy, Director of Program 
Administration, Office of Recapitalization, Office of Multifamily 
Programs, Department of Housing and Urban Development, 451 Seventh 
Street SW, Room 6230, Washington, DC 20410; telephone 202-402-2465. 
(This is not a toll-free number.) HUD welcomes and is prepared to 
receive calls from individuals who are deaf or hard of hearing, as well 
as individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. To 
assure a timely response, please direct written requests for further 
information electronically to the email address [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Originally authorized by the Consolidated and Further Continuing 
Appropriations Act, 2012 (Pub. L. 122-55, approved November 18, 2011) 
(2012 Appropriations Act) and later amended, RAD allows for the 
conversion of assistance of public housing properties, Rent Supplement 
(Rent Supp), Rental Assistance (RAP), Moderate Rehabilitation (Mod 
Rehab), Mod Rehab Single Room Occupancy (SRO), Section 202 Project 
Rental Assistance Contract (202 PRAC), and Section 811 Project Rental 
Assistance Contract (811 PRAC) programs (collectively, ``covered 
programs'') to long-term, renewable assistance under Section 8.\1\ The 
most recent version of the RAD notice is H-2019-09/PIH-2019-23 (HA), 
located at https://www.hud.gov/sites/dfiles/OCHCO/documents/2019-09hsgn.pdf.
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    \1\ The RAD statutory requirements were amended by the 
Consolidated Appropriations Act, 2014 (Pub. L. 113-76, approved 
January 17, 2014), the Consolidated and Further Continuing 
Appropriations Act, 2015 (Pub. L. 113-235, approved December 16, 
2014), the Consolidated Appropriations Act, 2016 (Pub. L. 114-113, 
approved December 18, 2015), the Consolidated Appropriations Act, 
2017 (Pub. L. 115-31, approved May 5, 2017), the Consolidated 
Appropriations Act, 2018 (Pub. L. 115-141, approved March 23, 2018), 
and the Consolidated Appropriations Act, 2022 (Pub. L. 117-103, 
approved March 15, 2022). The statutory provisions of the 2012 
Appropriations Act pertaining to RAD, as amended, are referred to 
collectively as the ``RAD Statute'' in this document.
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II. Key Changes Made to RAD

    The following highlights key changes to RAD that are included in 
the RAD Supplemental Notice (the Notice):
    1. RAD for PRAC Initial Contract Rent Setting. The Consolidated 
Appropriations Acts, 2022 and 2023, each provided $6 million to support 
preservation transactions of housing for the elderly originally 
developed with a Section 202 Capital Advance and assisted with a 
Project Rental Assistance Contract (PRAC). HUD is implementing this 
provision of the Consolidated Appropriations Acts, 2022 and 2023 in 
Section I of the Notice by allowing additional rent-setting 
flexibilities to promote and incentivize projects where the conversion 
supports long-term preservation by enhancing climate resiliency, energy 
and water efficiency, and the design of housing appropriate for the 
elderly to age-in-place. It further implements waiver authority 
provided in the Consolidated Appropriations Acts, 2022 and 2023 to 
ensure the continuation of resident services previously provided at 
Section 202 PRAC properties that are converting through RAD and to 
avoid reductions in rental revenue at such properties.
    2. Resident Engagement. Section II of the Notice amends the 
Resident Engagement requirements for PHAs to ensure that the residents 
are better informed and engaged in the RAD conversion process and that 
HUD can adequately monitor resident engagement. The Notice enhances the 
descriptions of resident engagement that must be submitted with the RAD 
application and modifies the resident meeting requirements to provide 
for more frequent and meaningful updates to residents.
    3. Energy Efficiency and Climate Resilience. Section III of the 
Notice amends the RAD Notice, Rev-4 to raise the minimum energy 
efficiency standards applicable to new construction activities by 
reference to updated energy codes incorporating higher, cost-effective 
standards and requires PHAs to participate in climate resilience 
planning.
    4. Harmonizing Radon Policies in RAD Conversions. Section IV of the 
Notice amends the RAD Notice, Rev-4 to ensure that all projects 
converting assistance under RAD are evaluated for radon. RAD Notice, 
Rev-4 introduced requirements for radon testing for properties 
converting under RAD but exempted certain scenarios from the 
requirement. It also inadvertently omitted Mod Rehab conversions from 
the requirement. HUD's subsequent amendments to Chapter 9 of the MAP 
Guide further narrowed the exempted scenarios. Through the Notice, HUD 
is eliminating the remaining exemptions, subjecting all Converting 
Projects to radon testing requirements.
    5. Treatment of Zero-HAP families. Section V of the Notice amends 
the treatment of families whose total tenant payment (TTP) exceeds the 
Gross Rent on the RAD HAP Contract including families present at the 
time of

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conversion and families newly admitted to the property after 
conversion.
    6. Faircloth-to-RAD Developments. Section VI and Section II of the 
Notice make changes to the RAD Notice, Rev-4 in order to support PHAs 
that are developing public housing units to replace public housing 
units previously removed from the PHA's portfolio. PHAs can secure a 
conditional pre-completion approval to convert newly developed public 
housing units to a long-term Section 8 contract through RAD following 
completion of the public housing development process. The changes make 
it simpler for PHAs to reserve RAD conversion authority, allow PHAs to 
utilize HAP reserves in order to augment RAD rents for such units at 
conversion, and set forth alternative resident notification procedures 
that a PHA may employ.
    7. Housing Quality Standards. Section VII of the Notice amends the 
RAD Notice, Rev-4 to clarify applicability of HQS during the work 
period for occupied units and adds a certification requirement 
regarding the condition of the unit prior to the execution of the HAP 
Contract.
    8. RAD/Section 18 Blend Streamlining. Section VIII of the Notice 
extends additional waivers to non-RAD project-based vouchers (PBVs) at 
the Converted Project in order to facilitate uniform treatment of 
residents and units.

III. New Waivers and Alternative Requirements

    The RAD Statute provides that waivers and alternative requirements 
authorized under the First Component must be published by notice in the 
Federal Register no later than 10 days before the effective date of 
such notice. Under the Second Component of RAD, HUD is authorized to 
waive or alter the provisions of subparagraphs (C) and (D) of Section 
8(o)(13) of the United States Housing Act of 1937 (42 U.S.C. 1437f) 
(the 1937 Act).
    HUD has previously published its waivers and alternative 
requirements for RAD on July 26, 2012 (77 FR 43850), July 2, 2013 (78 
FR 39759), June 26, 2015 (80 FR 36830), January 19, 2017 (82 FR 6615), 
July 3, 2018 (83 FR 31169), and October 10, 2019 (84 FR 54630). This 
document only includes waivers and alternative requirements not 
previously published or that have changed from previous publications. 
Although waivers and alternative requirements authorized under the 
Second Component are not subject to a Federal Register publication 
requirement, new Second Component waivers and alternative requirements 
are included in this document as a matter of convenience.
    The new waivers and alternative requirements are:
    1. Initial Contract Rent Setting for converting Section 202 PRAC 
projects. Provisions affected: Initial Section 8 Housing Assistance 
Payment contract rents shall not exceed 120% of the applicable fair 
market rents (FMR) less any utility allowances. Waiver: HUD is waiving 
the limitation under Section 8(c)(1)(A) of the 1937 Act (42 U.S.C. 
1437f) on setting initial contract rents no higher than 120% of FMR, 
less any utility allowances. Alternative requirement: HUD is 
implementing an alternative requirement permitting initial contract 
rents be set at the higher of (a) 120% of the applicable FMR 
(consistent with the requirements of Section 8(c)(1) of the 1937 Act), 
less any utility allowances, plus the current cost of provision and 
coordination of services, or (b) the approved PRAC rents, as necessary 
to ensure the ongoing provision and coordination of services or to 
avoid a reduction in project subsidy.
    2. Treatment of Zero-HAP families. Provisions affected: A PHA may 
select an occupied unit to be included under the PBV HAP Contract only 
if the unit's occupants are eligible for housing assistance payments. 
Also, a PHA must remove a unit from the HAP Contract when no assistance 
has been paid for 180 days because the family's TTP has risen to a 
level that is equal to or greater than the Gross Rent. Waiver: For RAD 
PBV units, the provisions of 24 CFR 983.53(c) does not apply in order 
to provide RAD PBV assistance to residents who were living in the 
Converting Project prior to conversion. To implement the alternative 
requirement and allow units where families are receiving no rental 
assistance remain under contract, HUD is waiving 24 CFR 983.258 and 
983.211, as well as the provisions of Section 8(o)(13)(H) of the Act 
and the regulations at 24 CFR 983.201 as modified by Section 1.6.B.5 of 
Notice H-2019-09/PIH-2019-23 (HA). Alternative requirements: HUD is 
implementing alternative requirements that pre-conversion families with 
a TTP that equals or exceeds Gross Rent who would otherwise qualify for 
assistance in the unit shall be admitted and allowed to occupy the RAD 
PBV unit. HUD is also requiring that the units occupied by such 
families shall be placed on and/or remain under the RAD PBV HAP 
Contract when TTP equals or exceeds the Gross Rent. These waivers only 
apply to ``new admission families'' (i.e., families that were not 
residents of the Converting Project at the time of conversion) if a PHA 
requests and receives a waiver for the new admission families in 
accordance with the requirements of RAD Supplemental Notice 4B, H-2023-
08/PIH-2023-19 (HA).
    3. Housing Quality Standards. Provisions affected: A unit covered 
under a HAP Contract must be inspected for compliance with Housing 
Quality Standards (HQS) before assistance can be paid on behalf of a 
household, unless the PHA is using HOTMA non-life threatening and 
alternative inspection provisions. In addition, HAP Contract units must 
be inspected to ensure compliance with HQS prior to payment of any 
assistance on behalf of a family. Waiver: HUD is waiving and 
establishing an alternative requirement to 24 CFR 983.103(b) and 
section 8(o)(8)(A) of the 1937 Act. Alternative Requirements: When work 
is occurring under RAD, HUD requires that all units undergo inspection 
for HQS no later than the date of completion of the work as indicated 
in the RAD Conversion Commitment (RCC). To place the unit under HAP 
contract and commence making payments, the PHA may rely on the owner's 
certification that the owner has no reasonable basis to have knowledge 
that life-threatening conditions exist in the unit or units in question 
instead of conducting an initial inspection. During the period of the 
work, HQS requirements apply. The PHA must enforce the Project Owner's 
obligations under this paragraph and conduct inspections when needed, 
for example in response to tenant complaints or other information 
coming to its attention, and the owner must correct any deficiencies in 
accordance with HQS requirements (i.e., no more than 24 hours for a 
life-threatening deficiency, and within no more than 30 calendar days 
or any PHA approved extension for other defects, but no later than the 
date of the completion of the work as indicated in the RCC).
    4. RAD/Section 18 Blend Streamlining.
    a. PBV Percentage Limitation: Provisions affected: A PHA is 
permitted to project-base up to 20 percent of its authorized housing 
choice voucher units. Waiver: HUD is waiving the provisions of section 
8(o)(13)(B) of the 1937 Act as well as 24 CFR 983.6. Alternative 
requirements: HUD is establishing an alternative requirement that all 
PBV units in a Covered Projects that replace former public housing 
units at the time of conversion at a new location are also excluded 
from both the numerator and the denominator when

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calculating the percent of vouchers that may be project-based by a PHA.
    b. Owner Proposal Selection Procedures: Provisions affected: A PHA 
must give written public notice of the opportunity to submit site and 
owner proposals for selection to receive project base vouchers from the 
Housing Choice Voucher program. Waiver: HUD is waiving the provisions 
of 24 CFR 983.51. Alternative requirements: HUD is establishing 
alternative requirements that a RAD PBV HAP contract is never subject 
to competitive selection requirements.

IV. Program Notice Availability

    The RAD Supplemental Notice 4B (H-2023-08/PIH-2023-19 (HA)) can be 
found on RAD's website, www.hud.gov/rad.

V. Finding of No Significant Impact

    A Finding of No Significant Impact with respect to the environment 
has been completed in accordance with HUD regulations in 24 CFR part 50 
that implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding is available for public 
inspection during regular business hours in the Regulations Division, 
Office of General Counsel; Department of Housing and Urban Development; 
451 7th Street SW, Room 10276, Washington, DC 20410-0500. Due to 
security measures at the HUD Headquarters building, please schedule an 
appointment to review the Finding by calling the Regulations Division 
at 202-402-3055 (this is not a toll-free number). HUD welcomes and is 
prepared to receive calls from individuals who are deaf or hard of 
hearing, as well as individuals with speech and communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Julia R. Gordon,
Assistant Secretary for Housing--Federal Housing Commissioner.
Richard J. Monocchio,
Principal Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 2023-17737 Filed 8-18-23; 8:45 am]
BILLING CODE 4210-67-P