[Federal Register Volume 61, Number 44 (Tuesday, March 5, 1996)]
[Rules and Regulations]
[Pages 8712-8748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4814]
[[Page 8711]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 941, et al.
_______________________________________________________________________
Streamlining the Comprehensive Improvement Assistance and Comprehensive
Grant Programs; Final Rule
Federal Register / Vol. 61, No. 44 / Tuesday, March 5, 1996 / Rules
and Regulations
[[Page 8712]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Parts 941, 950, 965, and 968
[Docket No. FR-3967-F-01]
RIN 2577-AB59
Streamlining the Comprehensive Improvement Assistance Program and
Comprehensive Grant Program
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This rule amends 24 CFR parts 950 (formerly 905) and 968 to
streamline, simplify and eliminate unnecessary requirements for the
Department's two modernization programs used in the public housing and
Indian housing programs. The Comprehensive Improvement Assistance
Program (CIAP) is used by Public Housing Agencies (PHAs) and Indian
Housing Authorities (IHAs) that own or operate fewer than 250 public
housing units. The Comprehensive Grant Program (CGP) is used by PHAs
and IHAs that own or operate 250 or more public housing units.
The rule also combines into provisions of a part dealing with
general provisions applicable to PHA-owned projects (part 965) the
nearly identical provisions concerning prevailing wage rates that have
been found in the development and modernization parts for public
housing (parts 941 and 968).
EFFECTIVE DATE: April 4, 1996.
FOR FURTHER INFORMATION CONTACT:
For Public Housing: William J. Flood, Director, Office of Capital
Improvements, Public and Indian Housing, Department of Housing and
Urban Development, Room 4134, 451 Seventh Street, S.W., Washington,
D.C. 20410-5000, telephone (202) 708-1640.
For Indian Housing: Deborah M. LaLancette, Director, Housing
Management Division, Office of Native American Programs, Public and
Indian Housing, Room B-133, Department of Housing and Urban
Development, 451 Seventh Street S.W., Washington, D.C. 20410, telephone
(202) 755-0088.
Hearing- or speech-impaired persons may use the Telecommunications
Devices for the Deaf (TDD) by contacting the Federal Information Relay
Service on 1-800-877-TDDY (1-800-877-8339) or (202) 708-9300. (Other
than the ``800'' TDD number, telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
I. Paperwork Burden
The information collection requirements contained in this rule
remain essentially unchanged. They are merely moved to different
section numbers as part of this consolidation effort. (See
Secs. 950.618, 950.622, 950.630, 950.632, 950.634, 950.636, 968.135,
968.145, 968.210, 968.215, 968.225, and 968.230, previously approved by
the Office of Management and Budget (OMB) in accordance with the
Paperwork Reduction Act (44 U.S.C. 3501-3520) under OMB control number
2577-0044 (CIAP). See also Secs. 950.650, 950.656, 950.658, 968.310,
968.325, and 968.330, previously approved by OMB under control number
2577-0157 (CGP).)
II. Background
Upon assuming the leadership of the Department of Housing and Urban
Development (HUD) in 1993, Secretary Cisneros made the reinvention of
HUD one of his first priorities. HUD's reinvention efforts took place
in the context of a broader, government-wide reinvention process, the
National Performance Review, under the leadership of Vice President
Gore. At that time, HUD established five program goals to accomplish
its mission that involved working for healthy growth in cities,
providing adequate housing for all, and protection of society's most
vulnerable people.
HUD determined that one of the first steps needed in its
transformation from the old HUD to a new HUD was the consolidation and
streamlining of funding programs. HUD recently submitted to Congress
sweeping changes to transform public housing to a resident-based
program.
Another aspect of the reinvention involves HUD's rules, which have
been at the forefront of HUD's reinvention efforts since those efforts
commenced in 1993. The foundation of HUD's regulatory process is
Executive Order 12866 (Regulatory Planning and Review) issued by
President Clinton on September 30, 1993. This order directs agencies
to, among other things, explore regulatory alternatives and, if
regulations are determined to be necessary, to select approaches that
maximize benefits and involve enhanced public accessibility and
participation in the rulemaking process.
HUD has done a comprehensive review of 24 CFR part 968, Public
Housing Modernization. Part 968 contains 3 subparts, covering general
requirements and separate requirements for the Comprehensive
Improvement Assistance Program (CIAP) and Comprehensive Grant Program
(CGP). Based on its comprehensive review, HUD has determined that
certain provisions from CIAP and CGP can be consolidated in the general
provisions, subpart A. HUD also has determined that there are a number
of revisions that should be made to simplify subpart B for CIAP and
subpart C for CGP. Similar changes are also being made to 24 CFR part
950, subpart I, which covers the modernization program requirements for
Indian Housing.
In addition to the simplifications mentioned above and described in
more detail in Part III below, the Department is also responding in
this rule to public comments received on the interim CIAP rule
published March 15, 1993 (58 FR 13916). This rule also makes changes
resulting from experience gained during the Federal Fiscal Years (FFYs)
1993, 1994, and 1995 funding competitions (see Part IV below).
[The reader should note that, hereafter, for ease of discussion,
the preamble to this final rule uses the term ``housing authorities
(HAs)'' to refer to both public housing agencies (PHAs) and Indian
Housing Authorities (IHAs) and the term ``public housing'' to refer to
both Public and Indian housing, unless otherwise stated. In addition,
the term ``development'' is used to refer to ``low-income projects,''
as defined at section 3(b)(l) of the Act.]
III. Reinvention Changes for CIAP and CGP
As a part of other pending rulemakings, various Federal
requirements that are applicable to a number of the Department's
programs, including modernization, are being moved to Department-wide
common rules. One example of such provisions are those now contained in
Sec. 968.110, Other Federal requirements.
The current section covers civil rights compliance, minority and
women's business enterprise opportunity, lead-based paint poisoning
prevention, environmental clearance, flood insurance, and wage rates,
as well as audits, uniform administrative requirements, and energy
conservation. Most of the civil rights authorities, including
references to minority and women's business enterprise opportunity,
have been consolidated into the Department-wide rule (24 CFR part 5)
listing provisions applicable to all of the Department's programs. That
rulemaking revised Sec. 968.110 to refer to the Department-wide rule,
leaving a few additional authorities in Sec. 968.110(a). Another
pending rulemaking addresses
[[Page 8713]]
the applicability of lead-based paint poisoning prevention.
This rulemaking also revises Sec. 968.110 as follows:
Sec. 968.110(i), Audits, is being moved to a new Sec. 968.145, Fiscal
closeout; Sec. 968.110(j), Uniform administrative requirements, is
being moved to a new Sec. 968.135, Contracting requirements;
Sec. 968.110(l), Energy conservation, is being moved to a revised
Sec. 968.115, Modernization and energy conservation standards; and the
cross-reference in paragraph (e)(3) for preemption of prevailing wage
rates is changed to 24 CFR 965.101. (Section 965.101 is amended in this
rulemaking to broaden the coverage of its preemption of prevailing wage
rates to extend to development and modernization, as well as to
operations.)
Existing Sec. 968.120, dealing with preemption of State prevailing
wage requirements, is being moved to and combined with Sec. 965.101.
The Indian housing program is not affected by the consolidation of
general provisions by the other pending rulemaking. Consequently,
Sec. 950.120 still contains comparable provisions.
IV. Relation of Current Regulations Sections to Final Rule Sections
The following chart shows the locations of similar provisions:
------------------------------------------------------------------------
New section Current sections
------------------------------------------------------------------------
950.604............................. 950.601
950.606............................. 950.667
950.608............................. 950.615, 950.666
950.610............................. 950.603
950.612............................. [New provision]
950.614............................. 950.635
950.616............................. 950.639
950.618............................. 950.642
950.620............................. 950.645
950.622............................. 950.657
950.630............................. 950.618
950.632............................. 950.624
950.634............................. 950.648
950.636............................. 950.651
950.638............................. [New provision]
950.640............................. 950.654, 950.675
950.650............................. 950.669
950.652............................. 950.672
950.654............................. 950.675
950.656............................. 950.678
950.658............................. 950.684
950.660............................. 950.687
968.104............................. 968.312
968.112............................. 968.210, 968.310
968.125............................. 968.225
968.130............................. 968.230
968.135............................. 968.235
968.140............................. 968.240
968.145............................. 968.260
968.210............................. 968.215
968.215............................. 968.220
968.225............................. 968.245
968.230............................. 968.250
968.235............................. [New provision]
968.240............................. 968.345
968.310............................. 968.315
968.315............................. 968.320
968.320............................. 968.325
968.325............................. 968.330
968.330............................. 968.340
968.335............................. 968.345
------------------------------------------------------------------------
V. Public Comments and Description of the Simplified CIAP
A. Public Comments
The Department received public comments on the March 1993 interim
rule from four HAs and two HA interest groups (National Association of
Housing and Redevelopment Officials (NAHRO) and Public Housing
Authorities Directors Association (PHADA)). The commenters agreed that
HUD has made substantial progress in simplifying the CIAP, and pointed
out additional areas for simplification or clarification.
Relocation requirements. The March 1993 interim rule revised parts
905 (now 950) and 968 by updating the displacement, relocation and
acquisition requirements pursuant to the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970, as amended, and by
removing the relocation requirements from the ``Other program
requirements'' sections and creating separate sections for the
relocation requirements at new Secs. 905.117 (now 950.117) and 968.108.
Comment: PHADA and two HAs recommended that HUD be required to
respond to an HA's request for a determination of coverage under the
relocation requirements (Secs. 968.108(g)(3) and 950.117(g)(3)) within
30 calendar days or within a longer stated period or provide a rebuttal
period or the HA's interpretation would be accepted as final.
Response: The Department agrees that dialogue between HUD and an HA
is important and should start in the planning stage. Technical
assistance on relocation matters is readily available from Community
Planning and Development relocation staff in HUD Field Offices. HUD
will make every effort to respond promptly to HA requests for
assistance. However, HUD cannot restrict the time period for a response
as suggested. HUD's relocation rules implementing statutory
requirements guaranteeing benefits to eligible persons cannot be
amended by this rulemaking. In fact, HUD relies on regulations issued
by the Department of Transportation for government-wide requirements,
at 49 CFR part 24 (see 24 CFR part 42). A delay in HUD's response does
not relieve an HA of its responsibility to comply with the Uniform
Relocation Act, where applicable.
Definition of modernization capability. Comment: PHADA commented
that the determination of no modernization capability be afforded an
appeal to the Regional Administrator, and that HUD be required to
inform the HA as to why the determination was made and what facts the
determination is based on. Response: With regard to the Public Housing
Management Assessment Program (PHMAP), the PHA may appeal its score on
the Modernization indicator to the Field Office; if that appeal is
denied, the PHA may appeal to HUD Headquarters. The HUD reorganization
eliminated the Regional Offices. With regard to the CIAP technical
review factor of modernization capability, HUD will provide guidance in
the revised CIAP Handbook on how Field Offices should score the
technical review factors, including modernization capability, to ensure
greater uniformity among Field Offices. In addition, HUD has made
clarifying changes to the definitions of modernization capability at
Secs. 950.102 and 968.205 to ensure that no arbitrary exclusion of
participation due to lack of modernization capability will occur.
Management improvement costs. Comment: PHADA agreed with HUD on
allowing CIAP programs composed solely of management improvements. Two
HAs questioned whether training related to management improvements is
eligible. Response: Training costs related to carrying out CIAP-
approved physical and management improvements are eligible. See
Secs. 950.608(g)(2)(ii) and 968.112(g)(2)(ii).
Comment: Two HAs also asked if office space and storage space are
eligible costs. Response: Such costs are eligible. See Secs. 950.608(c)
and 968.112(c).
Comment: PHADA indicated that some Field Offices have traditionally
frowned on management improvement requests. Response: This rule
clarifies that eligible management improvements, either development
specific or HA-wide, may be approved as single work items under Other
Modernization. In addition, this rule specifically states that the
establishment of a preventive maintenance system or improvement of an
existing system is an eligible management improvement. See
Secs. 950.608(g)(2)(v) and 968.112(g)(2)(v).
Reasonable cost and total development cost (TDC). Comment: PHADA
agreed with the definition of reasonable cost (hard costs not exceeding
90% of TDC) for most cases, but suggested exceptions for compliance
with accessibility requirements and
[[Page 8714]]
remedying environmental problems, such as asbestos and lead-based
paint. It was suggested that these types of situations are not taken
into account by the cost indices upon which TDC is based and,
therefore, should be excluded from the definition. In addition, many
IHAs with large numbers of homeownership (Mutual Help) units are
performing comprehensive-type, not piecemeal, modernization.
Response: The rule has been revised to use the previous definition
of reasonable cost (90% of TDC) and to handle any special cases on a
case-by-case basis. The Department had tried a method that allowed more
flexibility, which we have now determined to be inappropriate.
In the August 30, 1995, final rule streamlining the CGP, the
Department added a second method of determining cost reasonableness to
provide HAs with greater flexibility in determining the cost of
rehabilitation versus the cost of demolition and new development. HAs
could choose one of two methods which were: (1) unfunded modernization
hard costs do not exceed 90 percent of computed total development cost
(TDC); or (2) individual work items are reasonable in accordance with
National cost indices, adjusted by local conditions and the HA's own
recent procurement experience. During the FY 1995 program year, it
became evident that use of the second method was having unintended
consequences by allowing some very high cost developments to be
determined to have reasonable cost. This result is inappropriate in the
current environment of limited funding. Since it is clear that
resources for Public and Indian Housing will remain constrained, it is
incumbent on both the Department and the HAs to assure maximum return
for the dollars invested. It is not tolerable to allow large-scale
Federal investments to be made in properties which will remain
uneconomical or provide marginally suitable housing even after such
investments are made.
Accordingly, the Department has eliminated the second method of
determining cost reasonableness, but has provided that the 90 percent
of TDC limit may be exceeded where justified, and applied this
procedure to both CIAP and CGP. If the HA and the Field Office
recommend funding for a development which exceeds 90 percent of TDC,
the Field Office must submit written justification to Headquarters for
final decision.
Social services. Comment: PHADA and three HAs suggested that
eligible costs include the direct provision of social services, because
it is essential to enhance the living conditions and self-sufficiency
opportunities for residents of small HAs. It was suggested that HUD
allow start-up costs and reasonable operating costs for three years
conditioned on the HA being able to provide HUD up-front with a
reasonable plan for continuing the program after the CIAP funds are
expended. Response: Although the 1995 Rescissions Act expanded the
eligible activities that may be funded under Section 14 of the Act with
FFY 1995 and prior year modernization funds, to include the direct
provision of social services, there is no permanent statutory authority
for eligibility of such activities. Therefore, the rule excludes the
direct provision of social services from future year funding unless
otherwise provided by law. If a later appropriation act specifically
permits eligibility for these services, that change will be handled by
language in the Notices of Funding Availability for the affected years.
Program benefit. Comment: PHADA and four HAs questioned the program
benefit rules at Secs. 950.615(j)(3) and 968.210(j)(3) (now found in
Secs. 950.608(n)(3) and 968.112(n)(3)). Response: The rule provides
that where the physical or management improvement will benefit programs
other than Public or Indian housing, such as Section 8 or local
revitalization, eligible costs are limited to the amount directly
attributable to the Public or Indian Housing Program. CIAP assistance
must be used for the purposes expressed in the statute and not for
other programs or purposes. OMB Circular A-87 also requires this
program benefit rule. There is no statutory authority to use CIAP funds
to subsidize the Section 8 program as suggested.
Ineligible costs. Comment: PHADA and four HAs mentioned arguments
HAs have had with Field Offices regarding ineligible costs. The rule at
Secs. 950.615(k) and 968.210(k) stated that an HA shall not make luxury
improvements, or carry out any other ineligible activities, as
specified by HUD. Response: HUD has consulted with HA industry groups
on the eligibility and ineligibility of various work items. In January
1994, the Department revised its policy, under the Public Housing
Development Program and the CGP, on work items previously considered
amenities to provide HAs with maximum flexibility. The Department is
now extending that revised policy to the CIAP to allow work items that
are modest in design and cost, but still promote the blending in of
Public and Indian housing with the design and architecture of the
surrounding community by including amenities, quality materials and
design and landscaping features that are customary for the locality and
culture. However, no additional operating subsidy will be provided.
Accordingly, the CIAP provisions on ineligible costs at
Secs. 950.615(b) and 968.210(b) have been revised and moved to
Secs. 950.608(o) and 968.112(o) to incorporate this policy. The CGP
provisions on ineligible costs at Secs. 950.666(c) and 968.310(c) also
have been revised and moved to Secs. 950.608 and 968.112 to incorporate
this policy, consolidating in one section for IHAs and another for PHAs
the policy applicable to both the CIAP and CGP.
Administrative and maintenance space guidelines. Comment: PHADA and
three HAs commented that HUD needs to reexamine the standards for
allowable administrative and maintenance space. Response: HUD has
consulted with HA industry groups on this issue during the CGP
rulemaking. A survey by NAHRO concluded that the variation among HAs is
so great in terms of the programs which they operate for the benefit of
the Public or Indian Housing Program, it is impossible to establish
standards for such space. The Department agrees that establishing space
standards is very difficult and, accordingly, is eliminating the
maximum space guidelines for management, maintenance and community
space. Instead, Field Offices are given, at Secs. 950.608(c) and
968.112(c), the authority to approve space in accordance with the
general principles of program need and benefit, as well as sound
business practices.
Expedited NOFA publication. Comment: PHADA and two HAs urged HUD to
publish CIAP NOFAs within 60 days of passage of an Appropriations Act
or 30 calendar days from the start of a FFY, whichever is later,
assuming there are no major statutory changes adopted in the
Appropriations Act. Response: Secretary Cisneros has made expedited
publication of NOFAs a priority. However, the amount of funds available
for the CIAP each year cannot be determined until the modernization
formula is run. The formula determines the funding split between the
CIAP and the CGP. Revisions to the CGP (e.g., earlier update of the
Formula Characteristics Report for CGP agencies) have enabled the
Department to run the modernization formula earlier in the FFY, which,
in turn, has benefitted the CIAP. The Department will continue its
efforts to make CIAP funds available as soon as possible in the FFY.
Application process. Comment: PHADA suggested that a general format
[[Page 8715]]
should be developed by HUD to assist small HAs gather the information
being requested. Response: The CIAP Application form (HUD-52822)
provides a format for HAs to record their physical and management
improvement needs. The Department believes that any other format may be
burdensome to small HAs. The Department is open to the development of
guidance material which may be helpful to small HAs and welcomes
specific suggestions.
Replacement estimate for equipment, systems or structural elements.
Comment: PHADA and two HAs questioned why the CIAP Application required
identification of a cost estimate for the equipment, systems or
structural elements which would normally be replaced over the remaining
period of the Annual Contributions Contract (ACC) or during the 30-year
period beginning on the date of submission of the application.
Response: This was a burdensome statutory requirement from which HUD
sought legislative relief. A technical amendment to section 14(d)(2) of
the Act, was signed into law on April 11, 1994 (Pub. L. 103-233, 108
Stat. 369). Accordingly, the Department has eliminated this requirement
on Form HUD-52822, CIAP Application.
Application requirements for management improvements. Comment:
PHADA requested simplification of the application requirements for
management improvements. Response: It appeared to PHADA that the
regulation at Secs. 950.610(g)(2)(i) and 968.215(c)(2) required a
general recital of the management and administrative capabilities of
the HA. In order to clarify that such items were only examples of
eligible management improvements, the items have been moved to the
eligible costs section at Secs. 950.608(g)(2)(i) and 968.112(g)(2)(i).
Development deficiencies. Comment: PHADA pointed out a possible
problem with Secs. 950.618(e)(1)(ii) and 968.215(e)(1)(ii). Each
development for which work is proposed must be at least three years old
from the end of the initial operating period (EIOP). Since warranties
are generally one year and some builders may go bankrupt, PHADA asked
for relief to be provided for the unusual circumstance in which early
assistance from CIAP is required. Such relief would be simpler than
having to come to the Assistant Secretary for Public and Indian Housing
for a regulatory waiver. Response: In order to make the CIAP consistent
with the CGP, the Department has changed the threshold for development
eligibility from EIOP to Date of Full Availability (DOFA) and under ACC
at Secs. 968.210(e)(1) and 950.630(e)(1). However, the Department
stresses that the first avenue of correction of a development
deficiency is from the architect or contractor, as appropriate. Where
there is no approved actual development cost certificate (ADCC), HUD
will continue to look to development funds first to correct the
development deficiency; if development funds are not available, the
Field Office may approve use of CIAP funds for correction, without
Headquarters approval. Once there is an approved ADCC, any subsequently
identified development deficiency may be funded by CIAP funds.
Eligibility review. Comment: PHADA was concerned about a situation
where an HA is improperly managed and may be found to be ineligible
under the regulatory criteria even if a new executive director or key
staff member has been employed and is sincerely trying to correct the
HA's problems. PHADA thought this situation may require a waiver of the
eligibility criteria at Secs. 950.618(e) or 968.215(e). Response: HUD
disagrees with that interpretation and refers the commenter to the
revised definitions of modernization and management capability found in
Secs. 968.205 and 950.102. A Troubled PHA shall be considered for
funding of non-emergency improvements where it is making reasonable
progress toward meeting the performance targets established in its
memorandum of agreement (or equivalent) or has obtained alternative
oversight of its management functions. The Field Office shall determine
whether the HA has a reasonable prospect of acquiring management or
modernization capability through CIAP-funded management improvements
and administrative support, such as hiring staff or contracting for
assistance.
Technical review factors. Comment: PHADA and two HAs questioned if
the technical review factors are relevant for CIAP, considering the
size of the HAs participating in CIAP. Specifically, items 5, 6, and 7
which deal with resident involvement, initiatives, and employment are
difficult for many small HAs. While PHADA was not opposed to these
items in theory, it was concerned about their practicality. PHADA
suggested reexamination of these technical review factors since small
HAs find it is very difficult to get residents involved and the
opportunities for resident employment with the HA are severely limited.
NAHRO stated that the degree to which resident programs are operating
is more often a function of fund availability and the type of unit,
elderly or family. Also, in some small towns, the local elected
leadership may be anti-public housing. Item 8 (local government support
for proposed modernization) may prevent improvements needed by the
residents. NAHRO urged that while vacancies are a problem which should
be addressed whenever possible through CIAP, when assigning weights to
this factor, the Department should utilize data from the Vacancy
Reduction Program to ascertain the extent to which modernization needs
are causing vacancies in this size category of HAs. NAHRO indicated
that anecdotal evidence thus far indicates that the vacancies in this
size group are often caused by market conditions or an insufficient
number of applicants, not modernization need.
Response: Section 14(d) of the Act requires CIAP Applications to be
developed in consultation with the appropriate local officials and with
residents of the housing developments for which assistance is
requested; therefore, the technical review factors must, at a minimum,
reflect these requirements. The other factors are a matter of
Secretarial discretion. The Department supports strong resident
involvement in all aspects of the Public or Indian Housing Program.
These technical review factors reflect HUD's goals for the CIAP. HUD
realizes that resident involvement varies depending on the size and
resources of the HA, and those distinctions are considered in scoring
the technical review factors. It also should be noted that the
technical review factor on extent of vacancies has been clarified to
indicate that points will be given only if the vacancies are not due to
insufficient demand.
PHMAP and rating. Comment: PHADA and one HA were concerned about
reinventing CIAP and PHMAP. It was suggested that no PHA should be
rated down in management capability unless there is a failing PHMAP
score or some unusual change occurs at the PHA. Conversely, a low PHMAP
score should be used to increase the chances of needed management
improvements being funded. Response: If a PHA needs CIAP funds for a
management improvement to address a low PHMAP score, it is not
penalized. Again, refer to the revised definition of management
capability in Sec. 968.205.
Application review. Comment: PHADA suggested that an application
should be rejected only on new grounds once. PHADA wanted to avoid
possible endless resubmissions. Response: The Department notes that the
completeness review is not complex and that operating experience has
indicated that only a relatively small number of HAs are required to
correct or resubmit
[[Page 8716]]
documents. HUD cannot overlook deficiencies in HA submissions. Although
HUD will make every effort to provide technical assistance to HAs
before the application deadline date, HAs have a responsibility to
prepare applications which meet HUD requirements.
Debriefing for unsuccessful applications. Comment: PHADA and two
HAs were concerned that too often an HA not receiving the CIAP
assistance it requested is not adequately informed as to why it was not
funded. PHADA requested that the regulation be modified to require a
debriefing for HAs whose applications are not funded so they can
improve their situation for the next funding round. Response: HUD
already requires the Field Office to inform an HA in writing as to why
its application was unsuccessful. This requirement has been included in
the final rule at Secs. 950.630(i) and (j) and 968.210(i) and (j).
Residual receipts. Comment: PHADA and NAHRO noted that an HA will
not be selected for Joint Review if it has residual receipts to carry
out the modernization activities for which it is applying. PHADA, NAHRO
and one HA indicated that residual receipts should be used as long as a
HA is allowed to retain 50 percent of the maximum allowable reserves or
$50,000, whichever is higher. This way, a reasonable amount of reserves
can be used and at the same time the HA is not placed in financial
jeopardy. Response: The Department has eliminated the requirement for
PHAs to remit residual receipts, effective for HAs with fiscal years
beginning on or after January 1, 1995. This change will make the
retention or return of residual receipts a moot issue since there will
no longer be funds identified as residual receipts and no provision on
residual receipts in the rule. Accordingly, the Department has
eliminated the provision in Sec. 968.210(i) regarding non-selection for
Joint Review where the PHA has residual receipts.
Contracting and budget revisions approvals. Comment: PHADA, NAHRO
and one HA disagreed with HUD's approval procedures for contracting and
budget revisions. They suggested that these situations could be
modified so that if HUD does not act on an HA's submission within 15
calendar days, it is automatically approved and the project can
proceed. NAHRO requested that HUD clarify the processes to be used by
Field Offices in establishing more frequent reporting or more stringent
requirements related to thresholds or prior HUD approval. NAHRO urged
that PHMAP should be used and cross referenced here. Response: Field
Offices are required to establish thresholds as high as possible to
give CIAP agencies flexibility while protecting HUD's interests in the
contracting area. These thresholds are based on an HA's in-house
technical capability and past performance. The revised CIAP Handbook
will establish time frames for Field Office review and action on
documents which must be submitted for prior HUD approval. The
Department will continue to urge Field Offices to respond in a timely
manner, including use of form letters, where appropriate, and to
monitor Field Office performance in this area.
The Department has streamlined the requirements regarding budget
revisions by requiring that a budget revision be submitted for prior
HUD approval only where an HA plans to deviate from the competitively
funded modernization program. Prior HUD approval is not required for
revisions that are consistent with, and necessary to, completion of the
original modernization program. The regulation also clarifies that
modernization funds may not be used for developments that are not
covered by the original CIAP application, even where there are leftover
funds remaining after the originally approved modernization program has
been completed. See Secs. 968.225 and 950.634.
Modernization coordinator or contract administrator. Comment: PHADA
seeks appeal rights whenever HUD requires an HA to hire a modernization
coordinator or contract administrator in order to receive the CIAP
grant. PHADA considers this to be justified in certain cases, but urges
that the regulation specifically allow the HA to appeal this to the
Regional Administrator and also be informed specifically why HUD feels
this is necessary. PHADA suggest that if these modifications are not
made, this provision could be abused by some due to petty personal
differences. NAHRO suggested that the Department establish in PHMAP the
requirements or conditions for HAs who have performed poorly in the
past. Additionally, NAHRO suggested that if the Field Office requires a
contract administrator, the HA must be notified at Joint Review. This
practice would give the HA the opportunity to protest, or if there is
agreement, the time to search for one who can take over immediately
following the execution of the ACC.
Response: It has been the Department's experience that some smaller
HAs do not have in-house capacity to administer the CIAP and require
administrative and technical assistance to implement their approved
programs. The Department must be assured that approved programs will be
carried out in an economical and effective manner. During Joint Review,
the Field Office will discuss with the HA the type and amount of
administrative and technical assistance which it may need during
implementation of its CIAP program. However, such needs may not be
finalized until the scope of work and amount of funding are determined
after Joint Review. The Field Office has the final determination on
this matter.
Force account. Comment: PHADA and two HAs recommended that
Secs. 950.635(a) and 968.225(a) be changed to allow HAs to use force
account labor to carry out modernization in all cases except where it
is specifically forbidden. Response: To provide a reward for high-
performing HAs and to achieve consistency with the CGP, the Department
has eliminated prior HUD approval for use of force account labor by
PHAs that are designated as both over-all high performers and mod-high
performers under the PHMAP and by all IHAs. See Secs. 950.612(a) and
968.120(a). PHAs that are not both over-all high performers and mod-
high performers will continue to obtain prior HUD approval to use force
account labor through their CIAP budgets or budget revision
submissions. The Field Office will approve or disapprove such use as
part of the budget/budget revision approval process.
Modernization priorities. Comment: Following the CGP model, PHADA
urged HUD to respect an HA's priorities and only modify the priorities
after the HA agrees to the modification. Response: The key difference
between CIAP and CGP is that CIAP is a competitive, not a formula,
program. Although HUD does not set priorities for HAs in either
program, HUD must assess the relative extent and urgency of need among
CIAP agencies in rating and ranking the CIAP Applications.
Comparability with CGP. Comment: NAHRO noted that the CIAP is now
similar in many respects to the CGP. It encouraged HUD to strive for
comparability between the two programs on the issue of technical
review. Response: Except for statutory differences, the Department has
made every attempt to make the CIAP comparable to the CGP.
Formula approach. Comment: PHADA and one HA requested HUD to
examine whether the competitive CIAP process could be replaced by a CGP
formula distribution. Response: As part of HUD's reinvention, the
Department has proposed to the Congress the establishment of a Capital
Fund in the first stage of transforming public and Indian housing. The
Capital Fund
[[Page 8717]]
would replace both the existing CIAP and CGP programs and provide
formula funding to all HAs, regardless of size. In FFY 1995, the 904
CGP agencies were eligible to receive 89 percent of the available funds
and the 2,496 CIAP agencies were eligible to receive 11 percent of the
available funds.
Board Resolution. Comment: NAHRO questioned the HUD requirement for
the Board of Commissioners to certify that the budget, implementation
schedule or other documents are accurate and complete. It was suggested
that the Board should be able to delegate responsibility to the
Executive Director to make certain certifications on behalf of the HA.
Accountability could be achieved by the fact that the Executive
Director is accountable to the Board. Response: HUD requires that,
after an HA is selected for funding, the HA submit the Board Resolution
Approving the CIAP Budget, Form HUD-52820, with the CIAP budget and
other required documents. The Board resolution does not require
certification as to the accuracy and completeness of the budget,
including the implementation schedule, and other documents. The Board
resolution does contain various certifications and agreements regarding
HA compliance with HUD policies, procedures, requirements, regulations
and Federal statutes. The Department is willing to accept the
certification by the Executive Director, in lieu of the Board, in these
matters, where the Executive Director has been delegated this authority
by the Board and is permitted to do so under State law.
B. Description of Simplified CIAP
This final rule continues the simplification of the CIAP, as set
forth in the interim rule, in the areas of HA application requirements,
modernization types, application processing and implementation. The
final rule provides increased efficiency, reduces unnecessary
requirements, and provides new flexibility for both the participating
HAs and HUD. The changes to CIAP are the same for both Public and
Indian housing, with the exception of the Mutual Help Program. Many of
these changes are the result of recent meaningful dialogue with small
HAs and experience gained through administering CIAP.
C. Simplification of Procedures for Obtaining Approval of a
Modernization Program
Previously, the process for receiving CIAP funds involved multiple
steps. This final rule continues the approach set forth in the interim
rule regarding the elimination, combination or simplification of many
of those previous requirements.
HUD expects that after modernization funds for a particular Federal
Fiscal Year become available, HUD would continue to publish in the
Federal Register a NOFA and the time frame for submission for
applications. HUD currently publishes an annual CIAP NOFA for this
purpose and, in the last two years, the CIAP NOFA has been
significantly improved to describe clearly submission requirements,
available amounts, eligibility, technical review factors, application
processing, Joint Review selections, and funding decisions. The
improvements to the CIAP NOFA also are intended to promote fair
competition in the program.
This final rule establishes the following steps for obtaining
approval of a modernization program: (1) application submission by the
HA; (2) completeness review by HUD; (3) eligibility review by HUD; (4)
technical review, including rating and ranking, by HUD; and (5) Joint
Review by HUD and the HA; (6) funding decisions by HUD; (7) budget
submission by HA; and (8) ACC amendment. Based on actual operating
experience in FFYs 1993, 1994, and 1995, processing time was
significantly reduced.
The first step for obtaining a CIAP grant is the application
submission by the HA. As previously noted, the requirement to provide a
cost estimate for the replacement of equipment, systems or structural
elements over a 30-year period is no longer mandated by the statute and
has been eliminated.
An HA has the option of including only the specific developments
for which it is requesting funding or of including all its developments
in the CIAP Application. The consequences of not including all its
developments in the CIAP Application are that HUD may not, as a result
of Joint Review, consider funding of any non-emergency work at excluded
developments or subsequently approve use of leftover funds at excluded
developments. The benefits derived from including all its developments
are the ability to: (1) revise specific work items among developments
at Joint Review; and (2) use leftover funds upon completion of the
modernization for modernization needs at other developments covered by
the application. An HA must evaluate and describe its modernization
needs and the estimated costs for each development covered by the
application.
HUD will ensure that documentation and other information regarding
each application submitted pursuant to the CIAP NOFA are sufficient to
indicate the basis upon which assistance was provided or denied. This
material, including any letters of support, will be made available for
public inspection for a five-year period beginning not less than 30
calendar days after the award of the assistance. Material will be made
available in accordance with the Freedom of Information Act (5 U.S.C.
552) and HUD's implementing regulation at 24 CFR part 15. In addition,
HUD will include the recipients of assistance pursuant to the CIAP NOFA
in its quarterly Federal Register notice of all recipients of HUD
assistance awarded on a competitive basis. (See 24 CFR Secs. 12.14(a)
and 12.16(b), and the notice published in the Federal Register on
January 16, 1992 (57 FR 1942), for further information on these
requirements.)
The second step for obtaining a CIAP grant is the completeness
review by HUD. The final rule clarifies that if the CIAP Application
(Form HUD-52822) or any other essential document, as specified in the
NOFA, is missing, the HA's application will be considered substantially
incomplete and, therefore, ineligible for further processing. If there
is a technical mistake, such as no signature on a submitted form, the
HA will be given an opportunity to correct the deficiency. This is not
additional time to substantially revise the application. Deficiencies
that may be corrected at this time are inadvertently omitted documents,
as specified in the NOFA, or clarifications of previously submitted
material and other changes which are not of such a nature as to improve
the competitive position of the application. In addition, the final
rule clarifies that if the HA does not correct the deficiency within
the specified time period, the HA is ineligible for further processing.
The third step for obtaining a CIAP grant is the eligibility review
by HUD. Based on operating experience in FFYs 1993, 1994, and 1995, the
Department has made the following changes from the interim rule:
(1) Eliminated work item eligibility and need which may be
difficult to determine before Joint Review;
(2) Changed the requirement that each development on which work is
proposed be at least three years old from the End of Initial Operating
Period (EIOP) to a requirement that each development must have reached
the Date of Full Availability (DOFA) and be under ACC. Also, clarified
the eligibility of a development/building/unit assisted with Major
Reconstruction of Obsolete Projects (MROP) funding, under section
[[Page 8718]]
5(j)(2) of the Act (see Section F of this Preamble). These changes make
development eligibility under the CIAP consistent with the CGP;
(3) Eliminated the restriction on processing where the HA has not
submitted the fiscal audit to HUD within one year after the end of the
audit period, or requested an extension for submission, in conformance
with the Single Audit Act requirements. The Department has decided to
use regular monitoring as a more effective method of obtaining audit
compliance rather than eliminating the HA up-front from full funding
consideration;
(4) Eliminated the restriction on processing where the HA owes
funds to the Department as a result of excess development,
modernization or operating funds previously provided and the HA has not
repaid the funds, or has not entered into a repayment agreement, or is
not meeting its obligations under a repayment agreement. The Department
has decided to use regular monitoring as a more effective method of
obtaining funds owed to the Department rather than eliminating the HA
up-front from full funding consideration;
(5) Where the HA has not completed the structural changes
identified by the Section 504 Needs Assessment, added the restriction
on processing to Emergency Modernization or physical work needed to
meet Section 504 requirements;
(6) Where the HA has not complied with the statutory requirement to
complete Lead Based Paint (LBP) testing on all pre-1978 family units,
added the restriction on processing to Emergency Modernization or work
needed to complete LBP testing; and
(7) Where the HA has not complied with Fair Housing and Equal
Opportunity (FHEO) requirements, continued the restriction on
processing to Emergency Modernization or work needed to remedy civil
rights deficiencies.
The fourth step for obtaining a CIAP grant is technical review by
HUD. The Department is retaining the provisions of the interim rule
regarding technical processing, categorizing the eligible HAs and their
developments into two processing groups (Group 1 for Emergency
Modernization and Group 2 for Other Modernization), and rating and
ranking of applications in Group 2. Preference is given to all HA
applications in Group 1 since such applications involve emergencies
which are an immediate threat to resident health or safety.
Accordingly, such applications are not rated and ranked during
technical processing and are automatically selected for Joint Review.
The Field Office rates the Group 2 HAs/developments against the
technical review factors to determine relative ranking. In accordance
with section 14(h) of the Act, the Department will continue the
preference given to HAs which request assistance for developments
having conditions which threaten the health or safety of the residents
or having a significant number of vacant, substandard units, and which
have demonstrated a capability of carrying out the proposed activities.
This preference is reflected in the technical review factors and their
maximum point scores.
The final rule recognizes the change in the Department's field
structure by eliminating reference to the Regional Office. Since each
Field Office receives its own allocation of CIAP funds, the Field
Office will proceed to Joint Review selection after rating and ranking.
The Field Office will identify for selection the highest ranking HA
applications in Group 2 in descending order, and other Group 2 HAs with
lower ranking applications but with high priority needs which most
reasonably approximate the amount of modernization which can be funded
by the Field Office. High priority needs are non-emergency needs, but
related to: health or safety; vacant, substandard units; structural or
system integrity; or compliance with statutory, regulatory or court-
ordered deadlines. Again, all Group 1 applications will be
automatically selected for Joint Review.
The fifth step for obtaining a CIAP grant is Joint Review. The
purpose of Joint Review is for the Field Office to discuss with an HA
the proposed modernization program, as set forth in the application,
and determine the size of the grant, if any, to be awarded. The Field
Office will notify those HAs whose applications have been selected for
further processing as to whether the Joint Review will be conducted on-
site or off-site (e.g., by telephone or in-office meeting). If
conducted on-site, the Joint Review may include an inspection of the
proposed physical work. An HA will prepare for Joint Review by
preparing a draft CIAP budget and reviewing the other items to be
covered during Joint Review, as prescribed by HUD. The Field Office
will review long-term viability and reasonable cost determinations
during Joint Review.
HAs not selected for Joint Review will be notified by letter
stating the reasons, such as the low priority of its physical
improvement needs relative to available funding. If, prior to
scheduling the Joint Reviews, there is determined to be a duplication
of funding, the HA will not be selected for Joint Review. Where a
duplication of funding is determined during Joint Review, the HA will
not be selected for funding.
The sixth and seventh steps for obtaining a CIAP grant are funding
decisions by HUD and budget submission by the HA. Upon completion of
Joint Review, the Field Office will adjust the HAs/developments and
work items to be funded and the amounts to be awarded, including
processing groups, as necessary, based on information obtained at Joint
Review, the results of FHEO review, and completion of the environmental
reviews. After Congressional notification, the Field Office will
announce the HAs selected for CIAP grants, subject to their submission
of an approvable CIAP budget and other required documents. The Field
Office will request the funded HA to submit a CIAP budget, which
includes an implementation schedule, a resolution by the HA Board of
Commissioners containing certifications required by HUD, and any other
required documents. The Field Office will select all bona fide
emergencies in Group 1 for funding before funding Group 2 applications.
HAs not selected for funding will be notified in writing of the reason
for non-selection.
After Field Office approval of the CIAP budget, the eighth step for
obtaining a CIAP grant is that the Field Office and the HA enter into
an ACC Amendment in order for the HA to obtain modernization funds. The
ACC Amendment will require low-income use of the housing for not less
than 20 years from the date of the ACC Amendment (subject to sale of
homeownership units in accordance with the terms of the ACC). It should
be noted that HUD has the authority to condition the ACC Amendment
(e.g., to require an HA to hire a modernization coordinator or contract
administrator to administer its modernization program).
The final rule continues the streamlined ACC Amendment process by
allowing Field Office program staff to complete and forward the ACC
Amendment to the HA with the budget approval letter, and by allowing
the HA Executive Director, where authorized by the Board and permitted
by State law, to sign and return the ACC Amendment to the Field Office
for execution. This is identical to the ACC Amendment process in the
CGP. Excluding Mutual Help developments, an HA also will, where
necessary, execute and file for record a Declaration of Trust, as
provided under the ACC, to protect the rights and interests of HUD
throughout
[[Page 8719]]
the 20-year period during which the HA is obligated to operate the
developments receiving modernization funds in accordance with the ACC,
the Act, and HUD regulations and requirements.
D. Other Simplifications and Revisions to CIAP
When the revised CGP final rule was published on August 30, 1994,
at 59 FR 44810, the Department eliminated the requirement that the cost
of non-emergency health and safety work items increase the purchase
price and amortization period for Turnkey III or Mutual Help homebuyer
families. This requirement already was eliminated for the CGP and CIAP
at Secs. 950.602 and 968.102.
CIAP agencies shall administer previously approved CIAP grants
under this final rule. It would be problematic for both HUD and CIAP
agencies to administer CIAP programs in progress under differing
requirements. HUD will continue to allow revisions to previously
approved CIAP budgets, where appropriate.
E. Major Reconstruction of Obsolete Projects (MROP)
Section 111(b) of the Housing and Community Development Act of 1992
amended section 14(c) of the Act and provided that a building which is
assisted with MROP funding (under section 5(j)(2) of the Act) is not
eligible for CIAP funding. This statutory provision was implemented in
the interim rule at Sec. 968.101(b)(5). To provide further
clarification, Sec. 968.101(b)(5) is revised in the final rule to
clarify that a development/building/unit is eligible for CIAP funding
where it was funded under MROP after FFY 1988 and has reached DOFA or
where it was funded under MROP during FFYs 1986-1988 and all MROP funds
have been expended.
F. Long-Term Viability
The final rule clarifies at Secs. 905.608(b) and 968.112(b) that
HAs may expend funds on a non-viable development for essential non-
routine maintenance needed to keep the property habitable until the
demolition or disposition application is approved and residents are
relocated.
G. Previous Participation
On June 20, 1994, the Department published at 59 FR 31521, an
interim rule, which eliminated the requirement for HAs to submit Form
HUD-2530, Previous Participation Certificate, on modernization
contracts. Accordingly, Secs. 950.642(d)(3) and 968.235(d)(3),
requiring previous participation clearance, have been eliminated and
Secs. 950.642(g) (now 950.618) and 968.235 (now 968.135) have been
modified to delete reference to previous participation.
H. Time Extensions
The Department has added new Secs. 950.638 and 968.235 to specify
requirements regarding time extensions to the obligation or expenditure
deadline date approved by HUD in the original implementation schedule.
HUD approves implementation schedules as part of the budget approval
process (refer to Part III of the CIAP budget). The Department is
allowing CIAP agencies to execute (as CGP agencies now are authorized
to do), without prior HUD approval, time extensions commensurate with
the delay no later than 30 calendar days after the obligation or
expenditure deadline date where the HA is able to certify that the
delay is due to reasons outside of the HA's control, such as the need
to use leftover funds from a completed modernization program for
additional work, unforeseen delays in contracting or contract
administration, litigation, and HUD or other institutional delay. Where
the delay is not due to reasons outside of the HA's control, the HA
must request HUD approval of a time extension no later than 30 calendar
days after the obligation or expenditure deadline date to avoid
recapture of funds.
I. Threshold for Performance and Payment Bond for CGP Agencies
The Department's procurement regulations, as set forth in 24 CFR
85.36(h), require that HA contractors furnish a bid guarantee and a
performance bond and payment bond for each construction or equipment
contract over $100,000. For the CIAP and the CGP, the Department had
reduced that threshold from $100,000 to $25,000 in order to protect the
Federal interest. The Department has reconsidered this matter and has
raised the threshold from $25,000 to $100,000 for both CIAP and CGP
agencies at Secs. 950.618(b) and 968.135(b). The Department
inadvertently omitted the requirement of the bid guarantee when it
reduced the threshold for the performance and payment bonds and has
included it with this rule. In addition, the Department is continuing
its policy of allowing for both CGP and CIAP agencies two other
alternative methods of assurance to performance and payment bonds,
which are a twenty percent cash escrow or a twenty-five percent letter
of credit.
VI. Findings and Certifications
Environmental Impact
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR part 50
which implement section 102(2)(C) of the National Environmental Policy
Act of 1969, 42 U.S.C. 4332. The Finding of No Significant Impact is
available for public inspection and copying during regular business
hours (7:30 a.m. to 5:00 p.m. weekdays) in the Office of the Rules
Docket Clerk, Room 10272, 451 Seventh Street, SW., Washington, DC
20410.
Federalism Impact
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the rule does
not have substantial, direct effects on HAs. The revised modernization
program is consistent with federalism principles since it reduces
unnecessary burdens on HAs. While the program is revised, the primary
change is only in the way that HUD processes and reviews HA
modernization activities, and not the modernization activities
themselves. This rule will not diminish the importance of State and
local governments with respect to the Federal Government. As a result,
the rule is not subject to review under the order.
Impact on the Family
This rule has been developed in accordance with Executive Order
12606, the Family. The General Counsel, as the Designated Official
under the Executive Order, has determined that this rule does not have
the potential for significant impact on family formation, maintenance,
or general well-being, since its effect is limited to revising program
procedures for HAs applying for discretionary grants. Families are not
affected since HAs will continue to carry out modernization activities
at public housing developments.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. The rule codifies revisions to
the existing CIAP under which HAs receive modernization assistance from
HUD on a competitive basis. HUD does not anticipate a significant
economic impact on small entities since HAs will continue to carry out
their modernization activities by entering
[[Page 8720]]
into contracts for the work as they now do.
Catalog of Domestic Assistance
The Catalog of Domestic Assistance numbers for the programs
affected by this rule are 14.146, 14.147, 14.850, 14.851, 14.852, and
15.141.
List of Subjects
24 CFR Part 941
Grant programs--housing and community development, Loan programs--
housing and community development, Public housing.
24 CFR Part 950
Aged, Grant programs--housing and community development, Grant
programs--Indians, Indians, Individuals with disabilities, Low and
moderate income housing, Public housing, Reporting and recordkeeping
requirements.
24 CFR Part 965
Energy conservation, Government procurement, Grant programs--
housing and community development, Lead poisoning, Loan programs--
housing and community development, Public housing, Reporting and
recordkeeping requirements, Utilities.
24 CFR Part 968
Grant programs--housing and community development, Indians, Loan
programs--housing and community development, Public housing, Reporting
and recordkeeping requirements.
For the reasons set forth in the preamble, parts 941, 950, 965, and
968 of title 24 of the Code of Federal Regulations are amended as
follows:
PART 941--PUBLIC HOUSING DEVELOPMENT
1. The authority citation for 24 CFR part 941 continues to read as
follows:
Authority: 42 U.S.C. 1437b, 1437c, 1437g, and 3535(d).
2. In Sec. 941.208, paragraph (c) is revised to read as follows:
Sec. 941.208 Other Federal requirements.
* * * * *
(c) Prevailing wage rates. See part 965 of this chapter for
applicable requirements on this subject.
* * * * *
3. In Sec. 941.503, paragraph (d) is revised to read as follows:
Sec. 941.503 Construction requirements.
* * * * *
(d) Prevailing wage rates. See Sec. 965.101 of this chapter.
PART 950--INDIAN HOUSING PROGRAMS
4. The authority citation for 24 CFR part 950 continues to read as
follows:
Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa-1437ee, and
3535(d).
5-6. Section 950.102 is amended by adding a definition of ``other
modernization (modernization other than emergency)'' in alphabetical
order, and by revising the definitions of ``emergency modernization'',
``modernization capability'', and ``modernization project'', to read as
follows:
Sec. 950.102 Definitions.
* * * * *
Emergency modernization (CIAP). A type of modernization program for
a development that is limited to physical work items of an emergency
nature, that pose an immediate threat to the health or safety of
residents or is related to fire safety, and that must be corrected
within one year of CIAP funding approval.
* * * * *
Modernization capability. An IHA has modernization capability if it
is:
(1) Not designated as high risk under Sec. 950.135; or
(2) Designated as high risk, but has a reasonable prospect of
acquiring modernization capability through CIAP-funded management
improvements and administrative support, such as hiring staff or
contracting for assistance. An IHA that has been classified high risk
with regard to modernization is eligible for emergency modernization
only, unless it is making reasonable progress toward meeting the
performance targets established in its management improvement plan
under Sec. 950.135(f)(2) or has obtained alternative oversight of its
modernization functions. Where an IHA does not have a funded
modernization program in progress, the Area ONAP shall determine
whether the IHA has a reasonable prospect of acquiring modernization
capability through hiring staff or contracting for assistance.
* * * * *
Modernization project. The improvement of one or more existing
Indian housing developments under an unique number designated for that
modernization program (CIAP). For each modernization project, HUD and
the IHA shall enter into an ACC amendment, requiring low-income use of
the housing for not less than 20 years from the date of the ACC
amendment (subject to sale of homeownership units in accordance with
the terms of the ACC).
* * * * *
Other Modernization (modernization other than emergency). A type of
modernization program for a development that includes one or more
physical work items, where HUD determines that the physical
improvements are necessary and sufficient to extend substantially the
useful life of the development, and/or one or more development specific
or IHA-wide management work items (including planning costs), and/or
LBP testing, professional risk assessments, interim containment, and
abatement.
* * * * *
7. Subpart I of Part 950, is revised to read as follows:
Subpart I--Modernization Program
General Provisions
Sec.
950.600 Purpose and applicability.
950.602 Special requirements for Turnkey III and Mutual Help
developments.
950.604 Allocation of funds under section 14.
950.606 Reserve for emergencies and disasters.
950.608 Eligible costs.
950.610 Modernization and energy conservation standards.
950.612 Force account.
950.614 Initiation of modernization activities.
950.616 Fund requisition.
950.618 Contracting requirements.
950.620 On-site inspections.
950.622 Fiscal closeout.
Comprehensive Improvement Assistance Program (For IHAs That Own or
Operate Fewer Than 250 Indian Housing Units)
950.630 Procedures for obtaining approval of a modernization
program.
950.632 Resident and homebuyer participation.
950.634 Budget revisions.
950.636 Progress reports.
950.638 Time extensions.
950.640 HUD review of IHA performance.
Comprehensive Grant Program (For IHAs That Own or Operate 250 or More
Indian Housing Units)
950.650 Determination of formula amount.
950.652 Comprehensive plan (including Five-Year Action Plan).
950.654 HUD review and approval of comprehensive plan (including
Five-Year Action Plan).
950.656 Annual submission of activities and expenditures.
950.658 IHA Performance and Evaluation Report.
950.660 HUD review of IHA performance.
[[Page 8721]]
Subpart I--Modernization Program
General Provisions
Sec. 950.600 Purpose and applicability.
(a) Purpose. The purpose of this subpart is to set forth the
policies and procedures for the Modernization program, authorizing HUD
to provide financial assistance to Indian Housing Authorities (IHAs).
(b) Applicability. (1) The sections under the undesignated heading
``General Provisions'' apply to all modernization under this subpart.
The sections under the undesignated heading ``Comprehensive Improvement
Assistance Program'' (CIAP) set forth the requirements and procedures
for the CIAP for IHAs that own or operate fewer than 250 Indian housing
units. An IHA that qualifies for participation in the Comprehensive
Grant Program (CGP) is not eligible to participate in the CIAP. The
sections under the undesignated heading ``Comprehensive Grant program
(CGP)'' set forth the requirements and procedures for the CGP for IHAs
that own or operate 250 or more Indian housing units. An IHA that has
already qualified to participate in the CGP remains eligible to
participate in the CGP so long as it owns or operates at least 200
units.
(2) This subpart applies to IHA-owned low-income Indian housing
developments (including developments managed by a Resident Management
Corporation pursuant to a contract with the IHA). This subpart also
applies to the implementation of modernization programs which were
approved before FFY 1996. Rental developments that are planned for
conversion to homeownership under sections 5(h), 21, or 301 of the Act
(42 U.S.C. 1437c, 1437s, 1437aaa), but that have not yet been sold by
an IHA, continue to qualify for assistance under this subpart. This
subpart does not apply to developments under the Section 23 Leased
Housing Non-Bond Financed program, the Section 10(c) Leased program, or
the Section 23 or Section 8 Housing Assistance Payments programs.
(c) Transition. Any amount that HUD has obligated to an IHA shall
be used for the purposes for which the funding was provided, or:
(1) For a CGP IHA, for purposes consistent with an approved annual
statement or five-year action plan submitted by the IHA, as the IHA
determines to be appropriate; or
(2) For a CIAP IHA, in accordance with a revised CIAP budget under
Sec. 950.634.
(d) Other applicable requirements. See subpart A of this part for
applicable requirements, other than the Act, that apply to
modernization under this subpart I.
(e) Approved information collections. The following sections of
this subpart have been approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 and assigned OMB
approval number 2577-0044: Secs. 950.618, 950.622, 950.630, 950.632,
950.634, and 950.636. The following sections of this subpart have been
similarly approved and assigned approval number 2577.0157:
Secs. 950.650, 950.656, and 950.658.
Sec. 950.602 Special requirements for Turnkey III and Mutual Help
developments.
(a) Modernization costs. Modernization work on a Mutual Help or
Turnkey III unit shall not increase the purchase price or amortization
period of the home.
(b) Eligibility of paid-off and conveyed units for assistance. (1)
Paid-off units. A Mutual Help or Turnkey III unit that is paid off but
has not been conveyed at the time work is included for it in the CIAP
application or CGP Annual Statement is eligible for any physical
improvements provided under Sec. 950.608. However, in accordance with
the provisions of Sec. 950.440(e)(8), an IHA may perform nonemergency
work on a paid-off Mutual Help unit only after all delinquencies are
repaid.
(2) Conveyed units. Where modernization work has been approved
prior to conveyance, the IHA may complete the work even if title to the
unit is subsequently conveyed before the work is completed. However,
once conveyed, the unit is not eligible for additional or future
assistance. An IHA shall not use funds provided under this subpart for
the purpose of modernizing units if the modernization work was not
approved before conveyance of title.
(c) Other. The homebuyer family shall be in compliance with its
financial obligations under its homebuyer agreement in order to be
eligible for nonemergency physical improvements, with the exception of
work necessary to meet statutory and regulatory requirements (e.g.,
accessibility for disabled persons, lead-based paint testing, interim
containment, professional risk assessment, and abatement) and the
correction of development deficiencies. Notwithstanding the above
requirement, an IHA may, with prior HUD approval, complete nonemergency
physical improvements on any homeownership unit if the IHA demonstrates
that, due to economies of scale or geographic constraints, substantial
cost savings may be realized by completing all necessary work in a
development at one time.
Sec. 950.604 Allocation of funds under section 14.
(a) General. This section describes the process for allocating
modernization funds to the aggregate of IHAs and PHAs participating in
the CIAP (i.e., agencies that own or operate fewer than 250 units), and
to individual IHAs and PHAs participating in the CGP (i.e., agencies
that own or operate 250 or more units). The program requirements
governing PHA participation in the CIAP and CGP are contained in 24 CFR
part 968.
(b) Set-aside for emergencies and disasters. For each FFY, HUD
shall reserve from amounts approved in the appropriation act for grants
under this part and part 968 of this title, an amount not to exceed $75
million (which shall include unused reserve amounts carried over from
previous FFYs), which shall be made available to IHAs and PHAs for
modernization needs resulting from natural and other disasters, and
from emergencies. HUD shall replenish this reserve at the beginning of
each FFY. Any unused funds from previous years may remain in the
reserve until allocated. The requirements governing the reserve for
disasters and emergencies and the procedures by which an IHA may
request such funds are set forth in Sec. 950.606.
(c) Set-aside for credits for mod troubled PHAs under 24 CFR part
968, subpart C. (1) General. After deducting amounts for the reserve
for natural and other disasters and for emergencies under paragraph (b)
of this section, HUD shall set aside no more than five percent of the
remaining amount for the purpose of providing credits to PHAs under 24
CFR part 968, subpart C that were formerly designated as mod troubled
agencies under the Public Housing Management Assessment Program (PHMAP)
at 24 CFR part 901. The purpose of this set-aside is to compensate such
PHAs for amounts previously withheld by HUD because of their prior
designation as a mod troubled agency.
(2) Nonapplicability to IHAs. Since the PHMAP performance
indicators under 24 CFR part 901 do not apply to IHAs, these agencies
cannot be deemed mod troubled for purposes of the CGP. Hence, IHAs are
not subject to any reduction in funding under section 14(k)(5)(a) of
the Act, nor do they participate in the set-aside of credits
established under paragraph (c)(1) of this section.
(d) Formula allocation based on relative needs. After determining
the
[[Page 8722]]
amounts to be reserved under paragraphs (b) and (c) of this section,
HUD shall allocate the amount remaining pursuant to the formula set
forth in paragraphs (e) and (f) of this section, which are designed to
measure the relative backlog and accrual needs of IHAs and PHAs.
(e) Allocation for backlog needs. HUD shall allocate half of the
formula amount under paragraph (d) of this section based on the
relative backlog needs of IHAs and PHAs, as follows:
(1) Determination of backlog need. (i) Statistically reliable data.
Where HUD determines that the data concerning the categories of backlog
need identified under paragraph (e)(4) of this section are
statistically reliable for individual IHAs and PHAs with 250 or more
units, or the aggregate of IHAs and PHAs with fewer than 250 units not
participating in the formula funding portion of the modernization
program, it will base its allocation on direct estimates of the
statutory categories of backlog need, based on the most recently
available, statistically reliable data.
(ii) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of backlog need identified under paragraph (e)(4) of this section are
not available for individual IHAs and PHAs with 250 or more units, it
will base its allocation of funds under this section on estimates of
the categories of backlog need using:
(A) The most recently available data on the categories of backlog
need under paragraph (e)(4) of this section;
(B) Objectively measurable data concerning the following IHA or
PHA, community, and development characteristics:
(1) The average number of bedrooms in the units in a development
(Weighted at 2858.7);
(2) The proportion of units in a development available for
occupancy by very large families (Weighted at 7295.7);
(3) The extent to which units for families are in high-rise
elevator developments (Weighted at 5555.8);
(4) The age of the developments, as determined by the DOFA date
(date of full availability). In the case of acquired developments, HUD
will use the DOFA date unless the IHA provides HUD with the actual date
of construction, in which case HUD will use the age of the development
(or for scattered sites, the average age of all the buildings), subject
to a 50 year cap. (Weighted at 206.5);
(5) In the case of a large agency, the number of units with 2 or
more bedrooms (Weighted at .433);
(6) The cost of rehabilitating property in the area (Weighted at
27544.3);
(7) For family developments, the extent of population decline in
the unit of general local government determined on the basis of the
1970 and 1980 censuses (Weighted at 759.5); and
(C) An equation constant of 1412.9.
(2) Calibration of backlog need for developments constructed prior
to 1985. The estimated backlog need, as determined under either
paragraphs (e)(1)(i) or (e)(1)(ii) of this section, shall be adjusted
upward for developments constructed prior to 1985 by a constant ratio
of 1.5 to more accurately reflect the costs of modernizing the
categories of backlog need under paragraph (e)(4) of this section, for
the Indian housing stock as of 1991.
(3) Deduction for prior modernization. HUD shall deduct from the
estimated backlog need, as determined under either paragraphs (e)(1)(i)
or (e)(1)(ii) of this section, amounts previously provided to an IHA or
PHA for modernization, using one of the following methods:
(i) Standard deduction for prior CIAP and MROP. HUD shall deduct 60
percent of the CIAP funds made available on an IHA-wide or PHA-wide
basis from FFY 1984 to 1991, and 40 percent of the funds made available
on a development-specific basis for the Major Reconstruction of
Obsolete Projects (MROP) (not to exceed the estimated formula need for
the development), subject to a maximum 50 percent deduction of an IHA's
or PHA's total need for backlog funding;
(ii) Newly constructed units. Units with a DOFA date of October 1,
1991 or thereafter will be considered to have a zero backlog; or
(iii) Acquired developments. Developments acquired by an IHA with
major rehabilitation, with a DOFA date of October 1, 1991 or
thereafter, will be considered to have a zero backlog.
(4) Categories of backlog need. The most recently available data to
be used under either paragraphs (e)(1)(i) or (e)(1)(ii) of this section
shall pertain to the following categories of backlog need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments;
(ii) Items that shall be added to developments to meet HUD's
modernization standards under Sec. 950.610, and State, local and tribal
codes; and
(iii) Items that are necessary or highly desirable for the long-
term viability of a development, in accordance with HUD's modernization
standards.
(f) Allocation for accrual needs. HUD shall allocate the other half
remaining under the formula allocation under paragraph (d) of this
section based upon the relative accrual needs of IHAs and PHAs,
determined as follows:
(1) Statistically reliable data. If HUD determines that
statistically reliable data are available concerning the categories of
need identified under paragraph (f)(3) of this section for individual
IHAs and PHAs with 250 or more units and for the aggregate of IHAs and
PHAs with fewer than 250 units, it shall base its allocation of
assistance under this section on the needs that are estimated to have
accrued since the date of the last objective measurement of backlog
needs under paragraph (e)(1)(i) of this section; or
(2) Statistically reliable data are unavailable. If HUD determines
that statistically reliable data concerning the categories of need
identified under paragraph (f)(3) of this section are not available for
individual IHAs and PHAs with 250 or more units, it shall base its
allocation of assistance under this section on estimates of accrued
need using:
(i) The most recently available data on the categories of backlog
need under paragraph (f)(3) of this section;
(ii) Objectively measurable data concerning the following IHA or
PHA, community, and development characteristics:
(A) The average number of bedrooms in the units in a development
(Weighted at 100.1);
(B) The proportion of units in a development available for
occupancy by very large families (Weighted at 356.7);
(C) The age of the developments (Weighted at 10.4);
(D) The extent to which the buildings in developments of an agency
average fewer than 5 units (Weighted at 87.1.);
(E) The cost of rehabilitating property in the area (Weighted at
679.1);
(F) The total number of units of each IHA or PHA that owns or
operates 250 or more units (Weighted at .0144); and
(iii) An equation constant of 602.1.
(3) Categories of need. The data to be provided under either
paragraph (f)(1) or (f)(2) of this section shall pertain to the
following categories of need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments; and
(ii) Items that shall be added to developments to meet HUD's
modernization standards under Sec. 950.610, and State, local, and
tribal codes.
(g) Allocation for CIAP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs and PHAs with fewer
than 250 units shall be allocated to IHAs in accordance with
[[Page 8723]]
the requirements under the undesignated heading of this subpart
``Comprehensive Improvement Assistance Program'' (CIAP) and to PHAs in
accordance with the requirements of 24 CFR part 968, subpart B.
(h) Allocation for CGP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs with 250 or more units
shall be allocated in accordance with the requirements under the
undesignated heading of this subpart ``Comprehensive Grant Program,''
and for PHAs in accordance with the requirements of 24 CFR part 968,
subpart C. An IHA that is eligible to receive a grant under the CGP may
appeal the amount of its formula allocation under this section in
accordance with the requirements set forth in Sec. 950.650. An IHA that
is eligible to receive modernization funds under the CGP because it
owns or operates 250 or more units, is disqualified from receiving
assistance under the CIAP under this part.
(i) Use of formula allocation. Any amounts allocated to an IHA
under paragraphs (e) and (f) of this section may be used for any
eligible activity under this subpart, notwithstanding that the
allocation amount is determined by allocating half based on the
relative backlog needs and half based on the relative accrual needs of
IHAs and PHAs.
(j) Calculation of number of units. For purposes of determining
under this section the number of units owned or operated by an IHA or
PHA, and the relative modernization needs of IHAs and PHAs, HUD shall
count as one unit each existing rental, Mutual Help, and section 23
Bond-Financed unit under the ACC, except that it shall count as one-
fourth of a unit each existing unit under the Turnkey III program. New
development units that are added to an IHA's or PHA's inventory will be
added to the overall unit count so long as they are under ACC amendment
and have reached DOFA by the first day in the FFY in which the formula
is being run. Any increase in units (reaching DOFA and under ACC
amendment) as of the beginning of the FFY shall result in an adjustment
upwards in the number of units under the formula. New units reaching
DOFA after this date will be counted for formula purposes as of the
following FFY.
(k) Demolition, disposition, and conversion of units. (1) General.
Where an existing unit under an ACC is demolished, disposed of, or
converted into a larger or smaller unit, HUD shall not adjust the
amount the IHA or PHA receives under the formula, unless more than one
percent of the units are affected on a cumulative basis. Where more
than one percent of the existing units are demolished, disposed of, or
converted, HUD shall reduce the formula amount for the IHA or PHA over
a 3-year period to reflect removal of the units from the ACC.
(2) Determination of one percent cap. In determining whether more
than one percent of the units are affected on a cumulative basis, HUD
will compare the units eligible for funding in the initial year under
formula funding with the number of units eligible for funding for the
current year under formula funding, and shall base its calculations on
the following:
(i) Increases in the number of units resulting from the conversion
of existing units will be added to the overall unit count so long as
they are under ACC amendment by the first day in the FFY in which the
formula is being run;
(ii) Units that are lost as a result of demolition, disposition, or
conversion shall not be offset against units subsequently added to an
IHA's or PHA's inventory;
(iii) For purposes of calculating the number of converted units,
HUD shall regard the converted size of the unit as the appropriate unit
count (e.g., a unit that originally was counted as one unit under
paragraph (j) of this section, but which later was converted into two
units, shall be counted as two units under the ACC).
(3) Phased-in reduction of units. (i) Reduction less than one
percent. If HUD determines that the reduction in units under paragraph
(k)(2) of this section is less than one percent, the IHA or PHA will be
funded as though no change had occurred.
(ii) Reduction greater than one percent. If HUD determines that the
reduction in units under paragraph (k)(2) of this section is greater
than one percent, the number of units on which formula funding is based
will be the number of units reported as eligible for funding for the
current program, plus two-thirds of the difference between the initial
year and the current year in the first year, plus one-third of the
difference in the second year, and at the level of the current year in
the third year.
(iii) Exception. A unit that is conveyed under the Mutual Help or
Turnkey III programs will result in an automatic (rather than a phased-
in) reduction in the unit count. Paid-off Mutual Help or Turnkey III
units continue to be counted until they are conveyed.
(4) Subsequent reductions in unit count. (i) Once an IHA's or PHA's
unit count has been fully reduced under paragraph (k)(3)(ii) of this
section to reflect the new number of units under the ACC, this new
number of units will serve as the base for purposes of calculating
whether there has been a one percent reduction in units on a cumulative
basis.
(ii) A reduction in formula funding, based upon additional
reductions to the number of an IHA's or PHA's units, will also be
phased in over a 3-year period, as described in paragraph (k)(2) of
this section.
Sec. 950.606 Reserve for emergencies and disasters.
(a) Emergencies. (1) Eligibility for assistance. An IHA (including
an IHA that is determined to be high risk under Sec. 950.135) may
obtain funds at any time, for any eligible emergency work item as
defined in Sec. 950.102 (for IHAs participating in CGP) or for any
eligible emergency work item (described as emergency modernization in
Sec. 950.102) (for IHAs participating in CIAP), from the reserve
established under Sec. 950.604(b). However, emergency reserve funds may
not be provided to an IHA participating in CGP that has the necessary
funds available from any other source, including its annual formula
allocation under Sec. 950.604(e) and (f), other unobligated
modernization funds, and its replacement reserves under Sec. 950.608.
An IHA is not required to have an approved Comprehensive Plan under
Sec. 950.652 before it can request emergency assistance from this
reserve. Emergency reserve funds may not be provided to an IHA
participating in CIAP unless it does not have the necessary funds
available from any other source, including unobligated CIAP, and no
CIAP modernization funding is available from HUD for the remainder of
the fiscal year.
(2) Procedure. To obtain emergency funds, an IHA shall submit a
request, in a form to be prescribed by HUD, that demonstrates that
without the requested funds from the set-aside under this section, the
IHA does not have adequate funds available to correct the conditions
that present an immediate threat to the health or safety of the
residents. HUD will immediately process a request for such assistance,
and if it determines that the IHA's request meets the requirements of
paragraph (a)(1) of this section, it shall approve the request, subject
to the availability of funds in the reserve.
(3) Repayment. A CGP IHA that receives assistance for its emergency
needs from the reserve under Sec. 950.604(b) shall repay such
assistance from its future allocations of assistance,
[[Page 8724]]
as available. For IHAs participating in the CGP, HUD shall deduct up to
50 percent of an IHA's succeeding year's formula allocation under
Sec. 950.604(e) and (f) to repay emergency funds previously provided by
HUD to the IHA. The remaining balance, if any, shall be deducted from
an IHA's succeeding years' formula allocations.
(b) Natural and other disasters. (1) Eligibility for assistance. An
IHA (including an IHA that has been determined by HUD not to be
administratively capable under Sec. 950.135) may request assistance at
any time from the reserve under Sec. 950.604(b) for the purpose of
permitting the IHA to respond to a natural or other disaster. To
qualify for assistance, the disaster shall pertain to an extraordinary
event affecting only one or a few IHAs, such as an earthquake or
hurricane. Any disaster declared by the President (or that HUD
determines would qualify for a Presidential declaration if it were on a
larger scale) qualifies for assistance under this paragraph. An IHA may
receive funds from the reserve regardless of the availability of other
modernization funds or reserves, but only to the extent its needs are
in excess of its insurance coverage. An IHA is not required to have an
approved Comprehensive Plan under Sec. 950.652 before it can request
assistance from the reserve under Sec. 950.604(b).
(2) Procedure. To obtain funding for natural or other disasters
under Sec. 950.604(b), an IHA shall submit a request, in a form
prescribed by HUD, that demonstrates that it meets the requirements of
paragraph (b)(1) of this section. HUD will immediately process a
request for such assistance, and if it determines that the request
meets the requirements under paragraph (b)(1) of this section, it will
approve the request, subject to the availability of funds in the
reserve.
(3) Repayment. Funds provided to an IHA under paragraph (b)(1) of
this section for natural and other disasters are not required to be
repaid.
Sec. 950.608 Eligible costs.
(a) General. An IHA may use financial assistance received under
this part for the following eligible costs:
(1) For a CGP IHA, the eligible costs are:
(i) Undertaking activities described in its approved Annual
Statement under Sec. 950.656(e) and approved Five-Year Action Plan
under Sec. 950.652(e)(5);
(ii) Carrying out emergency work, whether or not the need is
indicated in the IHA's approved Comprehensive Plan, including Five-Year
Action Plan, or Annual Statement;
(iii) Funding a replacement reserve to carry out eligible
activities in future years, subject to the restrictions set forth in
paragraph (f) of this section;
(iv) Preparing the Comprehensive Plan and Five-Year Action Plan
under Sec. 950.652 and the Annual Submission under Sec. 950.656,
including reasonable costs necessary to assist residents to participate
in a meaningful way in the planning, implementation and monitoring
process; and
(v) Carrying out an audit, in accordance with 24 CFR part 44.
(2) For a CIAP IHA, the eligible costs are activities approved by
HUD and included in an approved CIAP budget.
(b) Demonstration of viability. Except in the case of emergency
work, an IHA shall only expend funds on a development for which the IHA
has determined, and HUD agrees, that the completion of the improvements
and replacements (for CGP IHAs, as identified in the comprehensive
plan) will reasonably ensure the long-term physical and social
viability of the development at a reasonable cost (as defined in
Sec. 950.102), or for essential non-routine maintenance needed to keep
the property habitable until the demolition or disposition application
is approved and residents are relocated.
(c) Physical improvements. Eligible costs include alterations,
betterments, additions, replacements, and non-routine maintenance that
are necessary to meet the modernization and energy conservation
standards prescribed in Sec. 950.610. These mandatory standards may be
exceeded when the IHA (and HUD in the case of CIAP IHAs) determine that
it is necessary or highly desirable for the long-term physical and
social viability of the individual development. Development specific
work includes work items that are modest in design and cost, but still
blend in with the design and architecture of the surrounding community
by including amenities, quality materials and design and landscaping
features that are customary for the locality and culture. The Field
Office has the authority to approve nondwelling space where such space
is needed to administer, and is of direct benefit to, the Public and
Indian Housing Program. If demolition or disposition is proposed, an
IHA shall comply with subpart M of this part. Additional dwelling space
may be added to existing units.
(d) Turnkey III developments. (1) General. Eligible physical
improvement costs for existing Turnkey III developments are limited to
work items that are not the responsibility of the homebuyer families
and that are related to health and safety, correction of development
deficiencies, physical accessibility, energy audits and cost-effective
energy conservation measures, or LBP testing, interim containment,
professional risk assessment and abatement. In addition, management
improvements are eligible costs.
(2) Ineligible costs. Routine maintenance or replacements, and
items that are the responsibility of the homebuyer families are
ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units. (i) Notwithstanding the requirements of paragraph (d)(1) of this
section, an IHA may substantially rehabilitate a Turnkey III unit
whenever the unit becomes vacant or is occupied by a non-homebuyer
family in order to return the unit to the inventory or make the unit
suitable for homeownership purposes. An IHA that intends to use funds
under this paragraph must identify in its CIAP Application or CGP
Annual Submission the estimated number of units proposed for
substantial rehabilitation and subsequent sale. In addition, an IHA
must demonstrate that it has homebuyers who both are eligible for
homeownership, in accordance with the requirements of this part, and
have demonstrated their intent to be placed into each of the Turnkey
III units proposed to be substantially rehabilitated.
(ii) Before an IHA may be approved for substantial rehabilitation
of a unit under this paragraph (d), it must first deplete any Earned
Home Payments Account (EHPA) or Non-Routine Maintenance Reserve (NRMR)
pertaining to the unit, and request the maximum amount of operating
subsidy. Any increase in the value of a unit caused by its substantial
rehabilitation under this paragraph shall be reflected solely by its
subsequent appraised value, and not by an automatic increase in its
selling price.
(e) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or non-dwelling facilities, where
the demolition is approved by HUD under subpart M of this part, and
related costs, such as clearing and grading the site after demolition
and subsequent site improvement to benefit the remaining portion of the
existing development; and
(2) Conversion of existing dwelling units to different bedroom
sizes or to non-dwelling use.
(f) Replacement reserve costs (for CGP only). (1) Funding a
replacement reserve to carry out eligible activities in future years is
an eligible cost, subject to the following restrictions:
[[Page 8725]]
(i) Annual CGP funds are not needed for existing needs, as
identified by the IHA in its needs assessments; or
(ii) A physical improvement requires more funds than the IHA would
receive under its annual formula allocation; or
(iii) A management improvement requires more funds than the IHA may
use under its 20% limit for management improvements (except as provided
in paragraph (n)(2)(i) of this section), and the IHA needs to save a
portion of its annual grant, in order to combine it with a portion of
subsequent year(s) grants to fund the work item.
(2) The IHA shall invest replacement reserve funds so as to
generate a return equal to or greater than the average 91-day Treasury
bill rate.
(3) Interest earned on funds in the replacement reserve will not be
added to the IHA's income in the determination of an IHA's operating
subsidy eligibility, but must be used for eligible modernization costs.
(4) To the extent that its annual formula allocation and any
unobligated balances of modernization funds are not adequate to meet
emergency needs, an IHA must first use its replacement reserve, where
funded, to meet emergency needs, before requesting funds from the
reserve under Sec. 950.606.
(5) An IHA is not required to use its replacement reserve for
natural and other disasters.
(g) Management improvement costs. (1) General. Management
improvements that are development-specific or IHA-wide in nature are
eligible costs where needed to upgrade the operation of the IHA's
developments, sustain physical improvements at those developments or
correct management deficiencies. An IHA's ongoing operating expenses
are ineligible management improvement costs. For CIAP IHAs, management
improvements may be funded as a single work item.
(2) Eligible costs. Eligible costs include:
(i) General management improvement costs. Eligible costs include
general management improvement costs, such as: management, financial,
and accounting control systems of the IHA; adequacy and qualifications
of IHA personnel, including training; resident programs and services
through the coordination of the provision of social services from
tribal or local government or other public and private entities;
resident and development security; resident selection and eviction;
occupancy; rent collection; maintenance; and equal opportunity.
(ii) Economic development costs. Eligible costs include job
training for residents and resident business development activities,
for the purpose of carrying out activities related to the
modernization-funded management and physical improvements. HUD
encourages IHAs, to the greatest extent feasible, to hire residents as
trainees, apprentices, or employees to carry out the modernization
program under this part, and to contract with resident-owned businesses
for modernization work.
(iii) Resident management costs. Eligible costs include technical
assistance to a resident council or resident management corporation
(RMC), as defined in Sec. 950.962, in order to: determine the
feasibility of resident management to carry out management functions
for a specific development or developments; train residents in skills
directly related to the operations and management of the development(s)
for potential employment by the RMC; train RMC board members in
community organization, board development, and leadership; and assist
in the formation of an RMC.
(iv) Resident homeownership costs. Eligible costs are limited to
the study of the feasibility of converting rental to homeownership
units and the preparation of an application for conversion to
homeownership or sale of units.
(v) Preventive maintenance system. Eligible costs include the
establishment of a preventive maintenance system or improvement of an
existing system. A preventive maintenance system must provide for
regular inspections of building structures, systems and units and
determine the applicability of work eligible for operating funds
(routine maintenance) and work eligible for modernization funding (non-
routine maintenance).
(h) Drug elimination costs. Eligible costs include drug elimination
activities involving management or physical improvements, as specified
by HUD.
(i) LBP costs. Eligible costs include professional risk assessments
and interim containment of family developments/buildings constructed
before 1980, testing and abatement of family developments/buildings
constructed before 1978, and costs for insurance coverage for pollution
hazards associated with the testing, abatement, clean-up and disposal
of LBP on applicable surfaces of family developments/buildings
constructed before 1978.
(j) Administrative costs. Administrative costs necessary for the
planning, design, implementation and monitoring of the physical and
management improvements are eligible costs and include the following:
(1) Salaries. The salaries of non-technical and technical IHA
personnel assigned full-time or part-time to modernization are eligible
costs only where the scope and volume of the work are beyond that which
could be reasonably expected to be accomplished by such personnel in
the performance of their non-modernization duties. An IHA shall
properly apportion to the appropriate program budget any direct charges
for the salaries of assigned full- or part-time staff (e.g., to the
CIAP, CGP or operating budget);
(2) Employee benefit contributions. IHA contributions to employee
benefit plans on behalf of non-technical and technical IHA personnel
are eligible costs in direct proportion to the amount of salary charged
to the CIAP or CGP, as appropriate;
(3) Preparation of CIAP or CGP required documents.
(4) Resident participation. Eligible costs include those associated
with ensuring the meaningful participation of residents in the
development of the CIAP application or the CGP Annual Submission and
Comprehensive Plan and the implementation and monitoring of the
approved modernization program; and
(5) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(k) Audit costs (for CGP only). Eligible costs are limited to the
portion of the audit costs that are attributable to the modernization
program.
(l) Architectural/engineering and consultant fees. Eligible costs
include fees for planning, identification of needs, detailed design
work, preparation of construction and bid documents and other required
documents, LBP professional risk assessments and testing, and
inspection of work in progress.
(m) Relocation costs. Eligible costs include relocation and other
assistance for permanent and temporary relocation, as a direct result
of rehabilitation, demolition or acquisition for a modernization-funded
activity, where this assistance is required by 49 CFR part 24 or 24 CFR
950.117.
(n) Cost limitations. (1) CIAP costs. (i) Management improvement
costs. Management improvement costs shall not exceed a percentage of
the CIAP funds available to a Field Office in a particular FFY, as
specified by HUD.
(ii) Planning costs. Planning costs are costs that are incurred
before HUD approval of the CIAP application and that are related to
developing the CIAP application or carrying out eligible modernization
planning, such as detailed design work, preparation of
[[Page 8726]]
solicitations, and LBP professional risk assessment and testing.
Planning costs may be funded as a single work item. If an IHA incurs
planning costs without prior HUD approval, an IHA does so with the full
understanding that the costs may not be reimbursed upon approval of the
CIAP application. Planning costs shall not exceed 5 percent of the CIAP
funds available to a Field Office in a particular FFY.
(2) CGP costs. (i) Management improvement costs. Notwithstanding
the full fungibility of work items, an IHA shall not use more than a
total of 20 percent of its annual grant for management improvement
costs in account 1408, unless specifically approved by HUD.
(ii) Administrative costs. Notwithstanding the full fungibility of
work items, an IHA shall not use more than a total of 10 percent of its
annual grant on administrative costs in account 1410, excluding any
costs related to lead-based paint or asbestos testing (whether
conducted by force account employees or by a contractor), in-house
architectural/engineering (A/E) work, or other special administrative
costs required by tribal or State law, unless specifically approved by
HUD.
(3) Program benefit. Where the physical or management improvement,
including administrative cost, will benefit programs other than Indian
housing, such as Section 8 or local revitalization programs, eligible
costs are limited to the amount directly attributable to the Indian
housing program.
(4) No duplication. Any eligible cost for an activity funded by
CIAP or CGP shall not also be funded by any other HUD program.
(o) Ineligible costs. Ineligible costs include:
(1) Luxury improvements;
(2) Indirect administrative costs (overhead), as defined in OMB
Circular A-87;
(3) Indian housing operating assistance;
(4) Direct provision of social services, through either force
account or contract labor, from FFY 1996 and future FFYs funds, unless
otherwise provided by law; and
(5) Other ineligible activities, as specified by HUD.
(p) Expanded eligibility for FFY 1995 and prior year modernization
funds. The FFY 1995 Rescissions Act expanded the eligible activities
that may be funded with CIAP or CGP assistance provided from FFY 1995
and prior FFY funds. Such activities include, but are not limited to:
(1) New construction or acquisition of additional Indian housing
units, including replacement units;
(2) Modernization activities related to the Indian housing portion
of housing developments held in partnership, or cooperation with non-
Indian housing entities; and
(3) Other activities related to Indian housing, including
activities eligible under the Urban Revitalization Demonstration (HOPE
VI).
Sec. 950.610 Modernization and energy conservation standards.
All improvements funded under this part shall:
(a) Meet the modernization standards as prescribed by HUD;
(b) Incorporate cost-effective energy conservation measures,
identified in the IHA's most recently updated energy audit, conducted
pursuant to part 950, subpart K;
(c) Where changing or installing a new utility system, conduct a
life-cycle cost analysis, reflecting installation and operating costs;
and
(d) Provide decent, safe, and sanitary living conditions in IHA-
owned and IHA-operated public housing.
Sec. 950.612 Force account.
(a) An IHA may undertake the activities using force account or
contract labor, including contracting with an RMC, without prior HUD
approval.
(b) If the entirety of modernization activity (including the
planning and architectural design of the rehabilitation) is
administered by the RMC, the IHA shall not retain for any
administrative or other reason, any portion of the modernization funds
provided, unless the IHA and the RMC provide otherwise by contract.
Sec. 950.614 Initiation of modernization activities.
After HUD has approved the modernization program and entered into
an ACC amendment with the IHA, an IHA shall undertake the modernization
activities and expenditures set forth in its approved CIAP budget or
CGP Annual Statement/Five-Year Action Plan in a timely, efficient and
economical manner. All approved funding must be obligated within two
years of approval and expended within three years of approval unless
HUD approves a longer time period in the IHA's implementation schedule,
as set forth in the CIAP budget or CGP Annual Statement. HUD may
approve a longer time period for such reasons as the large size of the
grant or the complexity of the work.
Sec. 950.616 Fund requisitions.
To draw down modernization funds against the approved CIAP budget
or CGP Annual Statement, as appropriate, an IHA shall comply with
requirements prescribed by HUD.
Sec. 950.618 Contracting requirements.
In addition to the requirements specified in 24 CFR parts 85 and
subpart B of this part, the following provisions apply:
(a) Architect/engineer and other professional services contracts.
For CIAP only and notwithstanding 24 CFR 85.36(g), an IHA shall comply
with HUD requirements to either:
(1) Where the proposed contract amount exceeds the HUD-established
threshold, submit the contract for prior HUD approval before execution
or issuance; or
(2) Where the proposed contract amount does not exceed the HUD-
established threshold, certify that the scope of work is consistent
with the originally approved modernization program, and that the amount
is appropriate and does not result in the total HUD-approved CIAP
budget being exceeded.
(b) Assurance of completion. For CIAP and CGP and notwithstanding
24 CFR 85.36(h), for each construction contract over $100,000, the
contractor shall furnish a bid guarantee from each bidder equivalent to
5% of the bid price; and one of the following:
(1) A performance and payment bond for 100 percent of the contract
price; or
(2) Separate performance and payment bonds, each for 50% or more of
the contract price; or
(3) A 20% cash escrow; or
(4) A 25% irrevocable letter of credit.
(c) Construction solicitations. For CIAP only and notwithstanding
24 CFR 85.36(g), an IHA shall comply with HUD requirements to either:
(1) Where the estimated contract amount exceeds the HUD-established
threshold, submit a complete construction solicitation for prior HUD
approval before issuance; or
(2) Where the estimated contract amount does not exceed the HUD-
established threshold, certify receipt of the required architect's/
engineer's certification that the construction documents accurately
reflect HUD-approved work and meet the modernization and energy
conservation standards and that the construction solicitation is
complete and includes all mandatory items.
(d) Contract awards. (1) For CIAP only, an IHA shall obtain HUD
approval of the proposed award of a contract if the contract work is
inconsistent with
[[Page 8727]]
the originally approved modernization program or if the procurement
meets the criteria set forth in 24 CFR 85.36(g)(2)(i) through (iv). In
all other instances, an IHA shall make the award without HUD approval
after the IHA has certified that:
(i) The solicitation and award procedures were conducted in
compliance with tribal, State or local laws and Federal requirements;
(ii) The award does not meet the criteria in 24 CFR 85.36(g)(2)(i)
through (iv) for prior HUD approval; and
(iii) The contractor is not on the Lists of Parties Excluded from
Federal Procurement or Nonprocurement Programs.
(2) For CGP only, an IHA shall obtain HUD approval of the proposed
award of a contract if the procurement meets the criteria set forth in
24 CFR 85.36(g)(2)(i) through (iv).
(e) Contract modifications. For CIAP only and notwithstanding 24
CFR 85.36(g), except in an emergency endangering life or property, an
IHA shall comply with HUD requirements to either:
(1) Where the proposed contract modification exceeds the HUD-
established threshold, submit the proposed modification for prior HUD
approval before issuance; or
(2) Where the proposed contract modification does not exceed the
HUD-established threshold, certify that the proposed modification is
within the scope of the contract and that any additional costs are
within the total HUD-approved CIAP budget amount.
(f) Construction requirements. Where indicated by poor performance,
an IHA may be required to submit to HUD periodic progress reports and,
for prior HUD approval, construction completion documents above a HUD-
specified amount. For CGP only, an IHA is notified of additional
construction requirements by a notice of deficiency or a corrective
action order.
Sec. 950.620 On-site inspections.
It is the responsibility of the IHA, not HUD, to provide, by
contract or otherwise, adequate and competent supervisory and
inspection personnel during modernization, whether work is performed by
contract or force account labor, and with or without the services of an
architect/engineer, to assure work quality and progress.
Sec. 950.622 Fiscal closeout.
(a) Actual modernization cost certificate (AMCC). Upon expenditure
by the IHA of all funds, or termination by HUD of the activities funded
in a modernization program, an IHA shall submit the AMCC, in a form
prescribed by HUD, to HUD for review and approval for audit. After
audit verification, HUD shall approve the AMCC.
(b) Audit. The audit shall follow the guidelines prescribed in 24
CFR part 44, Non-Federal Government Audit Requirements. If the pre-
audit or post-audit AMCC indicates that there are excess funds, an IHA
shall immediately remit the excess funds as directed by HUD. If the
pre-audit or post-audit AMCC discloses unauthorized or ineligible
expenditures, an IHA shall immediately take such corrective actions as
HUD may direct.
Comprehensive Improvement Assistance Program (For IHAs that Own or
Operate Fewer than 250 Indian Housing Units)
Sec. 950.630 Procedures for obtaining approval of a modernization
program.
(a) HUD notification. After modernization funds for a particular
FFY become available, HUD shall publish in the Federal Register a
notice of funding availability (NOFA) and the time frame for submission
of the CIAP application, and other pertinent information.
(b) IHA consultation with tribal/local officials and residents/
homebuyers. An IHA shall develop the application in consultation with
tribal and local officials and with residents and homebuyers, as set
forth in Sec. 950.632.
(c) IHA application. An IHA shall submit to HUD an application, in
a form prescribed by HUD. Where an IHA has not included all its
developments in the CIAP application, HUD may not consider funding any
nonemergency work at excluded developments or subsequently approve use
of leftover funds at excluded developments.
(d) Completeness review. To be eligible for processing, an
application must be physically received by HUD by the time and date
specified in the NOFA. Immediately after the application deadline, HUD
shall perform a completeness review to determine whether the
application is complete, responsive to the NOFA, and acceptable for
technical processing.
(1) If the application form or any other essential document, as
specified in the NOFA, is missing, the IHA's application will be
considered substantially incomplete and, therefore, ineligible for
further processing. HUD shall immediately notify the IHA in writing.
(2) If other required documents, as specified in the NOFA, are
missing or there is a technical mistake, such as no signature on a
submitted form, HUD shall immediately notify the IHA in writing to
submit or correct the deficiency within a specified period of time from
the date of HUD's written notification. This is not additional time to
substantially revise the application. Deficiencies that may be
corrected at this time are inadvertently omitted documents or
clarifications of previously submitted material and other changes which
are not of such a nature as to improve the competitive position of the
application.
(3) If an IHA fails to submit or correct the items within the
required time period, the IHA's application will be ineligible for
further processing. HUD shall immediately notify the IHA in writing
after this occurs.
(4) An IHA may submit an application for Emergency Modernization
whenever needed.
(e) Eligibility review. (1) Eligibility for processing. To be
eligible for processing each eligible development for which work is
proposed must have reached the Date of Full Availability (DOFA) and be
under ACC amendment at the time of CIAP application submission.
(2) Eligibility for processing on reduced scope. When the following
conditions exist, an IHA will be reviewed on a reduced scope:
(i) Section 504 compliance. Where an IHA has not completed all
required structural changes to meet the need for accessible units, as
identified in the IHA's Section 504 needs assessment, the IHA is
eligible for processing only for Emergency Modernization or physical
work needed to meet Section 504 requirements.
(ii) Lead-based paint (LBP) testing compliance. Where an IHA has
not complied with the statutory requirement to complete LBP testing on
all pre-1978 family units, the IHA is eligible for processing only for
Emergency Modernization or work needed to complete the testing.
(iii) Fair Housing and Equal Opportunity (FHEO) compliance. Where
an IHA has not complied with any applicable FHEO requirements set forth
in Sec. 950.115, as evidenced by an enforcement action, finding or
determination, the IHA is eligible for processing only for Emergency
Modernization or for work needed to remedy civil rights deficiencies--
unless the IHA is implementing a voluntary compliance agreement or
settlement agreement designed to correct the area(s) of noncompliance.
The enforcement actions, findings, or determinations that trigger
limited eligibility are described in paragraphs (e)(2)(iii)(A) through
(E) of this section:
(A) A pending proceeding against the IHA based upon a charge of
[[Page 8728]]
discrimination issued under the Fair Housing Act. A charge of
discrimination is a charge under section 810(g)(2) of the Fair Housing
Act (42 U.S.C. 3610(g)(2)), issued by the Department's General Counsel
or legally authorized designee;
(B) A pending civil rights suit against the IHA, referred by the
Department's General Counsel and instituted by the Department of
Justice;
(C) Outstanding HUD findings of IHA noncompliance with civil rights
statutes and executive orders under Sec. 950.115, or implementing
regulations, as a result of formal administrative proceedings;
(D) A deferral of the processing of applications from the IHA
imposed by HUD under Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d-1) and HUD implementing regulations (24 CFR 1.8), the
Attorney General's Guidelines (28 CFR 50.3), and procedures (HUD
Handbook 8040.1), or under Section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794) and HUD implementing regulations (24 CFR 8.57); or
(E) An adjudication of a violation under any of the authorities
specified in Sec. 950.115 in a civil action filed against the IHA by a
private individual.
(f) Technical processing. After all CIAP applications are reviewed
for eligibility, HUD shall categorize the eligible IHAs and their
developments into two processing groups: Group 1 for Emergency
Modernization; and Group 2 for Other Modernization. IHA developments
may be included in both groups and the same development may be in each
group. However, an IHA is only required to submit one CIAP application.
Group 1 developments are not subject to the technical review rating and
ranking and the long-term viability and reasonable cost determination.
Group 2 developments are subject to the technical review rating and
ranking and the long-term viability and reasonable cost determination.
Preference will be given to IHAs which request assistance for
developments that either have conditions that threaten the health or
safety of the residents or have a significant number of vacant,
substandard units, and which have demonstrated a capability of carrying
out the proposed activities.
(g) Rating on technical review factors. After categorizing the
eligible IHAs/developments into Group 1 and Group 2, HUD shall review
and rate each Group 2 IHA on each of the following technical review
factors:
(1) Extent and urgency of need, including need to comply with
statutory, regulatory, or court-ordered deadlines;
(2) Extent of vacancies, where the vacancies are not due to
insufficient demand;
(3) IHA's modernization capability;
(4) IHA's management capability;
(5) Degree of resident involvement in IHA operations;
(6) Degree of IHA activity in resident initiatives, including
resident management, economic development, and drug elimination
efforts;
(7) Degree of resident employment;
(8) Tribal/local government support for proposed modernization; and
(9) Such additional factors as the Secretary determines necessary
and appropriate.
(h) Ranking and selection for Joint Review. After rating all Group
2 IHAs/developments, the Area ONAP shall then rank each Group 2 IHA
based on its total score, list Group 2 IHAs in descending order,
subject to confirmation of need and cost at Joint Review, and identify
for Joint Review selection the highest IHA ranking applications in
Group 2 and other Group 2 IHAs with lower ranking applications, but
with high priority needs, which most reasonably approximate the amount
of modernization which can be funded. High priority needs are
nonemergency needs, but related to: health or safety; vacant,
substandard units; structural or system integrity; or compliance with
statutory, regulatory, or court-ordered deadlines. All Group 1
applications are automatically selected for Joint Review.
(i) Joint review. The purpose of the Joint Review is for HUD to
discuss with an IHA the proposed modernization program, as set forth in
the CIAP application, review long-term viability and cost
reasonableness determinations, and determine the size of the grant, if
any, to be awarded. HUD shall notify each IHA whose application has
been selected for further processing as to whether Joint Review will be
conducted on-site or off-site (e.g., by telephone or in-office
meeting). An IHA shall prepare for Joint Review by preparing a draft
CIAP budget, and reviewing the other items to be covered during Joint
Review, as prescribed by HUD. If conducted on-site, Joint Review may
include an inspection of the proposed physical work. IHAs not selected
for Joint Review will be advised in writing of the reasons for non-
selection.
(j) Funding decisions. After all Joint Reviews are completed, HUD
shall adjust the IHAs, developments, and work items to be funded and
the amounts to be awarded, on the basis of information obtained from
Joint Reviews, environmental reviews, and FHEO review, and make the
funding decisions. An IHA will not be selected for CIAP funding if
there is a duplication of funding. HUD shall select all bona fide
emergencies in Group 1 before funding Group 2 applications. After
funding announcement, HUD shall request a funded IHA to submit a CIAP
budget, including an implementation schedule, and any other required
documents, including the ACC amendment. IHAs not selected for funding
will be advised in writing of the reasons for non-selection.
(k) ACC amendment. After HUD approval of the CIAP budget, HUD and
the IHA shall enter into an ACC amendment in order for the IHA to draw
down modernization funds. The ACC amendment shall require low-income
use of the housing for not less than 20 years from the date of the ACC
amendment (subject to sale of homeownership units in accordance with
the terms of the ACC). The IHA Executive Director, where authorized by
the Board of Commissioners and permitted by tribal or State law, may
sign the ACC amendment on behalf of the IHA. HUD has the authority to
condition an ACC amendment (e.g., to require an IHA to hire a
modernization coordinator or contract administrator to administer its
modernization program).
(l) Declaration of trust. As HUD may require, an IHA shall execute
and file for record a Declaration of Trust as provided under the ACC to
protect the rights and interests of HUD throughout the 20-year period
during which the IHA is obligated to operate its developments in
accordance with the ACC, the Act, and HUD regulations and requirements.
A Declaration of Trust is not required for Mutual Help units.
(Approved by the Office of Management and Budget under control
number 2577-0044. 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 valid control number.)
Sec. 950.632 Resident and homebuyer participation.
An IHA shall establish a Partnership Process, as defined in
Sec. 950.102, to develop, implement, and monitor the CIAP. Before
submission of the CIAP application, an IHA shall consult with the
residents, the resident organization, or the resident management
corporation (see subpart O of this part) (herein referred to as the
resident) of the development(s) being proposed for modernization,
regarding its intent to submit an application and to solicit resident
comments. An IHA shall give residents a reasonable opportunity to
present their views on the proposed modernization and alternatives to
it and
[[Page 8729]]
shall give full and serious consideration to resident recommendations.
An IHA shall respond in writing to the residents, indicating its
acceptance or rejection of resident recommendations, consistent with
HUD requirements and the IHA's own determination of efficiency,
economy, and need. After HUD approval of the modernization program, an
IHA shall inform the residents of the approved work items and its
progress during implementation. Where HUD does not approve the
modernization program, an IHA shall so inform the residents.
Sec. 950.634 Budget revisions.
(a) An IHA shall not incur any modernization cost in excess of the
total HUD-approved CIAP budget. An IHA shall submit a budget revision,
in a form prescribed by HUD, if the IHA plans to deviate from the
originally approved modernization program, as it was competitively
funded, by deleting or substantially revising approved work items or
adding new work items that are unrelated to the originally approved
modernization program.
(b) In addition to the provisions of paragraph (a) of this section,
an IHA shall comply with the following requirements:
(1) An IHA is not required to obtain prior HUD approval if, in
order to complete the originally approved modernization program, the
IHA needs to delete or revise approved work items or add new related
work items consistent with the original modernization program. In such
case, an IHA shall certify that the revisions are necessary to carry
out the approved work and do not result in substantial changes to the
competitively funded modernization program.
(2) An IHA shall not incur any modernization cost on behalf of any
development that is not covered by the original CIAP application.
(3) Where there are funds leftover after completion of the
originally approved modernization program, an IHA may, without prior
HUD approval, use the remaining funds to carry out other eligible
modernization activities at developments covered by the original CIAP
application.
Sec. 950.636 Progress reports.
For each six-month period ending March 31 and September 30, until
completion of the modernization program or expenditure of all funds, an
IHA shall submit a progress report, in a form prescribed by HUD, to the
HUD Area ONAP. Where HUD determines that an IHA is having
implementation problems, HUD may require more frequent reporting.
Sec. 950.638 Time extensions.
An IHA shall not obligate or expend funds after the obligation or
expenditure deadline date approved by HUD in the original
implementation schedule without a time extension, as follows:
(a) Certification. An IHA may extend an obligation or expenditure
deadline date no later than 30 calendar days after the existing
deadline date, without prior HUD approval, for a time period
commensurate with the delay, where the IHA certifies that the delay is
due to reasons outside the IHA's control, such as:
(1) Need to use leftover funds from a completed modernization
program for additional work;
(2) Unforeseen delays in contracting or contract administration;
(3) Litigation; and
(4) Delay by HUD or other institutions. Delay by the IHA's staff or
Board of Commissioners or a change in the Executive Director is not
considered to be outside of the IHA's control.
(b) Prior HUD approval. Where an IHA is unable to meet an
obligation or expenditure deadline date and the delay is not due to
reasons within the IHA's control, the IHA must request HUD approval of
a time extension no later than 30 calendar days after the deadline
date, to avoid recapture of funds. The request shall include an
explanation of the delay, the steps taken to prevent future delay, and
the requested extension.
Sec. 950.640 HUD review of IHA performance.
HUD shall periodically review IHA performance in carrying out its
approved modernization program to determine compliance with HUD
requirements, the quality of an IHA's inspections as evidenced by the
quality of work, and the timeliness of the work. HUD's review may be
conducted either in-office or on-site. Where conducted in-office, an
IHA shall forward any requested documents to HUD for post-review. Where
deficiencies are noted, an IHA shall take such corrective actions as
HUD may direct.
Comprehensive Grant Program (For IHAs That Own or Operate 250 or More
Indian Housing Units)
Sec. 950.650 Determination of formula amount.
(a) Submission of formula characteristics report. (1) Formula
characteristics report. In its first year of participation in the CGP,
each IHA shall verify and provide data to HUD, in a form and at a time
to be prescribed by HUD, concerning IHA and development
characteristics, so that HUD can develop the IHA's annual funding
allocation under the CGP in accordance with Sec. 950.604(e) and (f). If
an IHA fails to submit to HUD the formula characteristics report by the
prescribed deadline, HUD will use the data that it has available
concerning IHA and development characteristics for purposes of
calculating the IHA's formula share. After its first year of
participation in the CGP, an IHA is not required to submit formula
characteristics report data to HUD, but is required to respond to data
transmitted by HUD if there have been changes to its inventory from
that previously reported, or when requested by HUD. On an annual basis,
HUD will transmit to the IHA the formula characteristics report that
reflects the data that will be used to determine the IHA's formula
share. The IHA will have at least 30 calendar days to review and advise
HUD of errors in this HUD report. Necessary adjustments will be made to
the IHA's data before the formula is run for the current FFY.
(2) IHA Board Resolution. In its first year of participation in the
CGP, the IHA must include with its formula characteristics report under
paragraph (a)(1) of this section, a resolution adopted by the IHA Board
of Commissioners approving the report, and certifying that the data
contained in the formula characteristics report are accurate.
(b) HUD notification of formula amount; appeal rights. (1) Formula
amounts notification. After HUD determines an IHA's formula allocation
under Sec. 950.604(e) and (f) based upon the IHA, development, and
community characteristics, it shall notify the IHA of its formula
amount and provide instructions on the Annual Submission in accordance
with Secs. 950.652(a) and 950.656;
(2) Appeal based upon unique circumstances. An IHA may appeal in
writing HUD's determination of its formula amount within 60 calendar
days of the date of HUD's determination on the basis of ``unique
circumstances.'' The IHA shall indicate what is unique, specify the
manner in which it is different from all other IHAs participating in
the CGP, and provide any necessary supporting documentation. HUD shall
render a written decision on an IHA's appeal under this paragraph
within 60 calendar days of the date of its receipt of the IHA's request
for an appeal. HUD shall publish in the Federal Register a description
of the facts supporting any successful appeals based upon ``unique
[[Page 8730]]
circumstances.'' Any adjustments resulting from successful appeals in a
particular FFY under this paragraph shall be made from the subsequent
years' allocation of funds under this part;
(3) Appeal based upon error. An IHA may appeal in writing HUD's
determination of its formula amount within 60 calendar days of the date
of HUD's determination on the basis of an error. The IHA may appeal on
the basis of error the correctness of data in the formula
characteristics report. The IHA shall describe the nature of the error
and provide any necessary supporting documentation. HUD shall respond
to the IHA's request within 60 calendar days of the date of its receipt
of the IHA's request for an appeal. Any adjustment resulting from
successful appeals in a particular FFY under this paragraph shall be
made from subsequent years' allocation of funds under this part;
(c) IHAs determined to be high risk. If an IHA is determined to
have serious deficiencies in accordance with Sec. 950.135, or if the
IHA fails to meet, or to make reasonable progress toward meeting, the
goals previously established in its management improvement plan under
Sec. 950.135, HUD may designate the IHA as high risk. If HUD designates
the IHA as high risk with respect to modernization, HUD may withhold
some or all of the IHA's annual grant; HUD may declare a breach of the
grant agreement with respect to all or some of the IHA's functions, so
that the IHA or a particular function of the IHA may be administered by
another entity; or HUD may take other sanctions authorized by law or
regulation.
Sec. 950.652 Comprehensive plan (including Five-Year Action Plan).
(a) Submission. As soon as possible after modernization funds first
become available for allocation under this subpart, HUD shall notify
IHAs in writing of their formula amount. For planning purposes, IHAs
may use the amount they received under CGP in the prior year in
developing their comprehensive plan, or they may wait for the annual
HUD notification of formula amount under Sec. 950.650(b)(1).
(b)(1) Resident participation. An IHA is required to develop,
implement, monitor, and annually amend portions of its comprehensive
plan in consultation with residents of the developments covered by the
comprehensive plan, and with democratically elected resident groups. In
addition, the IHA shall also consult with resident management
corporations (RMCs) to the extent that an RMC manages a development
covered by the comprehensive plan. The IHA, in partnership with the
residents, shall develop and implement a process for resident
participation that ensures that residents are involved in a meaningful
way in all phases of the CGP. Such involvement shall include
implementing the Partnership Process as a critical element of the CGP.
(2) Establishment of Partnership Process. The IHA, in partnership
with the residents of the developments covered by the plan (and which
may include resident leaders, resident organizations, resident advisory
councils/boards and RMCs) must establish a Partnership Process to
develop and implement the goals, needs, strategies, and priorities
identified in the Comprehensive Plan. After residents have organized to
participate in the CGP, they may decide to establish a volunteer
advisory group of experts in various professions to assist them in the
CGP Partnership Process. The Partnership Process shall be designed to
achieve the following:
(i) To assure that residents are fully briefed and involved in
developing the content of, and monitoring the implementation of, the
Comprehensive Plan including, but not limited to, the physical and
management needs assessments, viability analysis, five-year action
plan, and annual statement. If necessary, the IHA shall develop and
implement capacity building strategies to ensure meaningful resident
participation in CGP. Such technical assistance efforts for residents
are eligible management improvement costs under CGP;
(ii) To enable residents to participate, on an IHA-wide or area-
wide basis, in ongoing discussions of the comprehensive plan and
strategies for its implementation, and in all meetings necessary to
ensure meaningful participation.
(3) Public notice. Within a reasonable amount of time before the
advance meeting for residents and duly elected resident organizations
under paragraph (b)(4) of this section, and the public hearing under
paragraph (b)(5) of this section, the IHA shall provide public notice
of the advance meeting and the public hearing in a manner determined by
the IHA and which ensures notice to all duly elected resident
organizations;
(4) Advance meeting for residents and duly elected resident
organizations. The IHA shall hold, within a reasonable amount of time
before the public hearing under paragraph (b)(5) of this section, a
meeting for residents and duly elected resident organizations at which
the IHA shall explain the components of the comprehensive plan. The
meeting shall be open to all residents and duly elected resident
organizations;
(5) Public Hearing. The IHA shall hold at least one public hearing,
and any appropriate number of additional hearings, to present
information on the comprehensive plan/annual submission and the status
of prior approved programs. The public hearing shall provide ample
opportunity for residents, tribal government officials, and other
interested parties to express their priorities and concerns. The IHA
shall give full consideration to the comments and concerns of
residents, tribal government officials, and other interested parties.
(c) Tribal/local government participation. An IHA shall consult
with and provide information to appropriate tribal and local government
officials with respect to the development of the comprehensive plan. In
the case of an IHA with developments in multiple jurisdictions, the IHA
may meet this requirement by consulting with an advisory group
representative of all the jurisdictions. At a minimum, such
consultation shall include providing such officials with:
(1) Advance written notice of the public hearing required under
paragraph (b)(5) of this section;
(2) A copy of the summary of total preliminary estimated costs to
address physical needs by each development and management/operations
needs IHA-wide, a specific description of the IHA's process for
maximizing the level of participation by residents, a summary of the
general issues raised on the plan by residents and others during the
public comment process, and the IHA's response to the general issues.
IHA records, such as minutes of planning meetings or resident surveys,
shall be maintained in the IHA's files and made available to residents,
resident organizations, and other interested parties upon request; and
(3) An opportunity to express their priorities and concerns to
ensure due consideration in the IHA's planning process.
(d) Contents of Comprehensive Plan. The comprehensive plan shall
identify all of the physical and management improvements needed for an
IHA and all of its developments, and that represent needs eligible for
funding under Sec. 950.608. The plan shall also include preliminary
estimates of the total cost of these improvements. The plan shall set
forth general strategies for addressing the identified needs, and
highlight any special strategies, such as major redesign or partial
demolition of a development, that are necessary to
[[Page 8731]]
ensure the long-term physical and social viability of the development.
Where long-term physical and social viability of the development is
dependent upon revitalization of the surrounding neighborhood in the
provision of or coordination of public services, or the consolidation
or coordination of drug prevention and other human service initiatives,
the IHA shall identify these needs and strategies. Each comprehensive
plan shall contain the following elements:
(1) Executive summary. An IHA shall include as part of its
comprehensive plan an executive summary to facilitate review and
comprehension by development residents and by the public. The executive
summary shall include:
(i) A summary of total preliminary estimated costs to address
physical needs by each development and IHA-wide physical and management
needs; and
(ii) A specific description of the IHA's process for maximizing the
level of participation by residents during the development,
implementation, and monitoring of the comprehensive plan, a summary of
the general issues raised on the plan by residents and others during
the public comment process, and the IHA's response to the general
issues. IHA records, such as minutes of planning meetings or resident
surveys, shall be maintained in the IHA's files and made available to
residents, duly elected resident organizations, and other interested
parties, upon request;
(2) Physical needs assessment. (i) Requirements. The physical needs
assessment identifies all of the work that an IHA would need to
undertake to bring each of its developments up to the modernization and
energy conservation standards, as required by the Act, to comply with
lead-based paint testing and abatement requirements under
Sec. 950.120(g), and to comply with other program requirements under
Sec. 950.120. The physical needs assessment is completed without regard
to the availability of funds, and shall include the following
information with respect to each of an IHA's developments:
(A) A brief summary of the physical improvements necessary to bring
each development to a level at least equal to the modernization and
energy conservation standards set forth in Sec. 950.610, to comply with
the lead-based paint testing and abatement requirements under
Sec. 950.120(g), and to comply with other program requirements under
Sec. 950.120. The IHA also should indicate the relative urgency of
need. If the IHA has no physical improvement needs at a particular
development at the time it completes its comprehensive plan, it must so
indicate. Similarly, if the IHA intends to demolish, partially
demolish, convert, or dispose of a development (or units within a
development), it must so indicate in the summary of physical
improvements;
(B) The replacement needs of equipment systems and structural
elements that will be required to be met (assuming routine and timely
maintenance is performed) during the period covered by the action plan;
(C) A preliminary estimate of the cost to complete the physical
work; and
(D) In addition, the IHA shall provide with respect to vacant or
non-homebuyer-occupied Turnkey III units, the estimated number of units
that the IHA is proposing for substantial rehabilitation and subsequent
sale, in accordance with Sec. 950.608(d)(3).
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
physical needs assessment under this paragraph (d)(2), and shall retain
such source documents in its files.
(3) Management needs assessment. (i) Requirements. The plan shall
include a comprehensive assessment of the improvements needed to
upgrade the management and operation of the IHA and of each viable
development, so that decent, safe, and sanitary living conditions will
be provided. The management needs assessment shall include the
following, with the relative urgency of need indicated:
(A) An identification of the most current needs related to the
following areas (to the extent that any of these needs is addressed in
a HUD-approved management improvement plan, the IHA may simply include
a cross-reference to these documents):
(1) The management, financial, and accounting control systems of
the IHA;
(2) The adequacy and qualifications of personnel employed by the
IHA in the management and operation of its developments, for each
significant category of employment;
(3) The adequacy and efficacy of:
(i) Resident programs and services;
(ii) Resident and development security;
(iii) Resident selection and eviction;
(iv) Occupancy;
(v) Maintenance;
(vi) Resident management and resident capacity building programs;
(vii) Resident opportunities for employment and business
development and other self-sufficiency opportunities for residents; and
(viii) Homeownership opportunities for residents.
(B) Any additional deficiencies identified through audits and HUD
monitoring reviews that are not addressed under paragraph (e)(3)(i)(A)
of this section. To the extent that any of these is addressed in a HUD-
approved management improvement plan, the IHA may include a cross-
reference to these documents;
(C) Any other management and operations needs that the IHA wants to
address at the IHA-wide or development level; and
(D) An IHA-wide preliminary cost estimate for addressing all the
needs identified in the management needs assessment, without regard to
the availability of funds.
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
management needs assessment under paragraph (d)(3) of this section, and
shall retain such source documents in its files.
(4) Demonstration of long-term physical and social viability. (i)
General. The plan shall include, on a development-by-development basis,
an analysis of whether completion of the improvements and replacements
identified under paragraphs (e)(2) and (e)(3) of this section will
reasonably ensure the long-term physical and social viability,
including achieving structural/system soundness and full occupancy, of
the development at a reasonable cost. For cost reasonableness, the IHA
shall determine whether the unfunded hard costs satisfy the definition
of ``reasonable cost.'' Where the IHA wishes to fund a development, for
other than emergencies, where hard costs exceed that reasonable cost,
the IHA shall submit written justification to the Field Office. If the
Field Office agrees with the IHA's request, the Field Office shall
forward its recommendation to Headquarters for final decision. Where
the estimated per unit unfunded hard cost is equal to or less than the
per unit TDC for the smallest bedroom size at the development, no
further computation of the TDC limit is required. The IHA shall keep
documentation in its files to support all cost determinations. The
Field Office will review cost reasonableness as part of its review of
the Annual Submission and the Performance and Evaluation Report. As
necessary, HUD will review the IHA's documentation in support of its
cost reasonableness, taking into account broader efforts to revitalize
the neighborhoods in which the development is located;
(ii) Determination of non-viability. When an IHA's analysis of a
development, under paragraph (e) of
[[Page 8732]]
this section, establishes that completion of the identified
improvements and replacements will not result in the long-term physical
and social viability of the development at a reasonable cost, the IHA
shall not expend CGP funds for the development, except for emergencies
and essential nonroutine maintenance necessary to maintain habitability
until residents can be relocated. The IHA shall specify in its
comprehensive plan the actions it proposes to take with respect to the
nonviable development (e.g., demolition or disposition under subpart M
of this part).
(5) Five-Year Action Plan. (i) General. The comprehensive plan
shall include a rolling five-year action plan to carry out the
improvements and replacements (or a portion thereof) identified under
paragraphs (e)(2) and (e)(3) of this section. In developing its five-
year action plan, the IHA shall assume that the current year funding or
formula amount will be available for each year of its five-year action
plan, whichever the IHA is using for planning purposes, plus the IHA's
estimate of the funds that will be available from other sources, such
as tribal, state, and local governments. All activities specified in an
IHA's five-year action plan are contingent upon the availability of
funds.
(ii) Requirements. Under the action plan, an IHA must indicate how
it intends to use the funds available to it under the CGP to address
the deficiencies, or a portion of the deficiencies, identified under
its physical and management needs assessments, as follows:
(A) Physical condition. With respect to the physical condition of
an IHA's developments, an IHA must indicate in its action plan how it
intends to address, over a five-year period, the deficiencies (or a
portion of the deficiencies) identified in its physical needs
assessment so as to bring each of its developments up to a level at
least equal to the modernization and energy conservation standards.
This would include specifying the work to be undertaken by the IHA in
major work categories (e.g., kitchens, electrical systems, etc.);
establishing priorities among the major work categories by development
and year based upon the relative urgency of need; and estimating the
cost of each of the identified major work categories. In developing its
action plan, an IHA shall give priority to the following:
(1) Activities required to correct emergency conditions;
(2) Activities required to meet statutory (or other legally
mandated) requirements;
(3) Activities required to meet the needs identified in the Section
504 needs assessment within the regulatory timeframe; and
(4) Activities required to complete lead-based paint testing and
abatement requirements.
(B) Management and operations. An IHA shall address in its action
plan the management and operations deficiencies (or a portion of the
deficiencies) identified in its management needs assessment, as
follows:
(1) With respect to the management and operations needs of the IHA,
the IHA shall identify how it intends to address with CGP funds, if
necessary, the deficiencies (or a portion thereof) identified in its
management needs assessment, including work identified through audits,
HUD monitoring reviews, and self-assessments (this would include
establishing priorities based upon the relative urgency of need); and
(2) A preliminary IHA-wide cost estimate, by major work category.
(iii) Procedure for maintaining current Five-Year Action Plan. The
IHA shall maintain a current Five-Year Action Plan by annually amending
its Five-Year Action Plan, in conjunction with the Annual Submission;
(6) Tribal/local government statement. The Comprehensive Plan shall
include a statement signed by the chief executive officer of the
appropriate governing body (or in the case of an IHA with developments
in multiple jurisdictions, from the CEO of each such jurisdiction),
certifying as to the following:
(i) The IHA developed the comprehensive plan/five-year action plan
or amendments thereto in consultation with officials of the appropriate
governing body and with development residents covered by the
comprehensive plan/five-year action plan, in accordance with the
requirements of paragraphs (b) and (c) of this section;
(ii) The comprehensive plan/five-year action plan or amendments
thereto are consistent with the appropriate governing body's assessment
of its low-income housing needs and that the appropriate governing body
will cooperate in providing resident programs and services; and
(iii) The IHA's proposed drug elimination activities are
coordinated with, and supportive of, local drug elimination strategies
and neighborhood improvement programs, if applicable.
(7) IHA resolution. The plan shall include a resolution, in a form
prescribed by HUD, adopted by the IHA Board of Commissioners, and
signed by the Board Chairman of the IHA, approving the comprehensive
plan or any amendments.
(e) Amendments to the Comprehensive Plan. (1) Extension of time for
performance. An IHA shall have the right to amend its comprehensive
plan (including the action plan) to extend the time for performance
whenever HUD has not provided the amount of assistance set forth in the
comprehensive plan or has not provided the assistance in a timely
manner.
(2) Amendments to needs assessments. The IHA shall amend its plan
by revising its needs assessments whenever it proposes to carry out
activities in its five-year action plan or annual statement that are
not reflected in its current needs assessments (except in the case of
emergencies). The IHA may propose an amendment to its needs
assessments, in connection with the submission of its annual submission
(see Sec. 950.656(b)), or at any other time. These amendments shall be
reviewed by HUD in accordance with Sec. 950.654;
(3) Six-year revision of Comprehensive Plan. Every sixth year
following the initial year of participation, the IHA shall submit to
HUD, with its annual submission, a complete update of its comprehensive
plan. An IHA may elect to revise some or all parts of the comprehensive
plan more frequently.
(4) Annual revision of Five-Year Action Plan. Annually, the IHA
shall submit to HUD, with its annual submission, an update of its five-
year action plan, eliminating the previous year and adding an
additional year. The IHA shall identify changes in work categories
(other than those included in the new fifth year) from the previous
year five-year action plan when making this Annual Submission.
(5) Required submissions. Any amendments to the comprehensive plan
under this section shall be submitted with the IHA resolution under
Sec. 950.652(e)(7).
(f) Prerequisite for receiving assistance. (1) Prohibition of
assistance. No financial assistance, except for emergency work to be
funded under Secs. 950.604(b) and 950.606, and for modernization needs
resulting from disasters under Sec. 950.604(b), may be made available
under this subpart unless HUD has approved a comprehensive plan
submitted by the IHA that meets the requirements of Sec. 950.652. An
IHA that has failed to obtain approval of its comprehensive plan by the
end of the FFY shall have its formula allocation for that year (less
[[Page 8733]]
any formula amounts provided to the IHA for emergencies) added to the
subsequent year's appropriation of funds for grants under this part.
HUD shall allocate such funds to PHAs and IHAs participating in the CGP
in accordance with the formula under Sec. 950.604(e) and (f) in the
subsequent FFY. An IHA that elects in any FFY not to participate in the
CGP under this subpart may participate in the CGP in subsequent FFYs.
(2) Requests for emergency assistance. An IHA may receive funds
from its formula allocation to address emergency modernization needs
even if HUD has not approved the IHA's comprehensive plan. To request
such assistance, the IHA shall submit to HUD a request for funds in
such form as HUD may prescribe, including any documentation necessary
to support its claim that an emergency exists. HUD shall review the
request and supporting documentation to determine if it meets the
definition of ``emergency work,'' as set forth in Sec. 950.102.
Sec. 950.654 HUD review and approval of comprehensive plan (including
Five-Year Action Plan).
(a) Submission of comprehensive plan. (1) Upon receipt of a
comprehensive plan from an IHA, HUD shall determine whether:
(i) The plan contains each of the required components specified at
Sec. 950.652; and
(ii) If applicable, the IHA has submitted any additional
information or assurances required as a result of HUD monitoring,
findings of inadequate IHA performance, audit findings, or civil rights
compliance findings.
(2) Acceptance for review. If the IHA has submitted a Comprehensive
Plan (including the action plan) that meets the criteria specified in
paragraph (a)(1) of this section, HUD shall accept the Comprehensive
Plan for review, within 14 calendar days of its receipt in the Area
ONAP. The IHA shall be notified in writing that the plan has been
accepted by HUD, and that the 75-day review period is proceeding.
(3) Time period for review. A Comprehensive Plan that is accepted
by HUD for review shall be considered to be approved unless HUD
notifies the IHA in writing, postmarked within 75 calendar days of the
date of HUD's receipt of the Comprehensive Plan for review, that HUD
has disapproved the plan. HUD shall not disapprove a Comprehensive Plan
on the basis that it cannot complete its review within the 75-day
deadline.
(4) Rejection of Comprehensive Plan. If an IHA has submitted a
Comprehensive Plan (including the action plan) that does not meet the
requirements of paragraph (a)(1) of this section, HUD shall notify the
IHA within 14 calendar days of its receipt that HUD has rejected the
plan for review. In such case, HUD shall indicate the reasons for
rejection, the modifications required to qualify the Comprehensive Plan
for HUD review, and the deadline date for receipt of any modifications.
(b) HUD approval of Comprehensive Plan (including action plan). (1)
A Comprehensive Plan (including the action plan) that is accepted by
HUD for review in accordance with paragraph (a) of this section shall
be considered to be approved, unless HUD notifies the IHA in writing,
postmarked within 75 days of the date of HUD's receipt of the
Comprehensive Plan for review, that HUD has disapproved the plan,
indicating the reasons for disapproval, and the modifications required
to make the Comprehensive Plan approvable. The IHA shall re-submit the
Comprehensive Plan to HUD, in accordance with the deadline established
by HUD, which may allow up to 75 calendar days before the end of the
FFY for HUD review. If the revised plan is disapproved by HUD following
its resubmission, or the IHA fails to resubmit the plan by the deadline
established by HUD, any funds that would have been allocated to the IHA
shall be added to the subsequent year's appropriation of funds for
grants under this subpart. HUD shall allocate such funds to IHAs and
PHAs participating in the CGP in accordance with the formula under 24
CFR Sec. 950.604 and 968.103. HUD shall not disapprove a Comprehensive
Plan on the basis that HUD cannot complete its review under this
section within the 75-day deadline.
(2) HUD shall approve the comprehensive plan except where it makes
a determination in accordance with one or more of the following:
(i) Comprehensive plan is incomplete in significant matters;
(ii) Identified needs are plainly inconsistent with facts and data;
(A) Identified physical improvements and replacements are
inadequate;
(B) Identified management improvements are inadequate;
(C) Proposed physical and management improvements fail to address
identified needs;
(iii) Action plan is plainly inappropriate to meeting identified
needs;
(iv) Inadequate demonstration of long-term viability at reasonable
cost; or
(v) Contradiction of tribal/local government certification or IHA
resolution.
(c) Effect of HUD approval of Comprehensive Plan. After HUD
approves the Comprehensive Plan (including the Five-Year Action Plan),
or any amendments to the plan, it shall be binding upon HUD and the
IHA, until such time as the IHA submits, and HUD approves, an amendment
to its plan. The IHA is expected to undertake the work set forth in the
Annual Statement. However, the IHA may undertake any of the work
identified in any of the other four years of the latest approved Five-
Year Action Plan, current approved Annual Statement or previously
approved CIAP budgets, without further HUD approval. Actual uses of the
funds are to be reflected in the IHA annual Performance and Evaluation
Report for each grant. See Sec. 950.658. HUD encourages the IHA to
inform the residents of significant changes (such as changes in scope
of work or whenever it moves work items within the approved Five-Year
Action Plan). The IHA shall retain documentation of that information in
its files. If HUD determines as a result of an audit or monitoring
findings that an IHA has provided false or substantially inaccurate
data in its Comprehensive Plan/Annual Submission or has circumvented
the intent of the program, HUD may condition the receipt of assistance,
in accordance with Sec. 950.660. Moreover, in accordance with 18 U.S.C.
1001, any individual or entity who knowingly and willingly makes or
uses a document or writing containing any false, fictitious, or
fraudulent statement or entry, in any matter within the jurisdiction of
any department or agency of the United States, shall be fined not more
than $10,000 or imprisoned for not more than five years, or both.
Sec. 950.656 Annual submission of activities and expenditures.
(a) General. The Annual Submission is a collective term for all
documents that the IHA shall submit to HUD for review and approval
before accessing the current FFY grant funds. Such documents include
the Annual Statement, Work Statements for years two through five of the
Five-Year Action Plan, local government statement, IHA Board
Resolution, materials demonstrating the partnership process, and any
other documents as prescribed by HUD. For planning purposes, an IHA may
use either the amount of funding received in the current year or the
actual formula amount provided in HUD's notification under Sec. 950.650
in
[[Page 8734]]
developing the Five-Year Action Plan for presentation at the resident
meetings and public hearing. Work Statements cover the second through
the fifth years of the Five-Year Action Plan and set forth the major
work categories and costs, by development or IHA-wide, that the IHA
intends to undertake in each year of years two through five. In
preparing these Work Statements, the IHA shall assume that the current
FFY formula amount will be available in each year of years two through
five. The Work Statements for all five years will be at the same level
of detail so that the IHA may interchange work items as discussed in
Sec. 950.652. An IHA may budget up to 8 percent of its annual grant in
a contingency account for cost overruns.
(b) Submission. After receiving HUD notification of the formula
amount estimating how much funding will be available from other
sources, such as State and tribal governments, and determining its
activities and costs based on the current FFY formula amount, the IHA
shall submit its Annual Submission.
(c) Acceptance for review. (1) Upon receipt of an Annual Submission
from an IHA, HUD shall determine whether:
(i) The Annual Submission contains each of the required components;
and
(ii) The IHA has submitted any additional information or assurances
required as a result of HUD monitoring, findings of inadequate IHA
performance, audit findings, and civil rights compliance findings.
(2) If the IHA has submitted a complete Annual Submission and all
required information and assurances, HUD will accept the submission for
review, as of the date of receipt. If the IHA has not submitted all
required material, HUD will promptly notify the IHA that it has
disapproved the submission, indicating the reasons for disapproval, the
modifications required to qualify the Annual Submission for HUD review,
and the date by which such modifications shall be received by HUD.
(d) Resident and local government participation. An IHA is required
to develop its Annual Submission, including any proposed amendments to
its Comprehensive Plan as provided in Sec. 950.652, in consultation
with officials of the appropriate governing body (or in the case of an
IHA with developments in multiple jurisdictions, in consultation with
the CEO of each such jurisdiction or with an advisory group
representative of all jurisdictions) and with residents and duly
elected resident organizations of the developments covered by the
Comprehensive Plan, as follows:
(1) Public notice. Within a reasonable amount of time before the
advance meeting for residents under paragraph (d)(2) of this section,
and the public hearing under paragraph (d)(3) of this section, the IHA
shall annually provide public notice of the advance meeting and the
public hearing in a manner determined by the IHA and that ensures
notice to all duly elected resident organizations;
(2) Advance meeting with residents. The IHA shall at least annually
hold a meeting open to all residents and duly elected resident
organizations. The advance meeting shall be held within a reasonable
amount of time before the public hearing under paragraph (d)(3) of this
section. The IHA will provide residents with information concerning the
contents of the IHA's Five-Year Action Plan (and any proposed
amendments to the IHA's Comprehensive Plan to be submitted with the
Annual Submission) so that residents can comment adequately at the
public hearing on the contents of the Five-Year Action Plan and any
proposed amendments to the Comprehensive Plan.
(3) Public hearing. The IHA shall annually hold at least one public
hearing, and any appropriate number of additional hearings, to present
information on the Annual Submission and the status of prior approved
programs. The public hearing shall provide ample opportunity for
residents of the developments covered by the Comprehensive Plan,
officials of the appropriate governing body, and other interested
parties, to express their priorities and concerns. The IHA shall give
full consideration to the comments and concerns of residents, local
government officials, and other interested parties in developing its
Five-Year Action Plan, or any amendments to its Comprehensive Plan.
(4) Expedited scheduling. IHAs are encouraged to hold the meeting
with residents and duly elected resident organizations under paragraph
(d)(2) of this section, and the public hearing under paragraph (d)(3)
of this section, between July 1 (i.e., after the end of the program
year--June 30) and September 30, using the formula amount for the
current FFY. If an IHA elects to use such expedited scheduling, it
shall explain at the meeting with residents and duly elected resident
organizations and at the public hearing that the current FFY amount is
not the actual grant amount for the subsequent year, but is rather the
amount used for planning purposes. It shall also explain that the Five-
Year Action Plan will be adjusted when HUD provides notification of the
actual formula amount, and explain which major work categories at which
developments may be added or deleted to adjust for the actual formula
amount and that any added work categories/developments will come from
the Comprehensive Plan.
(e) Contents of Annual Submission. The Annual Statement for each
year shall include, for each development or on an IHA-wide basis for
management improvements or certain physical improvements for which work
is to be funded out of that year's grant:
(1) A list of development accounts with an identification of major
work categories;
(2) The cost for each major work category, as well as a summary of
cost by development account;
(3) The IHA-wide or development-specific management improvements to
be undertaken during the year;
(4) For each development and for any management improvements not
covered by a HUD-approved management improvement plan, a schedule for
the use of current year funds, including target dates for the
obligation and expenditure of the funds (see Sec. 950.614);
(5) A summary description of the actions to be taken with non-CGP
funds to meet physical and management improvement needs that have been
identified by the IHA in its needs assessments;
(6) Documentation supporting the IHA's actions in carrying out its
responsibilities under the National Environmental Policy Act and other
related authorities in accordance with Sec. 950.120(a) and (b);
(7) Other information, as specified by HUD and approved by OMB
under the Paperwork Reduction Act; and
(8) An IHA resolution approving the Annual Submission or any
amendments thereto, as set forth in Sec. 950.652.
(f) Additional submissions with Annual Submission. An IHA shall
submit with the Annual Submission any amendments to the Comprehensive
Plan, as set forth in Sec. 950.652, and such additional information as
may be prescribed by HUD. HUD shall review any proposed amendments to
the Comprehensive Plan in accordance with review standards under
Sec. 950.654.
(g) HUD review and approval of Annual Submission. (1) General. An
Annual Submission accepted in accordance with paragraph (a) of this
section shall be considered to be approved, unless HUD notifies the IHA
in writing, postmarked within 75 calendar days of the date that HUD
receives the Annual Submission for
[[Page 8735]]
review under paragraph (c) of this section, that HUD has disapproved
the Annual Submission, indicating the reasons for disapproval, the
modifications required to make the Annual Submission approvable, and
the date by which such modifications shall be received by HUD. HUD may
request additional information (e.g., for eligibility determinations)
to facilitate review and approval of the Annual Submission during the
75-day review period. HUD shall not disapprove an Annual Submission on
the basis that HUD cannot complete its review under this section within
the 75-day deadline;
(2) Bases for disapproval for Annual Submission. HUD shall approve
the Annual Submission, except when:
(i) Plainly inconsistent with Comprehensive Plan. HUD determines
that the activities and expenditures proposed in the Annual Submission
are plainly inconsistent with the IHA's approved Comprehensive Plan;
(ii) Contradiction of IHA resolution. HUD has evidence that tends
to challenge, in a substantial manner, the certifications contained in
the board resolution, as required by Sec. 950.672(d)(7).
(h) Amendments to Annual Statement. The IHA shall advise HUD of all
changes to the IHA's approved Annual Statement in its Performance and
Evaluation Report submitted under Sec. 950.658. The IHA shall submit to
HUD for prior approval any additional work categories (except for
emergency work) that are not within the IHA's approved Five-Year Action
Plan.
(i) Failure to obligate formula funding and extension of time for
performance. (1) Failure to obligate formula funds. If the IHA fails to
obligate formula funds within the approved or extended time period, the
IHA may be subject to an alternative management strategy, which may
involve third-party oversight or administration of the modernization
function. HUD would only require such action after a corrective action
order had been issued under Sec. 950.660 and the IHA failed to comply
with the order. HUD could then require an alternative management
strategy in a corrective action order. An IHA may appeal in writing the
corrective action order requiring an alternative management strategy
within 30 calendar days of that order. HUD Headquarters shall render a
written decision on an IHA's appeal within 30 calendar days of the date
of its receipt of the IHA's appeal.
(2) Extension of time for performance. An IHA may extend the target
dates for fund obligation and expenditure in the approved Annual
Statement whenever any delay outside the IHA's control occurs, as
specified by HUD, and the extension is made in a timely manner. Such
revision is subject to HUD review under Sec. 950.660 as to the IHA's
continuing capacity. HUD shall not review as to an IHA's continuing
capacity any revisions to an IHA's Comprehensive Plan and related
statements when the basis for the revision is that HUD has not provided
the amount of assistance set forth in the Annual Submission, or has not
provided such assistance in a timely manner.
(j) ACC Amendment. After HUD approval of each year's Annual
Submission, HUD and the IHA shall enter into an ACC amendment in order
to draw down modernization funds. The ACC amendment shall require low-
income use of housing for not less than 20 years from the date of the
ACC amendment (subject to sale of homeownership units in accordance
with the terms of the ACC).
(k) Declaration of Trust. As HUD may require, the IHA shall execute
and file for record a Declaration of Trust as provided under the ACC to
protect the rights and interests of HUD throughout the 20-year period
during which the IHA is obligated to operate its developments in
accordance with the ACC, the Act, and HUD regulations and requirements.
A Declaration of Trust is not required for Mutual Help units.
Sec. 950.658 IHA Performance and Evaluation Report.
For any FFY in which an IHA has received assistance under this
subpart, the IHA shall submit a Performance and Evaluation Report, in a
form and at a time to be prescribed by HUD, describing its use of
assistance in accordance with the approved Annual Statement. The IHA
shall make reasonable efforts to notify residents and officials of the
appropriate governing body of the availability of the draft report,
make copies available to residents in the development office, and
provide residents with at least 30 calendar days in which to comment on
the report.
Sec. 950.660 HUD review of IHA performance.
(a) HUD determination. At least annually, HUD shall carry out such
reviews of the performance of each IHA as may be necessary or
appropriate to make the determinations required by this paragraph (a),
taking into consideration all available evidence.
(1) Conformity with Comprehensive Plan. HUD will determine whether
the IHA has carried out its activities under this subpart I in a timely
manner and in accordance with its Comprehensive Plan.
(2) Continuing capacity. HUD will determine whether the IHA has a
continuing capacity to carry out its Comprehensive Plan in a timely
manner. After the first full operational year of CGP, CIAP experience
will not be taken into consideration except when the IHA has not yet
had comparable experience under the CGP.
(3) Reasonable progress. HUD shall determine whether the IHA has
satisfied, or has made reasonable progress towards satisfying, the
applicable performance standards.
(b) Notice of deficiency. Based on HUD reviews of IHA performance
and findings of any of the deficiencies in paragraph (d) of this
section, HUD may issue to the IHA a notice of deficiency stating the
specific program requirements that the IHA has violated and requesting
the IHA to take any of the actions in paragraph (e) of this section.
(c) Corrective action order. (1) Based on HUD reviews of IHA
performance and findings of any of the deficiencies paragraph (d) of
this section, HUD may issue to the IHA a corrective action order,
whether or not a notice of deficiency has previously been issued in
regard to the specific deficiency on which the corrective action order
is based. HUD may order corrective action at any time by notifying the
IHA of the specific program requirements that the IHA has violated, and
specifying that any of the corrective actions listed in paragraph (e)
of this section shall be taken. HUD shall design corrective action to
prevent a continuation of the deficiency, mitigate any adverse effects
of the deficiency to the extent possible, or prevent a recurrence of
the same or similar deficiencies.
(2) Before ordering corrective action, HUD will notify the IHA and
give it an opportunity to consult with HUD regarding the proposed
action.
(3) Any corrective action ordered by HUD shall become a condition
of the grant agreement.
(4) If HUD orders corrective action by an IHA in accordance with
this section, the IHA's Board of Commissioners shall notify affected
residents of HUD's determination, the bases for the determination, the
conditioning requirements imposed under paragraph (c) of this section,
and the consequences to the IHA if it fails to comply with HUD's
requirements.
(d) Basis for corrective action. HUD may order an IHA to take
corrective action only if HUD determines:
(1) The IHA has not submitted a performance and evaluation report,
in accordance with Sec. 950.658;
[[Page 8736]]
(2) The IHA has not carried out its activities under the CGP
program in a timely manner and in accordance with its Comprehensive
Plan or HUD requirements, as described in paragraph (a)(1) of this
section;
(3) The IHA does not have a continuing capacity to carry out its
Comprehensive Plan in a timely manner or in accordance with its
Comprehensive Plan or HUD requirements, as described in paragraph
(a)(2) of this section;
(4) The IHA has not satisfied, or has not made reasonable progress
towards satisfying, the performance standards described in paragraph
(a)(3) of this section;
(5) An audit conducted in accordance with 24 CFR part 44 and
Sec. 950.120, or pursuant to other HUD reviews (including monitoring
findings) reveals deficiencies that HUD reasonably believes require
corrective action;
(6) The IHA has failed to repay HUD for amounts awarded under the
CGP program that were improperly expended; or
(7) The IHA has been determined to be high risk, in accordance with
Sec. 950.135.
(e) Types of corrective action. HUD may direct an IHA to take one
or more of the following corrective actions:
(1) Submit additional information:
(i) Concerning the IHA's administrative, planning, budgeting,
accounting, management, and evaluation functions, to determine the
cause for a IHA not meeting the standards in paragraphs (a)(1), (2), or
(3) of this section;
(ii) Explaining any steps the IHA is taking to correct the
deficiencies;
(iii) Documenting that IHA activities were not inconsistent with
the IHA's annual statement or other applicable laws, regulations, or
program requirements; and
(iv) Demonstrating that the IHA has a continuing capacity to carry
out the Comprehensive Plan in a timely manner;
(2) Submit detailed schedules for completing the work identified in
its Annual Statements and report periodically on its progress on
meeting the schedules;
(3) Notwithstanding 24 CFR 85.36(g), submit to HUD the following
documents for prior approval, which may include, but are not limited
to:
(i) Proposed agreement with the architect/engineer (prior to
execution);
(ii) Complete construction and bid documents (prior to soliciting
bids);
(iii) Proposed award of contracts, including construction and
equipment contracts and management contracts; or
(iv) Proposed contract modifications prior to issuance, including
modifications to construction and equipment contracts, and management
contracts.
(4) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, Five-Year Action Plan, or Performance and
Evaluation Report;
(5) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, Five-Year Action Plan, or Performance and
Evaluation Report;
(6) Reimburse, from non-HUD sources, one or more program accounts
for any amounts improperly expended;
(7) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies.
(8) Submit to an alternative management strategy which may involve
third-party oversight or administration of the modernization function
(see Sec. 950.650); and
(9) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies.
(f) Failure to take corrective action. In cases in which HUD has
ordered corrective action and the IHA has failed to take the required
actions within a reasonable time, as specified by HUD, HUD may take one
or more of the following steps:
(1) Withhold some or all of the IHA's grant;
(2) Declare a breach of the ACC grant amendment with respect to
some or all of the IHA's functions; or
(3) Any other sanction authorized by law or regulation.
(g) Reallocation of funds that have been withheld. If HUD has
withheld for a prescribed period of time some or all of an IHA's annual
grant, HUD may reallocate such amounts to other IHAs/PHAs under the CGP
program, subject to approval in appropriations acts. The reallocation
shall be made to IHAs that HUD has determined to be administratively
capable under Sec. 950.135, and to PHAs under the CGP program that are
not designated as either troubled or mod troubled under the PHMAP at 24
CFR part 901, based upon the relative needs of these IHAs and PHAs, as
determined under the formula at Sec. 950.604.
(h) Right to appeal. Before withholding some or all of the IHA's
annual grant, declaring a breach of the ACC grant amendment, or
reallocating funds that have been withheld, HUD will notify the IHA and
give it an opportunity, within a prescribed period of time, to present
to ONAP Headquarters, in writing, any arguments or additional facts and
data concerning the proposed action.
(i) Notification of residents. The IHA's Board of Commissioners
shall notify affected residents of HUD's final determination to
withhold funds, declare a breach of the ACC grant amendment, or
reallocate funds, as well as the basis for, and the consequences
resulting from, such a determination.
(j) Recapture. In addition, HUD may recapture for good cause any
grant amounts previously provided to an IHA, based upon a determination
that the IHA has failed to comply with the requirements of the CGP
program. Before recapturing any grant amounts, HUD will notify the IHA
and give it an opportunity to appeal in accordance with paragraph (h)
of this section. Any reallocation of recaptured amounts will be in
accordance with paragraph (g) of this section. The IHA's board of
Commissioners shall notify affected residents of HUD's final
determination to recapture any funds.
PART 965--PHA-OWNED OR LEASED PROJECTS--GENERAL PROVISIONS
8. The heading for part 965 is revised to read as set forth above.
9. The authority citation for part 965 continues to read as
follows:
Authority: 42 U.S.C. 1437, 1437a, 1437d, 1437g, and 3535(d).
Subpart H is also issued under 42 U.S.C. 4821-4846.
Subpart A--Preemption of State Prevailing Wage Requirements
10. The heading of subpart A is revised as set forth above.
Sec. 965.101 [Amended]
11. Section 965.101 is amended by:
a. Removing from the section heading the words, ``With Respect to
Maintenance and Operation of Projects'';
b. Removing the parenthetical phrase ``(including modernization)''
from the introductory text of paragraph (a); and
c. Removing the words, ``maintenance and operation'' wherever they
appear in paragraphs (a) introductory text, (a)(2), (b)(1) introductory
text, (b)(2), and (b)(3), and adding in their place, the words,
``development, maintenance, and modernization''.
PART 968--PUBLIC HOUSING MODERNIZATION
12. The authority citation for 24 CFR part 968 continues to read as
follows:
[[Page 8737]]
Authority: 42 U.S.C. 1437d, 1437l, and 3535(d).
Subpart A--General
13. Section 968.101 is amended by revising paragraph (a); removing
the second sentence of paragraph (b)(2); revising paragraphs (b)(1),
(b)(5), and (c); and adding a new paragraph (d), to read as follows:
Sec. 968.101 Purpose and applicability.
(a) Purpose. The purpose of this part is to set forth the policies
and procedures for the Modernization program authorizing HUD to provide
financial assistance to Public Housing Agencies (PHAs).
(b) Applicability. (1) Subpart A of this part applies to all
modernization under this part. Subpart B of this part sets forth the
requirements and procedures for the Comprehensive Improvement
Assistance Program (CIAP) for PHAs that own or operate fewer than 250
public housing units. Subpart C of this part sets forth the
requirements and procedures for the Comprehensive Grant Program (CGP)
for PHAs that own or operate 250 or more units. A PHA that qualifies
for participation in the CGP is not eligible to participate in the
CIAP. A PHA that has already qualified to participate in the CGP may
elect to continue to participate in the CGP so long as it owns or
operates at least 200 units.
* * * * *
(5) A development/building/unit which is assisted under section
5(j)(2) of the Act (Major Reconstruction of Obsolete Projects) (MROP)
is eligible for section 14 funding (CIAP or CGP) where it received MROP
funding after FFY 1988 and has reached Date of Full Availability (DOFA)
or where it received MROP funding during FFYs 1986-1988 and all MROP
funds have been expended.
(c) Transition. Any amount that HUD has approved for a PHA must be
used for the purposes for which the funding was provided, or:
(1) For a CGP PHA, for purposes consistent with an approved Annual
Statement or Five-Year Action Plan submitted by the PHA, as the PHA
determines to be appropriate; or
(2) For a CIAP PHA, in accordance with a revised CIAP budget.
(d) Approved information collections. The following sections of
this subpart have been approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 and assigned OMB
approval number 2577-0044: Secs. 968.135, 968.145, 968.210, 968.215,
968.225, and 968.230. The following sections of this subpart have been
similarly approved and assigned approval number 2577.0157:
Secs. 968.310, 968.315, 968.325, and 968.330.
Sec. 968.102 [Amended]
14. Section 968.102 is amended by removing the reference to
``Sec. 968.310(d)'' in paragraph (b) and adding in its place a
reference to ``Sec. 968.112(d)''.
15. Section 968.103 is amended by revising paragraphs (a), (b),
(c), (e)(1) (i) and (ii) introductory text, (f)(1), (f)(2) introductory
text, (f)(2)(i), (f)(2)(ii) (f), (g), and (h), and the heading to
paragraph (e)(4), to read as follows:
Sec. 968.103 Allocation of funds under section 14.
(a) General. This section describes the process for allocating
modernization funds to the aggregate of PHAs and IHAs participating in
the CIAP and to individual PHAs and IHAs participating in the CGP.
(b) Set-aside for emergencies and disasters. For each FFY, HUD
shall reserve from amounts approved in the appropriation act for grants
under this part and part 950 of this title, an amount not to exceed $75
million (which shall include unused reserve amounts carried over from
previous FFYs), which shall be made available to PHAs and IHAs for
modernization needs resulting from natural and other disasters, and
from emergencies. HUD shall replenish this reserve at the beginning of
each FFY. Any unused funds from previous years may remain in the
reserve until allocated. The requirements governing the reserve for
disasters and emergencies and the procedures by which a PHA may request
such funds, are set forth in Sec. 968.104.
(c) Set-aside for credits for mod troubled PHAs under subpart C of
this part. After deducting an amount for the reserve for natural and
other disasters and for emergencies under paragraph (b) of this
section, HUD shall set aside from the funds remaining no more than five
percent for the purpose of providing credits to PHAs that were formerly
designated as mod troubled agencies under the Public Housing Management
Assessment Program (PHMAP) (see 24 CFR part 901). The purpose of this
set-aside is to compensate these PHAs for amounts previously withheld
by HUD because of a PHA's prior designation as a mod troubled agency.
Since part 901 of this chapter does not apply to IHAs, they are not
classified as ``mod troubled'' and they do not participate in the set-
aside credits established under paragraph (c) of this section.
* * * * *
(e) * * *
(1) * * *
(i) Statistically reliable data are available. Where HUD determines
that the data concerning the categories of backlog need identified
under paragraph (e)(4) of this section are statistically reliable for
individual IHAs and PHAs with 250 or more units, or for the aggregate
of IHAs and PHAs with fewer than 250 units, which are not participating
in the formula funding portion of the modernization program, it will
base its allocation on direct estimates of the statutory categories of
backlog need, based on the most recently available, statistically
reliable data;
(ii) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of backlog need identified under paragraph (e)(4) of this section are
not available for individual PHAs and IHAs with 250 or more units, it
will base its allocation of funds under this section on estimates of
the categories of backlog need using:
* * * * *
(4) Categories of backlog need. * * *
(f) * * *
(1) Statistically reliable data are available. Where HUD determines
that statistically reliable data are available concerning the
categories of need identified under paragraph (f)(3) of this section
for individual PHAs and IHAs with 250 or more units, and for the
aggregate of PHAs and IHAs with fewer than 250 units, it shall base its
allocation of assistance under this section on the needs that are
estimated to have accrued since the date of the last objective
measurement of backlog needs under paragraph (e)(1)(i) of this section;
(2) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of need identified under paragraph (f)(3) of this section are not
available for individual PHAs and IHAs with 250 or more units, it shall
base its allocation of assistance under this section on estimates of
accrued need using:
(i) The most recently available data on the categories of accrual
need under paragraph (f)(3) of this section;
(ii) * * *
(F) The total number of units of each PHA or IHA that owns or
operates 250 or more units. (weighted at .0144);
* * * * *
(g) Allocation of CIAP. The formula amount determined under
paragraphs
[[Page 8738]]
(e) and (f) of this section for PHAs and IHAs with fewer than 250 units
shall be allocated to PHAs in accordance with the requirements of
subpart B of this part (the CIAP), and to IHAs in accordance with the
requirements of 24 CFR part 950, subpart I.
(h) Allocation for CGP. The formula amount determined under
paragraphs (e) and (f) of this section for PHAs with 250 or more units
shall be allocated in accordance with the requirements of subpart C of
this part (the CGP), and for IHAs in accordance with the requirements
of 24 CFR part 950, subpart I. A PHA that is eligible to receive a
grant under the CGP may appeal the amount of its formula allocation in
accordance with the requirements set forth in Sec. 968.310(b). A PHA
that is eligible to receive modernization funds under the CGP because
it owns or operates 250 or more units is disqualified from receiving
assistance under the CIAP under this part.
* * * * *
16. Section 968.105 is amended by adding in alphabetical order new
definitions for ``CGP'', ``modernization program'', ``modernization
project'', and ``reasonable cost''; by revising the definition ``Force
account labor''; removing the definition for ``CIAP program''; and
adding a definition for ``CIAP'' to read as follows:
Sec. 968.105 Definitions.
* * * * *
CGP. The Comprehensive Grant Program, which provides modernization
funds on a formula basis to PHAs with 250 or more public housing units.
CIAP. The Comprehensive Improvement Assistance Program, which
provides modernization funds on a competitive basis to PHAs with fewer
than 250 public housing units.
* * * * *
Force account labor. Labor employed directly by the PHA on either a
permanent or a temporary basis. See Sec. 968.120.
* * * * *
Modernization program. A PHA's program for carrying out
modernization, as set forth in the approved CIAP budget or CGP Annual
Statement.
Modernization project. The improvement of one or more existing
public housing developments under a unique number designated for that
modernization program. For each modernization project, HUD and the PHA
shall enter into an ACC amendment, requiring low-income use of the
housing for not less than 20 years from the date of the ACC amendment
(subject to sale of homeownership units in accordance with the terms of
the ACC). The terms ``modernization project number'' and
``comprehensive grant number'' are used interchangeably.
* * * * *
Reasonable cost. Total unfunded hard cost needs for a development
that do not exceed 90 percent of the computed Total Development Cost
(TDC) for a new development with the same structure type and number and
size of units in the market area.
* * * * *
Sec. 968.312 [Redesignated as Sec. 968.104]
17. Section 968.312 is redesignated as Sec. 968.104; and newly
redesignated Sec. 968.104 is amended by:
a. Removing from paragraph (a)(1) the phrase ``under
Sec. 968.310(a)(3)'';
b. Removing references to ``PHAs participating in CGP'' and ``PHAs
participating in CIAP'' in paragraphs (a) (1) and (a)(3), and adding in
their place references to ``CGP PHAs'' and ``CIAP PHAs'', respectively;
c. Removing references to ``PHA participating in CGP'' and ``PHA
participating in CIAP'' in paragraph (a)(1), and adding in their place
references to ``CGP PHA'' and ``CIAP PHA'', respectively;
d. Adding a sentence at the end of paragraph (a)(3);
e. Removing from paragraphs (a)(1) and (b)(1) the two references to
``Sec. 968.320'' and adding in their place references to
``Sec. 968.315'';
f. Amending paragraph (b)(1) in the fourth sentence, by adding
after the words ``insurance coverage'' and before the period, the words
``or other Federal assistance''; and in the fifth sentence, by adding
before the word ``PHA'', the word ``CGP''; and
g. Amending paragraph (b)(3) by removing the phrase, ``shall be in
the form of a grant, and''; to read as follows:
Sec. 968.104 Reserve for emergencies and disasters.
* * * * *
(a) * * *
(3) * * * A CIAP PHA is not required to repay assistance for its
emergency needs from the reserve.
* * * * *
Sec. 968.108 [Amended]
18. Section 968.108 is amended by removing paragraph (f)(2) and
redesignating paragraph (f)(3) as paragraph (f)(2).
Sec. 968.110 [Amended]
19. Section 968.110 is amended by removing and reserving paragraphs
(i), (j), and (l), by removing from paragraph (e)(3) the words ``or
tribal'', and by removing from paragraph (e)(3) the reference to
``Sec. 968.120'' and adding in its place a reference to ``Sec. 965.101
of this chapter''.
20. A new Sec. 968.112 is added, to read as follows:
Sec. 968.112 Eligible costs.
(a) General. A PHA may use financial assistance received under this
part for the following eligible costs:
(1) For a CGP PHA, the eligible costs are:
(i) Undertaking activities described in its approved Annual
Statement under Sec. 968.325 and approved Five-Year Action Plan under
Sec. 968.315(e)(5);
(ii) Carrying out emergency work, whether or not the need is
indicated in the PHA's approved Comprehensive Plan, including Five-Year
Action Plan, or Annual Statement;
(iii) Funding a replacement reserve to carry out eligible
activities in future years, subject to the restrictions set forth in
paragraph (f) of this section;
(iv) Preparing the Comprehensive Plan and Five-Year Action Plan
under Sec. 968.315 and the Annual Submission under Sec. 968.325,
including reasonable costs necessary to assist residents to participate
in a meaningful way in the planning, implementation and monitoring
process; and
(v) Carrying out an audit, in accordance with 24 CFR part 44.
(2) For a CIAP PHA, the eligible costs are activities approved by
HUD and included in an approved CIAP budget.
(b) Demonstration of viability. Except in the case of emergency
work, a PHA shall only expend funds on a development for which the PHA
has determined, and HUD agrees, that the completion of the improvements
and replacements (for CGP PHAs, as identified in the Comprehensive
Plan) will reasonably ensure the long-term physical and social
viability of the development at a reasonable cost (as defined in
Sec. 968.105), or for essential non-routine maintenance needed to keep
the property habitable until the demolition or disposition application
is approved and residents are relocated.
(c) Physical improvements. Eligible costs include alterations,
betterments, additions, replacements, and non-routine maintenance that
are necessary to meet the modernization and energy conservation
standards prescribed in Sec. 968.115. These mandatory standards may be
exceeded when a PHA (and HUD in the case of CIAP PHAs) determines that
it is necessary or highly desirable for the long-term physical and
social viability of the individual development. Development specific
[[Page 8739]]
work includes work items that are modest in design and cost, but still
blend in with the design and architecture of the surrounding community
by including amenities, quality materials and design and landscaping
features that are customary for the locality and culture. The Field
Office has the authority to approve nondwelling space where such space
is needed to administer, and is of direct benefit to, the public
housing program. If demolition or disposition is proposed, a PHA shall
comply with 24 CFR part 970. Additional dwelling space may be added to
existing units.
(d) Turnkey III developments. (1) General. Eligible physical
improvement costs for existing Turnkey III developments are limited to
work items that are not the responsibility of the homebuyer families
and that are related to health and safety, correction of development
deficiencies, physical accessibility, energy audits and cost-effective
energy conservation measures, or LBP testing, interim containment,
professional risk assessment and abatement. In addition, management
improvements are eligible costs.
(2) Ineligible costs. Routine maintenance or replacements, and
items that are the responsibility of the homebuyer families are
ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units.
(i) Notwithstanding the requirements of paragraph (d)(1) of this
section, a PHA may substantially rehabilitate a Turnkey III unit
whenever the unit becomes vacant or is occupied by a non-homebuyer
family in order to return the unit to the inventory or make the unit
suitable for homeownership purposes. A PHA that intends to use funds
under this paragraph must identify in its CIAP application or CGP
annual submission the estimated number of units proposed for
substantial rehabilitation and subsequent sale. In addition, a PHA must
demonstrate, for each of the Turnkey III units proposed to be
substantially rehabilitated, that it has homebuyers who both are
eligible for homeownership, in accordance with the requirements of 24
CFR part 904, and have demonstrated their intent to be placed into the
unit.
(ii) Before a PHA may be approved for substantial rehabilitation of
a unit under this paragraph, it must first deplete any Earned Home
Payments Account (EHPA) or Non-Routine Maintenance Reserve (NRMR)
pertaining to the unit, and request the maximum amount of operating
subsidy. Any increase in the value of a unit caused by its substantial
rehabilitation under this paragraph shall be reflected solely by its
subsequent appraised value, and by an automatic increase in its selling
price.
(e) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or non-dwelling facilities, where
the demolition is approved by HUD under 24 CFR part 970, and related
costs, such as clearing and grading the site after demolition and
subsequent site improvement to benefit the remaining portion of the
existing development; and
(2) Conversion of existing dwelling units to different bedroom
sizes or to non-dwelling use.
(f) Replacement reserve costs (for CGP only). (1) Funding a
replacement reserve to carry out eligible activities in future years is
an eligible cost, subject to the following restrictions:
(i) Annual CGP funds are not needed for existing needs, as
identified by the PHA in its needs assessments; or
(ii) A physical improvement requires more funds than the PHA would
receive under its annual formula allocation; or
(iii) A management improvement requires more funds than the PHA may
use under its 20% limit for management improvements (except as provided
in paragraph (n)(2)(i) of this section), and the PHA needs to save a
portion of its annual grant, in order to combine it with a portion of
subsequent year(s) grants to fund the work item.
(2) The PHA shall invest replacement reserve funds so as to
generate a return equal to or greater than the average 91-day Treasury
bill rate.
(3) Interest earned on funds in the replacement reserve will not be
added to the PHA's income in the determination of a PHA's operating
subsidy eligibility, but must be used for eligible modernization costs.
(4) To the extent that its annual formula allocation and any
unobligated balances of modernization funds are not adequate to meet
emergency needs, a PHA must first use its replacement reserve, where
funded, to meet emergency needs, before requesting funds from the
reserve under Sec. 968.104.
(5) A PHA is not required to use its replacement reserve for costs
related to natural and other disasters.
(g) Management improvement costs. (1) General. Management
improvements that are development-specific or PHA-wide in nature are
eligible costs where needed to upgrade the operation of the PHA's
developments, sustain physical improvements at those developments or
correct management deficiencies. A PHA's ongoing operating expenses are
ineligible management improvement costs. For CIAP PHAs, management
improvements may be funded as a single work item.
(2) Eligible costs. Eligible costs include:
(i) General management improvement costs. Eligible costs include
general management improvement costs, such as: management, financial,
and accounting control systems of the PHA; adequacy and qualifications
of PHA personnel, including training; resident programs and services
through the coordination of the provision of social services from
tribal or local government or other public and private entities;
resident and development security; resident selection and eviction;
occupancy; rent collection; maintenance; and equal opportunity.
(ii) Economic development costs. Eligible costs include job
training for residents and resident business development activities,
for the purpose of carrying out activities related to the
modernization-funded management and physical improvements. HUD
encourages PHAs, to the greatest extent feasible, to hire residents as
trainees, apprentices, or employees to carry out the modernization
program under this part, and to contract with resident-owned businesses
for modernization work.
(iii) Resident management costs. Eligible costs include technical
assistance to a resident council or resident management corporation
(RMC), as defined in part 964, in order to: determine the feasibility
of resident management to carry out management functions for a specific
development or developments; train residents in skills directly related
to the operations and management of the development(s) for potential
employment by the RMC; train RMC board members in community
organization, board development, and leadership; and assist in the
formation of an RMC.
(iv) Resident homeownership costs. Eligible costs are limited to
the study of the feasibility of converting rental to homeownership
units and the preparation of an application for conversion to
homeownership or sale of units.
(v) Preventive maintenance system. Eligible costs include the
establishment of a preventive maintenance system or improvement of an
existing system. A preventive maintenance system must provide for
regular inspections of building structures, systems and units and
distinguish between work eligible for operating funds (routine
maintenance) and work eligible for modernization funding (non-routine
maintenance).
[[Page 8740]]
(h) Drug elimination costs. Eligible costs include drug elimination
activities involving management or physical improvements, as specified
by HUD.
(i) LBP costs. Eligible costs include professional risk assessments
and interim containment of family developments/buildings constructed
before 1980, testing and abatement of family developments/buildings
constructed before 1978, and costs for insurance coverage for pollution
hazards associated with the testing, abatement, clean-up and disposal
of LBP on applicable surfaces of family developments/buildings
constructed before 1978.
(j) Administrative costs. Administrative costs necessary for the
planning, design, implementation and monitoring of the physical and
management improvements are eligible costs and include the following:
(1) Salaries. The salaries of non-technical and technical PHA
personnel assigned full-time or part-time to modernization are eligible
costs only where the scope and volume of the work are beyond that which
could be reasonably expected to be accomplished by such personnel in
the performance of their non-modernization duties. A PHA shall properly
apportion to the appropriate program budget any direct charges for the
salaries of assigned full- or part-time staff (e.g., to the CIAP, CGP
or operating budget);
(2) Employee benefit contributions. PHA contributions to employee
benefit plans on behalf of non-technical and technical PHA personnel
are eligible costs in direct proportion to the amount of salary charged
to the CIAP or CGP, as appropriate;
(3) Preparation of CIAP or CGP required documents;
(4) Resident participation. Eligible costs include those associated
with ensuring the meaningful participation of residents in the
development of the CIAP Application or the CGP Annual Submission and
Comprehensive Plan and the implementation and monitoring of the
approved modernization program; and
(5) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(k) Audit costs (CGP only). Eligible costs are limited to the
portion of the audit costs that are attributable to the modernization
program.
(l) Architectural/engineering and consultant fees. Eligible costs
include fees for planning, identification of needs, detailed design
work, preparation of construction and bid documents and other required
documents, LBP professional risk assessments and testing, and
inspection of work in progress.
(m) Relocation costs. Eligible costs include relocation and other
assistance for permanent and temporary relocation, as a direct result
of rehabilitation, demolition or acquisition for a modernization-funded
activity, where this assistance is required by 49 CFR part 24 or
Sec. 968.108.
(n) Cost limitations. (1) CIAP costs. (i) Management improvement
costs. Management improvement costs shall not exceed a percentage of
the CIAP funds available to a Field Office in a particular FFY, as
specified by HUD.
(ii) Planning costs. Planning costs are costs incurred before HUD
approval of the CIAP application and which are related to developing
the CIAP application or carrying out eligible modernization planning,
such as detailed design work, preparation of solicitations, and LBP
professional risk assessment and testing. Planning costs may be funded
as a single work item. If a PHA incurs planning costs without prior HUD
approval, a PHA does so with the full understanding that the costs may
not be reimbursed upon approval of the CIAP application. Planning costs
shall not exceed 5 percent of the CIAP funds available to a Field
Office in a particular FFY.
(2) CGP costs. (i) Management improvement costs. Notwithstanding
the full fungibility of work items, a PHA shall not use more than a
total of 20 percent of its annual grant for management improvement
costs in account 1408, unless specifically approved by HUD or the PHA
has been designated as both an over-all high performer and mod-high
performer under the PHMAP.
(ii) Administrative costs. Notwithstanding the full fungibility of
work items, a PHA shall not use more than a total of 10 percent of its
annual grant on administrative costs in account 1410, excluding any
costs related to lead-based paint or asbestos testing (whether
conducted by force account employees or by a contractor), in-house
architectural/engineering (A/E) work, or other special administrative
costs required by State or local law, unless specifically approved by
HUD.
(3) Program benefit. Where the physical or management improvement,
including administrative cost, will benefit programs other than Public
Housing, such as Section 8 or local revitalization programs, eligible
costs are limited to the amount directly attributable to the public
housing program.
(4) No duplication. Any eligible cost for an activity funded by
CIAP or CGP shall not also be funded by any other HUD program.
(o) Ineligible costs. Ineligible costs include:
(1) Luxury improvements;
(2) Indirect administrative costs (overhead), as defined in OMB
Circular A-87;
(3) Public housing operating assistance;
(4) Direct provision of social services, through either force
account or contract labor, from FFY 1996 and future FFYs funds, unless
otherwise provided by law; and
(5) Other ineligible activities, as specified by HUD.
(p) Expanded eligibility for FFY 1995 and prior year modernization
funds. The FFY 1995 Rescissions Act expanded the eligible activities
that may be funded with CIAP or CGP assistance provided from FFY 1995
and prior FFY funds. Such activities include, but are not limited to:
(1) New construction or acquisition of additional public housing
units, including replacement units;
(2) Modernization activities related to the public housing portion
of housing developments held in partnership, or cooperation with non-
public housing entities; and
(3) Other activities related to public housing, including
activities eligible under the Urban Revitalization Demonstration (HOPE
VI).
21. Section 968.115 is revised to read as follows:
Sec. 968.115 Modernization and energy conservation standards.
All improvements funded under this part shall:
(a) Meet the modernization standards as prescribed by HUD;
(b) Incorporate cost-effective energy conservation measures,
identified in the PHA's most recently updated energy audit, conducted
pursuant to part 965, subpart C;
(c) Where changing or installing a new utility system, conduct a
life-cycle cost analysis, reflecting installation and operating costs;
and
(d) Provide decent, safe, and sanitary living conditions in PHA-
owned and PHA-operated public housing.
22. Section 968.120 is revised to read as follows:
Sec. 968.120 Force account.
(a) For both CIAP and CGP, a PHA may undertake the activities using
force account labor, only where specifically approved by HUD in the
CIAP budget or CGP Annual Statement, except no prior HUD approval is
required where the PHA is designated as both an overall
[[Page 8741]]
high performer and Modernization high performer under the PHMAP.
(b) If the entirety of modernization activity (including the
planning and architectural design of the rehabilitation) is
administered by the RMC, the PHA shall not retain for any
administrative or other reason, any portion of the modernization funds
provided, unless the PHA and the RMC provide otherwise by contract.
23. New Secs. 968.125, 968.130, and 968.135 are added, to read as
follows:
Sec. 968.125 Initiation of modernization activities.
After HUD has approved the modernization program and entered into
an ACC amendment with the PHA, a PHA shall undertake the modernization
activities and expenditures set forth in its approved CIAP budget or
CGP Annual Statement/Five-Year Action Plan in a timely, efficient and
economical manner. All approved funding must be obligated within two
years of approval and expended within three years of approval unless
HUD approves a longer time period in the PHA's implementation schedule,
as set forth in the CIAP budget or CGP Annual Statement. HUD may
approve a longer time period for such reasons as the large size of the
grant or the complexity of the work.
Sec. 968.130 Fund requisitions.
To draw down modernization funds against the approved CIAP budget
or CGP Annual Statement, a PHA shall comply with requirements
prescribed by HUD.
Sec. 968.135 Contracting requirements.
In addition to the requirements specified in 24 CFR parts 5, 85,
and 965, subpart A, and Sec. 968.110(e), the following provisions
apply:
(a) Architect/engineer and other professional services contracts.
For CIAP only and notwithstanding 24 CFR 85.36(g), a PHA shall comply
with the following HUD requirements:
(1) Where the proposed contract amount exceeds the HUD-established
threshold, submit the contract for prior HUD approval before execution
or issuance; or
(2) Where the proposed contract amount does not exceed the HUD-
established threshold, certify that the scope of work is consistent
with the originally approved modernization program, and that the amount
is appropriate and does not result in the total HUD-approved CIAP
budget being exceeded.
(b) Assurance of completion. For both CIAP and CGP and
notwithstanding 24 CFR 85.36(h), for each construction contract over
$100,000, the contractor shall furnish a bid guarantee from each bidder
equivalent to 5% of the bid price; and one of the following:
(1) A performance and payment bond for 100 percent of the contract
price; or
(2) Separate performance and payment bonds, each for 50% or more of
the contract price; or
(3) A 20% cash escrow; or
(4) a 25% irrevocable letter of credit.
(c) Construction solicitations. For CIAP only and notwithstanding
24 CFR 85.36(g), a PHA shall comply with HUD requirements to either:
(1) Where the estimated contract amount exceeds the HUD-established
threshold, submit a complete construction solicitation for prior HUD
approval before issuance; or
(2) Where the estimated contract amount does not exceed the HUD-
established threshold, certify receipt of the required architect's/
engineer's certification that the construction documents accurately
reflect HUD-approved work and meet the modernization and energy
conservation standards and that the construction solicitation is
complete and includes all mandatory items.
(d) Contract awards. (1) For CIAP only, a PHA shall obtain HUD
approval of the proposed award of a contract if the contract work is
inconsistent with the originally approved modernization program or the
procurement meets the criteria set forth in 24 CFR 85.36(g)(2)(i)
through (iv). In all other instances, a PHA shall make the award
without HUD approval after the PHA has certified that:
(i) The solicitation and award procedures were conducted in
compliance with State or local laws and Federal requirements;
(ii) The award does not meet the criteria in 24 CFR 85.36(g)(2)(i)
through (iv) for prior HUD approval; and
(iii) The contractor is not on the Lists of Parties Excluded from
Federal Procurement or Nonprocurement Programs;
(2) For CGP only, a PHA shall obtain HUD approval of the proposed
award of a contract if the procurement meets the criteria set forth in
24 CFR 85.36(g)(2)(i) through (iv).
(e) Contract modifications. For CIAP only and notwithstanding 24
CFR 85.36(g), except in an emergency endangering life or property, a
PHA shall comply with HUD requirements to either:
(1) Where the proposed contract modification exceeds the HUD-
established threshold, submit the proposed modification for prior HUD
approval before issuance; or
(2) Where the proposed contract modification does not exceed the
HUD-established threshold, certify that the proposed modification is
within the scope of the contract and that any additional costs are
within the total HUD-approved CIAP budget amount.
(f) Construction requirements. Where indicated by poor performance,
a PHA may be required to submit to HUD periodic progress reports and,
for prior HUD approval, construction completion documents above a HUD-
specified amount. For CGP only, a PHA is notified of additional
construction requirements by a notice of deficiency or a corrective
action order.
(g) Reward for high performers. For CIAP only, if a PHA is both an
overall high performer and a modernization high performer under the
Public Housing Management Assessment Program (PHMAP), HUD will not
establish thresholds, and the PHA is not required to obtain prior HUD
approval, under paragraphs (a), (c), and (e) of this section.
Sec. 968.240 [Redesignated as Sec. 968.140]
24. Section 968.240 is redesignated as Sec. 968.140.
25. A new Sec. 968.145 is added to subpart A, to read as follows:
Sec. 968.145 Fiscal closeout.
(a) Actual modernization cost certificate (AMCC). Upon expenditure
by the PHA of all funds, or termination by HUD of the activities funded
in a modernization program, a PHA shall submit the AMCC, in a form
prescribed by HUD, to HUD for review and approval for audit. After
audit verification, HUD shall approve the AMCC.
(b) Audit. The audit shall follow the guidelines prescribed in 24
CFR part 44, Non-Federal Government Audit Requirements. If the pre-
audit or post-audit AMCC indicates that there are excess funds, a PHA
shall immediately remit the excess funds as directed by HUD. If the
pre-audit or post-audit AMCC discloses unauthorized or ineligible
expenditures, a PHA shall immediately take such corrective actions as
HUD may direct.
26. Subpart B is revised to read as follows:
Subpart B--Comprehensive Improvement Assistance Program (For PHAs That
Own or Operate Fewer Than 250 Units)
968.205 Definitions.
968.210 Procedures for obtaining approval of a modernization
program.
968.215 Resident and homebuyer participation.
[[Page 8742]]
968.225 Budget revisions.
968.230 Progress reports.
968.235 Time extensions.
968.240 HUD review of PHA performance.
Subpart B--Comprehensive Improvement Assistance Program (For PHAs
That Own or Operate Fewer Than 250 Units)
Sec. 968.205 Definitions.
In addition to the definitions in Sec. 968.105, the following
definitions apply to this subpart:
Emergency Modernization (CIAP). A type of modernization program for
a development that is limited to physical work items of an emergency
nature that poses an immediate threat to the health or safety of
residents or is related to fire safety, and that must be corrected
within one year of CIAP funding approval.
Management capability. A PHA has management capability if it is:
(1) Not designated as Troubled under part 901 of this chapter,
Public Housing Management Assessment Program (PHMAP); or
(2) Designated as Troubled, but has a reasonable prospect of
acquiring management capability through CIAP-funded management
improvements and administrative support. A Troubled PHA is eligible for
Emergency Modernization only, unless it is making reasonable progress
toward meeting the performance targets established in its memorandum of
agreement or equivalent under Sec. 901.140 of this chapter or has
obtained alternative oversight of its management functions.
Modernization capability. A PHA has modernization capability if it
is:
(1) Not designated as Modernization Troubled under part 901 of this
chapter, PHMAP; or
(2) Designated as Modernization Troubled, but has a reasonable
prospect of acquiring modernization capability through CIAP-funded
management improvements and administrative support, such as hiring
staff or contracting for assistance. A Modernization Troubled PHA is
eligible for Emergency Modernization only, unless it is making
reasonable progress toward meeting the performance targets established
in its memorandum of agreement or equivalent under Sec. 901.140 of this
chapter or has obtained alternative oversight of its modernization
functions. Where a PHA does not have a funded modernization program in
progress, the Field Office shall determine whether the PHA has a
reasonable prospect of acquiring modernization capability through
hiring staff or contracting for assistance.
Other Modernization (modernization other than emergency). A type of
modernization program for a development that includes one or more
physical work items, where HUD determines that the physical
improvements are necessary and sufficient to extend substantially the
useful life of the development, and/or one or more development specific
or PHA-wide management work items (including planning costs), and/or
lead-based paint testing, professional risk assessments, interim
containment, and abatement.
Work item. Any separately identifiable unit of work constituting a
part of a modernization program.
Sec. 968.210 Procedures for obtaining approval of a modernization
program.
(a) HUD notification. After modernization funds for a particular
FFY become available, HUD shall publish in the Federal Register a
notice of funding availability (NOFA), the time frame for submission of
the CIAP Application, and other pertinent information.
(b) PHA consultation with local officials and residents/homebuyers.
A PHA shall develop the application in consultation with local
officials and residents/homebuyers, as set forth in Sec. 968.215.
(c) PHA application. A PHA shall submit to HUD an application, in a
form prescribed by HUD. Where a PHA has not included some of its
developments in the CIAP application, HUD may not consider funding any
non-emergency work at excluded developments or subsequently approve use
of leftover funds at excluded developments.
(d) Completeness Review. To be eligible for processing, an
application must be physically received by HUD by the time and date
specified in the NOFA. Immediately after the application deadline, HUD
shall perform a completeness review to determine whether the
application is complete, responsive to the NOFA, and acceptable for
technical processing.
(1) If the application form or any other essential document, as
specified in the NOFA, is missing, the PHA's application will be
considered substantially incomplete and, therefore, ineligible for
further processing. HUD shall immediately notify the PHA in writing.
(2) If other required documents, including certifications, as
specified in the NOFA, are missing or there is a technical mistake,
such as no signature on a submitted form, HUD shall immediately notify
the PHA in writing to submit or correct the deficiency within a
specified period of time from the date of HUD's written notification.
This is not additional time to substantially revise the application.
Deficiencies which may be corrected at this time are inadvertently
omitted documents or clarifications of previously submitted material
and other changes which are not of such a nature as to improve the
competitive position of the application.
(3) If a PHA fails to submit or correct the items within the
required time period, the PHA's application will be ineligible for
further processing. HUD shall immediately notify the PHA in writing
after this occurs.
(4) A PHA may submit an application for Emergency Modernization
whenever needed.
(e) Eligibility Review. (1) Eligibility for processing. To be
eligible for processing:
(i) Each eligible development for which work is proposed has
reached the Date of Full Availability (DOFA) and is under ACC at the
time of CIAP application submission; and
(ii) Where funded under Major Reconstruction of Obsolete Projects
(MROP) after FFY 1988, the development/building/unit has reached DOFA
or, where funded during FFYs 1986-1988, all MROP funds for the
development/building have been expended.
(2) Eligibility for processing on reduced scope. When the following
conditions exist, a PHA will be reviewed on a reduced scope:
(i) Section 504 compliance. Where a PHA has not completed all
required structural changes to meet the need for accessible units, as
identified in the PHA's Section 504 needs assessment, the PHA is
eligible for processing only for Emergency Modernization or physical
work needed to meet Section 504 requirements.
(ii) Lead-based paint (LBP) testing compliance. Where a PHA has not
complied with the statutory requirement to complete LBP testing on all
pre-1978 family units, the PHA is eligible for processing only for
Emergency Modernization or work needed to complete the testing.
(iii) Fair Housing and Equal Opportunity (FHEO) compliance. Where a
PHA has not complied with FHEO requirements set forth in Sec. 968.110,
as evidenced by an enforcement action, finding or determination, the
PHA is eligible for processing only for Emergency Modernization or for
work needed to remedy the civil rights deficiencies--unless the PHA is
implementing a voluntary compliance agreement or settlement agreement
designed to correct the area(s) of
[[Page 8743]]
noncompliance. The enforcement actions, findings, or determinations
that trigger limited eligibility are described in paragraphs
(e)(2)(iii) (A) through (E) of this section:
(A) A pending proceeding against the PHA based upon a charge of
discrimination issued under the Fair Housing Act. A charge of
discrimination is a charge under section 810(g)(2) of the Fair Housing
Act (42 U.S.C. 3610(g)(2)), issued by the Department's General Counsel
or legally authorized designee;
(B) A pending civil rights suit against the PHA, referred by the
Department's General Counsel and instituted by the Department of
Justice;
(C) Outstanding HUD findings of PHA noncompliance with civil rights
statutes and executive orders specified in 24 CFR part 5 and
Sec. 968.110 or implementing regulations, as a result of formal
administrative proceedings;
(D) A deferral of the processing of applications from the PHA
imposed by HUD under Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d-1) and HUD implementing regulations (24 CFR 1.8), the
Attorney General's Guidelines (28 CFR 50.3), and procedures (HUD
Handbook 8040.1), or under Section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794) and HUD implementing regulations (24 CFR 8.57); or
(E) An adjudication of a violation under any of the civil rights
authorities specified in 24 CFR part 5 and Sec. 968.110 in a civil
action filed against the PHA by a private individual.
(f) Technical processing. After all CIAP applications are reviewed
for eligibility, HUD shall categorize the eligible PHAs and their
developments into two processing groups: Group 1 for Emergency
Modernization; and Group 2 for Other Modernization. PHA developments
may be included in both groups and the same development may be in each
group. However, a PHA is only required to submit one CIAP application.
Group 1 developments are not subject to the technical review rating and
ranking and the long-term viability and reasonable cost determination.
Group 2 developments are subject to the technical review rating and
ranking and the long-term viability and reasonable cost determination.
Preference will be given to PHAs which request assistance for
developments having conditions which threaten the health or safety of
the residents or having a significant number of vacant, substandard
units, and which have demonstrated a capability of carrying out the
proposed activities.
(g) Rating on technical review factors. After categorizing the
eligible PHAs/developments into Group 1 and Group 2, HUD shall review
and rate each Group 2 PHA on each of the following technical review
factors:
(1) Extent and urgency of need, including need to comply with
statutory, regulatory or court-ordered deadlines;
(2) Extent of vacancies, where the vacancies are not due to
insufficient demand;
(3) PHA's modernization capability;
(4) PHA's management capability;
(5) Degree of resident involvement in PHA operations;
(6) Degree of PHA activity in resident initiatives, including
resident management, economic development, and drug elimination
efforts;
(7) Degree of resident employment;
(8) Local government support for proposed modernization; and
(9) Such additional factors as the Secretary determines necessary
and appropriate.
(h) Ranking and selection for Joint Review. After rating all Group
2 PHAs/developments, HUD shall then rank each Group 2 PHA based on its
total score, list Group 2 PHAs in descending order, subject to
confirmation of need and cost at Joint Review, and identify for Joint
Review selection the highest PHA ranking applications in Group 2 and
other Group 2 PHAs with lower ranking applications, but with high
priority needs, which most reasonably approximate the amount of
modernization which can be funded. High priority needs are non-
emergency needs, but related to: health or safety; vacant, substandard
units; structural or system integrity; or compliance with statutory,
regulatory or court-ordered deadlines. All Group 1 applications are
automatically selected for Joint Review.
(i) Joint Review. The purpose of Joint Review is for HUD to discuss
with a PHA the proposed modernization program, as set forth in the CIAP
Application, review long-term viability and cost reasonableness
determinations, and determine the size of the grant, if any, to be
awarded. HUD shall notify each PHA whose application has been selected
for further processing as to whether Joint Review will be conducted on-
site or off-site (e.g., by telephone or in-office meeting). A PHA shall
prepare for Joint Review by preparing a draft CIAP budget and reviewing
the other items to be covered during Joint Review, as prescribed by
HUD. If conducted on-site, Joint Review may include an inspection of
the proposed physical work. PHAs not selected for Joint Review will be
advised in writing of the reasons for non-selection.
(j) Funding decisions. After all Joint Reviews are completed, HUD
shall adjust the PHAs, developments, and work items to be funded and
the amounts to be awarded, on the basis of information obtained from
Joint Reviews, environmental reviews, and FHEO review, and make the
funding decisions. A PHA will not be selected for CIAP funding if there
is a duplication of funding. HUD shall select all bona fide emergencies
in Group 1 before funding Group 2 applications. After funding
announcement, HUD shall request a funded PHA to submit a CIAP budget,
including an implementation schedule, and any other required documents,
including the ACC amendment. PHAs not selected for funding will be
advised in writing of the reasons for non-selection.
(k) ACC amendment. After HUD approval of the CIAP budget, HUD and
the PHA shall enter into an ACC amendment in order for the PHA to draw
down modernization funds. The ACC amendment shall require low-income
use of the housing for not less than 20 years from the date of the ACC
amendment (subject to sale of homeownership units in accordance with
the terms of the ACC). The PHA Executive Director, where authorized by
the Board of Commissioners and permitted by State law, may sign the ACC
amendment on behalf of the PHA. HUD has the authority to condition an
ACC amendment (e.g., to require a PHA to hire a modernization
coordinator or contract administrator to administer its modernization
program).
(l) Declaration of trust. As HUD may require, the PHA shall execute
and file for record a Declaration of Trust, as provided under the ACC,
to protect the rights and interests of HUD throughout the 20-year
period during which the PHA is obligated to operate its developments in
accordance with the ACC, the Act, and HUD regulations and requirements.
Sec. 968.215 Resident and homebuyer participation.
A PHA shall establish a Partnership Process, as defined in
Sec. 968.105, to develop, implement and monitor the CIAP. Before
submission of the CIAP application, a PHA shall consult with the
residents, the resident organization, or the resident management
corporation (see part 964, subpart C of this chapter) (herein referred
to as the resident) of the development(s) being proposed for
modernization, regarding its intent to submit an application and to
solicit resident comments. A PHA shall give residents a reasonable
opportunity to present their views on the proposed modernization and
alternatives to it and shall give full and serious consideration
[[Page 8744]]
to resident recommendations. A PHA shall respond in writing to the
residents, indicating its acceptance or rejection of resident
recommendations, consistent with HUD requirements and the PHA's own
determination of efficiency, economy, and need. After HUD approval of
the modernization program, a PHA shall inform the residents of the
approved work items and its progress during implementation. Where HUD
does not approve the modernization program, a PHA shall so inform the
residents.
Sec. 968.225 Budget revisions.
(a) A PHA shall not incur any modernization cost in excess of the
total HUD-approved CIAP budget. A PHA shall submit a budget revision,
in a form prescribed by HUD, if the PHA plans to deviate from the
originally approved modernization program, as it was competitively
funded, by deleting or substantially revising approved work items or
adding new work items that are unrelated to the originally approved
modernization program, or to change the method of accomplishment from
contract to force account labor, except as provided in paragraph (b)(4)
of this section.
(b) In addition to the requirements of paragraph (a) of this
section, a PHA shall comply with the following requirements:
(1) A PHA is not required to obtain prior HUD approval if, in order
to complete the originally approved modernization program, the PHA
needs to delete or revise approved work items or add new related work
items consistent with the original modernization program. In such case,
a PHA shall certify that the revisions are necessary to carry out the
approved work and do not result in substantial changes to the
competitively funded modernization program.
(2) A PHA shall not incur any modernization cost on behalf of any
development that is not covered by the original CIAP application.
(3) Where there are funds leftover after completion of the
originally approved modernization program, a PHA may, without prior HUD
approval, use the remaining funds to carry out eligible modernization
activities at developments covered by the original CIAP application.
(4) If a PHA is both an overall high performer and a modernization
high performer under the Public Housing Management Assessment Program
(PHMAP), the PHA is not required to obtain prior HUD approval to change
the method of accomplishment from contract to force account labor.
Sec. 968.230 Progress reports.
For each six-month period ending March 31 and September 30, until
completion of the modernization program or expenditure of all funds, a
PHA shall submit to HUD a progress report, in a form prescribed by HUD.
Where HUD determines that a PHA is having implementation problems, HUD
may require more frequent reporting.
Sec. 968.235 Time extensions.
A PHA shall not obligate or expend funds after the obligation or
expenditure deadline date approved by HUD in the original
implementation schedule without a time extension, as follows:
(a) Certification. A PHA may extend an obligation or expenditure
deadline date no later than 30 calendar days after the existing
deadline date, without prior HUD approval, for a period commensurate
with the delay, where the PHA certifies that the delay is due to
reasons outside of the PHA's control, such as:
(1) Need to use leftover funds from a completed modernization
program for additional work;
(2) Unforeseen delays in contracting or contract administration;
(3) Litigation; and
(4) Delay by HUD or other institutions. Delay by the PHA's staff or
Board of Commissioners or a change in the Executive Director is not
considered to be outside of the PHA's control.
(b) Prior HUD approval. Where a PHA is unable to meet an obligation
or expenditure deadline date and the delay is due to reasons within the
PHA's control, the PHA may request HUD approval of a time extension no
later than 30 calendar days after the deadline date, to avoid recapture
of funds. The request shall include an explanation of the delay, steps
take to prevent future delay, and the requested extension.
Sec. 968.240 HUD review of PHA performance.
HUD shall periodically review PHA performance in carrying out its
approved modernization program to determine compliance with HUD
requirements, the adequacy of a PHA's inspections as evidenced by the
quality of work, and the timeliness of the work. HUD's review may be
conducted either in-office or on-site. Where conducted in-office, a PHA
shall forward any requested documents to HUD for post-review. Where
deficiencies are noted, a PHA shall take such corrective actions as HUD
may direct.
27. The heading for subpart C is revised to read as follows:
Subpart C--Comprehensive Grant Program (for PHAs That Own or
Operate 250 or More Public Housing Units)
Sec. 968.301 [Removed]
28. Section 968.301 is removed.
Sec. 968.305 [Amended]
29. Section 968.305 is amended by:
a. Removing the definition for ``comprehensive grant number''; and
b. Removing references to ``Sec. 968.310(a)(3)'',
``968.320(d)(5)'', and ``968.320(d)'', wherever they appear, and adding
in their place, respectively, references to ``968.112(f)'',
``968.315(e)(5)'', and ``968.315(e)''.
Sec. 968.310 [Removed]
30. Section 968.310 is removed.
Sec. 968.315 [Redesignated as Sec. 968.310]
31. Section 968.315 is redesignated as Sec. 968.310; and newly
redesignated Sec. 968.310 is amended by:
a. Removing from paragraph (a)(1) the phrase, ``under this
subpart,'';
b. Removing from paragraph (b)(1) the references to ``968.320'' and
``968.330'' and adding in their place references to ``968.315'' and
``968.325'', respectively;
c. Removing from paragraph (c)(5) the references to ``part 905''
and ``Sec. 905.135'' and adding in their place references to ``part
950'' and ``Sec. 950.135'', respectively;
d. Removing paragraph (d); and
e. Revising the section heading to read, ``Sec. 968.310
Determination of formula amount.''
32. A new Sec. 968.315 is added, to read as follows:
Sec. 968.315 Comprehensive Plan (including Five-Year Action Plan).
(a) Submission. As soon as possible after modernization funds first
become available for allocation under this subpart, HUD shall notify
PHAs in writing of their formula amount. For planning purposes, PHAs
may use the amount they received under CGP in the prior year in
developing their comprehensive plan, or they may wait for the annual
HUD notification of formula amount under Sec. 968.310(b)(1).
(b)(1) Resident participation. A PHA is required to develop,
implement, monitor and annually amend portions of its comprehensive
plan in consultation with residents of the developments covered by the
comprehensive plan. In addition, the PHA shall consult with resident
management corporations (RMCs) to the extent that an RMC manages a
development covered by the comprehensive plan. The PHA, in partnership
with the residents, must develop and implement a process for
[[Page 8745]]
resident participation that ensures that residents are involved in a
meaningful way in all phases of the CGP. Such involvement shall involve
implementing the Partnership Process as a critical element of the CGP.
(2) Establishment of Partnership Process. The PHA, in partnership
with the residents of the developments covered by the plan (and which
may include resident leaders, resident councils, resident advisory
councils/boards, and RMCs) must establish a Partnership Process to
develop and implement the goals, needs, strategies and priorities
identified in the comprehensive plan. After residents have organized to
participate in the CGP, they may decide to establish a volunteer
advisory group of experts in various professions to assist them in the
CGP Partnership Process. The Partnership Process shall be designed to
achieve the following:
(i) To ensure that residents are fully briefed and involved in
developing the content of, and monitoring the implementation of, the
comprehensive plan including, but not limited to, the physical and
management needs assessments, viability analysis, Five-Year Action
Plan, and Annual Statement. If necessary, the PHA shall develop and
implement capacity building strategies to ensure meaningful resident
participation in CGP. Such technical assistance efforts for residents
are eligible management improvement costs under CGP;
(ii) To enable residents to participate, on a PHA-wide or area-wide
basis, in ongoing discussions of the comprehensive plan and strategies
for its implementation, and in all meetings necessary to ensure
meaningful participation.
(3) Public notice. Within a reasonable amount of time before the
advance meeting for residents under paragraph (b)(4) of this section
and the public hearing under paragraph (b)(5) of this section, the PHA
shall provide public notice of the advance meeting and the public
hearing in a manner determined by the PHA that ensures notice to all
duly elected resident councils.
(4) Advance meeting for residents. The PHA shall hold, within a
reasonable amount of time before the public hearing under paragraph
(b)(5) of this section, a meeting for residents and duly elected
resident councils at which the PHA shall explain the components of the
comprehensive plan. The meeting shall be open to all residents and duly
elected resident councils.
(5) Public hearing. The PHA shall hold at least one public hearing,
and any appropriate number of additional hearings, to present
information on the comprehensive plan/annual submission and the status
of prior approval programs. The public hearing shall provide ample
opportunity for residents, local government officials, and other
interested parties to express their priorities and concerns. The PHA
shall give full consideration to the comments and concerns of
residents, local government officials, and other interested parties.
(c) Local government participation. A PHA shall consult with and
provide information to appropriate local government officials with
respect to the development of the comprehensive plan to ensure that
there is coordination between the actions taken under the consolidated
plan (see 24 CFR part 91) for project and neighborhood improvements
where public housing units are located or proposed for construction
and/or modernization and improvement and to coordinate meeting public
and human service needs of the public and assisted housing projects and
their residents. In the case of a PHA with developments in multiple
jurisdictions, the PHA may meet this requirement by consulting with an
advisory group representative of all the jurisdictions. At a minimum,
such consultation must include providing such officials with:
(1) Advance written notice of the public hearing required under
paragraph (b)(5) of this section;
(2) A copy of the summary of total preliminary estimated costs to
address physical needs by each development and management/operations
needs PHA-wide and a specific description of the PHA's process for
maximizing the level of participation by residents and a summary of the
general issues raised on the plan by residents and others during the
public comment process and the PHA's response to the general issues.
PHA records, such as minutes of planning meetings or resident surveys,
shall be maintained in the PHA's files and made available to residents,
resident organizations, and other interested parties upon request; and
(3) An opportunity to express their priorities and concerns to
ensure due consideration in the PHA's planning process;
(d) Participation in coordinating entities. To the extent that
coordinating entities are set up to plan and implement the consolidated
plans (under 24 CFR part 91), the PHA shall participate in these
entities to ensure coordination with broader community development
strategies.
(e) Contents of comprehensive plan. The comprehensive plan shall
identify all of the physical and management improvements needed for a
PHA and all of its developments, and that represent needs eligible for
funding under Sec. 968.112. The plan also shall include preliminary
estimates of the total cost of these improvements. The plan shall set
forth general strategies for addressing the identified needs, and
highlight any special strategies, such as major redesign or partial
demolition of a development, that are necessary to ensure the long-term
physical and social viability of the development. Where long-term
physical and social viability of the development is dependent upon
revitalization of the surrounding neighborhood in the provision of or
coordination of public services, or the consolidation or coordination
of drug prevention and other human service initiatives, the PHA shall
identify these needs and strategies. In addition, the PHA shall
identify the funds or other resources in the consolidated plan that are
to be used to help address these needs and strategies and the
activities in the comprehensive plan that strengthen the consolidated
plan. Each comprehensive plan shall contain the following elements:
(1) Executive summary. A PHA shall include as part of its
comprehensive plan an executive summary to facilitate review and
comprehension by development residents and by the public. The executive
summary shall include the following:
(i) A summary of total preliminary estimated costs to address
physical needs by each development and PHA-wide physical and management
needs; and
(ii) A specific description of the PHA's process for maximizing the
level of participation by residents during the development,
implementation and monitoring of the Comprehensive Plan, a summary of
the general issues raised on the plan by residents and others during
the public comment process and the PHA's response to the general
issues. PHA records, such as minutes of planning meetings or resident
surveys, shall be maintained in the PHA's files and made available to
residents, duly elected resident councils, and other interested
parties, upon request;
(2) Physical needs assessment. (i) Requirements. The physical needs
assessment identifies all of the work that a PHA would need to
undertake to bring each of its developments up to the modernization and
energy conservation standards, as required by the Act, to comply with
lead-based paint testing and abatement requirements under this part,
and to comply with other program requirements under Sec. 968.110. The
[[Page 8746]]
physical needs assessment is completed without regard to the
availability of funds, and shall include the following:
(A) A brief summary of the physical improvements necessary to bring
each such development to a level at least equal to applicable HUD
standards with respect to modernization standards, energy conservation
and life-cycle cost effective performance standards, lead-based paint
testing and abatement standards. This summary must indicate the
relative urgency of need. If the PHA has no physical improvement needs
at a particular development at the time it completes its comprehensive
plan, it must so indicate. Similarly, if the PHA intends to demolish,
partially demolish, convert, or dispose of a development (or units
within a development) it must so indicate in the summary of physical
improvements;
(B) The replacement needs of equipment systems and structural
elements that will be required to be met (assuming routine and timely
maintenance is performed) during the period covered by the action plan;
(C) A preliminary estimate of the cost to complete the physical
work;
(D) Any physical disparities between buildings occupied
predominantly by one racial or ethnic group and, in such cases, the
physical improvements required to correct the conditions; and
(E) In addition, with respect to vacant or non-homebuyer occupied
Turnkey III units, the estimated number of units that the PHA is
proposing for substantial rehabilitation and subsequent sale, in
accordance with Sec. 968.112(d)(3).
(ii) Source of data. The PHA shall identify in its needs assessment
the sources from which it derived data to develop the physical needs
assessment under this paragraph (e)(2) and shall retain such source
documents in its files;
(3) Management needs assessment (i) Requirements. The plan shall
include a comprehensive assessment of the improvements needed to
upgrade the management and operation of the PHA and of each viable
development so decent, safe, and sanitary living conditions will be
provided. The management needs assessment shall include the following,
with the relative urgency of need indicated:
(A) An identification of the most current needs related to the
following areas (to the extent that any of these needs is addressed in
a HUD-approved memorandum of agreement or improvement plan, the PHA may
simply include a cross-reference to these documents):
(1) The management, financial, and accounting control systems of
the PHA;
(2) The adequacy and qualifications of personnel employed by the
PHA in its management and operation, for each significant category of
employment;
(3) The adequacy and efficacy of:
(i) Resident programs and services;
(ii) Resident and development security;
(iii) Resident selection and eviction;
(iv) Occupancy;
(v) Maintenance;
(vi) Resident management and resident capacity building programs;
(vii) Resident opportunities for employment and business
development and other self-sufficiency opportunities for residents; and
(viii) Homeownership opportunities for residents;
(B) Any additional deficiencies identified through PHMAP, audits
and HUD monitoring reviews that are not addressed under paragraph
(e)(3)(i)(A) of this section. To the extent that any of these is
addressed in a HUD-approved memorandum of agreement or improvement
plan, the PHA may include a cross-reference to these documents;
(C) Any other management and operations needs that the PHA wants to
address at the PHA-wide or development level; and
(D) A PHA-wide preliminary cost estimate for addressing all the
needs identified in the management needs assessment, without regard to
the availability of funds;
(ii) Sources of funds. The PHA shall identify in its needs
assessment the sources from which it derived data to develop the
management needs assessment under this paragraph (e)(3) and shall
retain such source documents in its files;
(4) Demonstration of long-term physical and social viability. (i)
General. The plan shall include, on a development-by-development basis,
an analysis of whether completion of the improvements and replacements
identified under paragraphs (e)(2) and (e)(3) of this section will
reasonably ensure the long-term physical and social viability,
including achieving structural/system soundness and full occupancy, of
the development at a reasonable cost. For cost reasonableness, the PHA
shall determine whether the unfunded hard costs satisfy the definition
of ``reasonable cost.'' Where the PHA wishes to fund a development, for
other than emergencies, where hard costs exceed that reasonable cost,
the PHA shall submit written justification to the Field Office. If the
Field Office agrees with the PHA's request, the Field Office shall
forward its recommendation to Headquarters for final decision. Where
the estimated per unit unfunded hard cost is equal to or less than the
per unit TDC for the smallest bedroom size at the development, no
further computation of the TDC limit is required. The PHA shall keep
documentation in its files to support all cost determinations. The
Field Office will review cost reasonableness as part of its review of
the annual submission and the performance and evaluation report. As
necessary, HUD will review the PHA's documentation in support of its
cost reasonableness, taking into account broader efforts to revitalize
the neighborhoods in which the development is located;
(ii) Determination of non-viability. Where a PHA's analysis of a
development under paragraph (e) of this section establishes that
completion of the identified improvements and replacements will not
result in the long-term physical and social viability of the
development at a reasonable cost, the PHA shall not expend CGP funds
for the development, except for emergencies and essential non-routine
maintenance necessary to maintain habitability until residents can be
relocated. The PHA shall specify in its comprehensive plan the actions
it proposes to take with respect to the non-viable development (e.g.,
demolition or disposition under 24 CFR part 970);
(5) Five-year action plan. (i) General. The comprehensive plan
shall include a rolling five-year action plan to carry out the
improvements and replacements (or a portion thereof) identified under
paragraphs (e)(2) and (e)(3) of this section. In developing its five-
year action plan, the PHA shall assume that the current year funding or
formula amount will be available for each year of its five-year action
plan, whichever the PHA is using for planning purposes, plus the PHA's
estimate of the funds that will be available from other sources, such
as state and local governments. All activities specified in a PHA's
five-year action plan are contingent upon the availability of funds;
(ii) Requirements. Under the action plan, a PHA must indicate how
it intends to use the funds available to it under the CGP to address,
over a five-year period, the deficiencies (or a portion of the
deficiencies) identified in its physical and management needs
assessments, as follows:
(A) Physical condition. With respect to the physical condition of a
PHA's developments, a PHA must indicate in its action plan how it
intends to address, over a five-year period, the
[[Page 8747]]
deficiencies (or a portion of the deficiencies) identified in its
physical needs assessment so as to bring each of its developments up to
a level at least equal to the modernization and energy conservation
standards. This includes specifying the work to be undertaken by the
PHA in major work categories (e.g., kitchens, electrical systems,
etc.); establishing priorities among the major work categories by
development and year, based upon the relative urgency of need; and
estimating the cost of each of the identified major work categories. In
developing its action plan, a PHA shall give priority to the following:
(1) Activities required to correct emergency conditions;
(2) Activities required to meet statutory or other legally mandated
requirements (e.g., compliance with a court-ordered desegregation plan
or voluntary compliance agreement);
(3) Activities required to meet the needs identified in the Section
504 needs assessment within the regulatory timeframe; and
(4) Activities required to complete lead-based paint testing and
abatement requirements;
(B) Management and operations. A PHA must address in its action
plan the management and operations deficiencies (or a portion of the
deficiencies) identified in its management needs assessment, as
follows:
(1) With respect to the management and operations needs of the PHA,
the PHA must identify how it intends to address with CGP funds, if
necessary, the deficiencies (or a portion thereof) identified in its
management needs assessment, including work identified through PHMAP,
audits, HUD monitoring reviews, and self-assessments. The action plan
must indicate the relative urgency of need;
(2) A preliminary PHA-wide cost estimate, by major work category.
(iii) Procedure for maintaining current five-year action plan. The
PHA shall maintain a current five-year action plan by annually amending
its five-year action plan, in conjunction with the annual submission;
(6) Local government statement. The comprehensive plan shall
include a statement signed by the chief executive officer of the unit
of general local government (or, in the case of a PHA with developments
in multiple jurisdictions, from the CEO of each such jurisdiction)
certifying to the following:
(i) The PHA developed the comprehensive plan/five-year action plan
or amendments thereto in consultation with officials of the appropriate
governing body and with development residents covered by the
comprehensive plan/five-year action plan, in accordance with the
requirements of paragraphs (b) and (c) of this section;
(ii) The comprehensive plan/five-year action plan or amendments
thereto are consistent with the appropriate governing body's assessment
of its low income housing needs (as evidenced by its consolidated plan
under 24 CFR part 91, if applicable), and that the appropriate
governing body will cooperate in providing resident programs and
services; and
(iii) The PHA's proposed drug elimination activities are
coordinated with, and supportive of, local drug elimination strategies
and neighborhood improvement programs, if applicable; and
(7) PHA resolution. The plan shall include a resolution, in a form
prescribed by HUD, adopted by the PHA Board of Commissioners, and
signed by the Board Chairman of the PHA, approving the comprehensive
plan or any amendments.
(f) Amendments to the comprehensive plan.--(1) Extension of time
for performance. A PHA shall have the right to amend its comprehensive
plan (including the action plan) to extend the time for performance
whenever HUD has not provided the amount of assistance set forth in the
comprehensive plan or has not provided the assistance in a timely
manner;
(2) Amendments to needs assessments. The PHA shall amend its plan
by revising its needs assessments whenever it proposes to carry out
activities in its five-year action plan or annual statement that are
not reflected in its current needs assessments (except in the case of
emergencies). The PHA may propose an amendment to its needs
assessments, in connection with the submission of its annual submission
(see Sec. 968.325) or at any other time. These amendments shall be
reviewed by HUD in accordance with Sec. 968.320.
(3) Six-year revision of comprehensive plan. Every sixth year
following the initial year of participation, the PHA shall submit to
HUD, with its annual submission, a complete update of its comprehensive
plan. A PHA may elect to revise some or all parts of the comprehensive
plan more frequently.
(4) Annual revision of five-year action plan. Annually, the PHA
shall submit to HUD, with its annual submission, an update of its five-
year action plan, eliminating the previous year and adding an
additional year. The PHA shall identify changes in work categories
(other than those included in the new fifth year) from the previous
year five-year action plan when making this annual submission.
(5) Required submissions. Any amendments to the comprehensive plan
under this section must be submitted with the PHA resolution under
Sec. 968.315(e)(7).
(g) Prerequisite for receiving assistance.--(1) Prohibition of
assistance. No financial assistance, except for emergency work to be
funded under Secs. 968.103(b) and 968.112(a)(1)(ii), and for
modernization needs resulting from disasters under Sec. 968.103(b), may
be made available under this subpart unless HUD has approved a
comprehensive plan submitted by the PHA that meets the requirements of
this section. A PHA that has failed to obtain approval of its
comprehensive plan by the end of the FFY shall have its formula
allocation for that year (less any formula amounts provided to the PHA
for emergencies) added to the subsequent year's appropriation of funds
for grants under this part. HUD shall allocate such funds to PHAs and
IHAs participating in the CGP in accordance with the formula under
Sec. 968.103(e) and (f) in the subsequent FFY. A PHA that elects in any
FFY not to participate in the CGP may participate in the CGP in
subsequent FFYs;
(2) Requests for emergency assistance. A PHA may receive funds from
its formula allocation to address emergency modernization needs where
HUD has not approved a PHA's comprehensive plan. To request such
assistance, a PHA shall submit to HUD a request for funds in such form
as HUD may prescribe, including any documentation necessary to support
its claim that an emergency exists. HUD shall review the request and
supporting documentation to determine if it meets the definition of
``emergency work'' as set forth in Sec. 968.305. (Approved by the
Office of Management and Budget under control number 2577-0157)
Sec. 968.320 [Removed]
33. Section 968.320 is removed.
Sec. 968.325 [Redesignated as Sec. 968.320]
34. Section 968.325 is redesignated as Sec. 968.320; and newly
redesignated Sec. 968.320 is amended by:
a. Removing from paragraph (a)(1)(i) the reference to
``Sec. 968.320(d)'' and adding in its place a reference to
``Sec. 968.315(e)'';
b. Removing from paragraph (c) the references to ``Sec. 968.340''
and ``Sec. 968.345'' and adding in their place references to
``Sec. 968.330'' and ``Sec. 968.335'', respectively; and
[[Page 8748]]
c. Revising paragraph (b)(2) to read as follows:
Sec. 968.320 HUD review and approval of comprehensive plan (including
five-year action plan).
* * * * *
(b) * * *
(2) HUD shall approve the Comprehensive Plan except where it makes
a determination in accordance with one or more of the following:
(i) Comprehensive Plan is incomplete in significant matters;
(ii) Identified needs are plainly inconsistent with facts and data;
(A) Identified physical improvements and replacements are
inadequate;
(B) Identified management improvements are inadequate;
(C) Proposed physical and management improvements fail to address
identified needs;
(iii) Action plan is plainly inappropriate to meeting identified
needs;
(iv) Inadequate demonstration of long-term viability at reasonable
cost; and
(v) Contradiction of local government certification or PHA
resolution.
* * * * *
Sec. 968.330 [Redesignated as Sec. 968.325]
35. Section 968.330 is redesignated as Sec. 968.325; and newly
redesignated Sec. 968.325 is amended by:
a. Removing from paragraph (a) the reference to
``Sec. 968.315(b)(1)'' and adding in its place a reference to
``Sec. 968.310(b)(1)'' and by moving the phrase ``, as discussed in
Sec. 968.320(d)(5)(i)'' from the end of the penultimate sentence in the
paragraph to the end of the sentence before it, and revising the number
``Sec. 968.320'' in that phrase to read ``Sec. 968.315'';
b. Removing from paragraph (d) introductory text the reference to
``Sec. 968.320'' and adding in its place a reference to
``Sec. 968.315'';
c. Removing from paragraph (e)(8) the reference to
``Sec. 968.320(d)(7)'' and adding in its place a reference to
``Sec. 968.315(e)(7)'';
d. Removing from paragraph (f) references to ``Sec. 968.320(e)''
and ``Sec. 968.325'' and adding in their place references to
``Sec. 968.315(f)'' and ``Sec. 968.320'';
e. Removing from paragraph (g)(2)(ii) the reference to
``Sec. 968.320(d)'' and adding in its place a reference to
``Sec. 968.315(e)'';
f. Removing from paragraph (h) the reference to ``Sec. 968.305''
and adding in its place a reference to ``Sec. 968.330'';
g. Removing from paragraph (i)(1) references to ``Sec. 968.345''
and adding in their place references to ``Sec. 968.335'';
h. Removing from paragraph (j) the words ``to obtain'' and adding
in their place the words ``in order for the PHA to draw down''; and
i. Revising the section heading and paragraph (e)(4), to read as
follows:
Sec. 968.325 Annual submission of activities and expenditures.
* * * * *
(e) * * *
(4) For each development and for any management improvements not
covered by a HUD-approved memorandum of agreement or management
improvement plan, a schedule for the use of current year funds,
including target dates for the obligation and expenditure of the funds
(see Sec. 968.125);
* * * * *
Sec. 968.335 [Removed]
36. Section 968.335 is removed.
Sec. 968.340 [Redesignated as Sec. 968.330]
37. Section 968.340 is redesignated as Sec. 968.330, and newly
redesignated Sec. 968.330 is amended by removing the paragraph
designation and heading from paragraph (a), and by removing paragraph
(b).
Sec. 968.345 [Redesignated as Sec. 968.335]
38. Section 968.345 is redesignated as Sec. 968.335; and newly
redesignated Sec. 968.335 is amended by:
a. Removing paragraphs (a)(1)(i) and (a)(1)(ii), paragraphs
(a)(2)(i) and (a)(2)(ii), and paragraphs (a)(3)(i) through (a)(3)(iii);
b. Removing from paragraph (d) the reference to ``Sec. 905.684''
and adding in its place a reference to ``Sec. 968.330'';
c. Removing from paragraph (e)(7) the words ``(see
Sec. 968.315(d))'';
d. Removing from paragraph (g) references to ``Sec. 905.135'' and
``Sec. 905.601'' and adding in their place references to
``Sec. 950.135'' and ``Sec. 968.103(e) and (f)'', respectively;
e. Removing from paragraph (j) references to ``Sec. 978.345(h)''
and ``Sec. 968.345(g)'' and adding in their place references to
``paragraph (h) of this section'' and ``paragraph (g) of this
section'', respectively; and
f. Removing the reference in paragraph (k) to ``Sec. 968.312(c)''
and adding in its place a reference to ``Sec. 968.310(c)''.
Subpart D--Vacancy Reduction Program
Secs. 968.401, 968.403, 968.405, 968.407, 968.410, and
968.413 [Removed]
39. Sections 968.401, 968.403, 968.405, 968.407, 968.410, and
968.413 are removed.
Dated: February 8, 1996.
Michael B. Janis,
General Deputy Assistant Secretary for Distressed and Troubled Housing
Recovery.
[FR Doc. 96-4814 Filed 3-4-96; 8:45 am]
BILLING CODE 4210-33-P
