[Federal Register Volume 60, Number 11 (Wednesday, January 18, 1995)]
[Rules and Regulations]
[Pages 3706-3724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1113]
[[Page 3705]]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
Office of the Assistant Secretary for Public and Indian Housing
_______________________________________________________________________
24 CFR Part 970
Public Housing Program; Demolition or Disposition of Public Housing
Projects; Final Rule
Federal Register / Vol. 60, No. 11 / Wednesday, January 18, 1995 /
Rules and Regulations
[[Page 3706]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Part 970
[Docket No. R-95-1407; FR-2463-F-06]
RIN 2577-AA58
Public Housing Program; Demolition or Disposition of Public
Housing Projects
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This rule makes final the interim rule which implemented
section 121 of the Housing and Community Development Act of 1987.
Section 121 amended section 18 of the United States Housing Act of
1937, which governs the demolition and disposition of public and Indian
housing. Section 121 combined two of the previous demolition criteria,
so that demolition may be approved if the project is obsolete due to
its physical condition, location, or other factors which make it
unusable for housing, and no reasonable program of modifications, such
as rehabilitation, is feasible to return the project to useful life.
Section 121 also provided that projects may not be demolished or
disposed of unless the public housing agency (PHA) has developed a plan
for the provision of a replacement unit for each unit involved. The
plan must include a schedule for its completion (not to exceed six
years); and HUD must agree, upon approving the plan, to commit the
funds necessary to carry out the plan over the approved schedule, to
the extent such funding is not provided from other sources (e.g., State
or local programs or proceeds of disposition), and HUD's commitment is
subject to the availability of future appropriations. Section 121
repealed a previous statutory provision which made section 18
inapplicable to conveyance of units under homeownership programs. This
rule continues that inapplicability to units under certain established
homeownership programs, including disposition of a public housing
project in accordance with an approved homeownership program under
title III of the United States Housing Act of 1937, as provided by
section 412(b) of the National Affordable Housing Act (``NAHA'').
Section 412(a) of NAHA amended section 18 of the U.S. Housing Act
of 1937 to require that tenant councils, resident management
corporation, and tenant cooperative, if any, be given appropriate
opportunities to purchase the project or portion of the project covered
by the demolition or disposition application. Therefore, a separate
Federal Register document was published on October 6, 1992, at 57 FR
46074, that set forth the procedures and requirements for providing the
opportunity to purchase to tenant councils, resident management
corporations, and tenant cooperatives. This document was open to public
comment and is being made final by this rule.
This rule also contains a provision that states that in the case of
scattered-site housing of a public housing agency, the net proceeds of
a disposition that is less than the full disposition shall be used for
the payment of development cost for the project and for the retirement
of outstanding obligations issued to finance original development or
modernization of the project, in an amount that bears the same ratio to
the total of such costs and obligations as the number of units disposed
of bears to the total number of units of the project at the time of
disposition. This is a direct statutory requirement in compliance with
section 512 of NAHA and, therefore, is contained in this final rule.
Section 116 of the Housing and Community Development Act of 1992
modified section 412(a) and provided for the use of 5-year project-
based and tenant-based assistance in certain instances. It also
provided that a very limited number of units could be demolished before
the replacement requirements must be met. The section 116 provisions
are considered self-executing and, therefore, are contained in this
final rule.
EFFECTIVE DATE: February 17, 1995.
FOR FURTHER INFORMATION CONTACT: William J. Flood, Acting Director,
Office of Construction, Rehabilitation and Management, Office of Public
and Indian Housing, Department of Housing and Urban Development, 451
Seventh Street, S.W., Washington, D.C. 20410, telephone (202) 708-1800.
A telecommunications device for deaf persons (TDD) is available at
(202) 472-6725. (These are not toll-free telephone numbers.)
SUPPLEMENTARY INFORMATION: The information collection requirements
contained in this rule have been submitted to the Office of Management
and Budget (OMB) for review under the Paperwork Reduction Act of 1980
and have been assigned OMB control number 2577-0075.
Background
Section 121 of the Housing and Community Development Act of 1987
(Pub. L. 100-242) (``1987 Act'') amended section 18 of the United
States Housing Act of 1937 (42 U.S.C. 1437p) (``1937 Act'')--the
statutory provision governing the demolition and disposition of public
and Indian housing. On August 17, 1988, the Department published an
interim rule (53 FR 30984) which implemented the 1987 Act amendments
and became effective on October 6, 1988.
Below is a discussion of the public comments received on the
interim rule, as well as the changes made by the interim rule as a
result of the public comments.
Following that is a discussion of the remaining provisions of the
final rule that were not discussed in the interim rule section of this
preamble. This section also includes a discussion of the statutory
changes made by section 412(a) of the National Affordable Housing Act
(Pub.L. 101-625) (``NAHA''), as amended by section 116(a) of the 1992
Act, and the public comments received on the October 6, 1992 Federal
Register notice which implemented section 412(a).
Interim Rule
Section 121 of the 1987 Act combined two of the criteria for
demolition of public housing units, by requiring both that the project
or portion of the project be obsolete as to physical condition,
location, or other factors, making it unusable for housing purposes,
and that no reasonable program of modifications is feasible to return
the project or portion of the project to useful life. One factor that
the Department will take into consideration in determining whether the
program of modifications is reasonable is where the costs of such
program exceed 90 percent of total development cost (TDC). (The use of
a percentage of TDC to establish the reasonable cost for demolition was
set forth previously in HUD Handbook 7486.1.) Before this statutory
change, either criterion could be the basis for demolition of a project
or portion of a project. The regulatory amendment for implementation of
this statutory requirement can be found in Sec. 970.6 of both the
interim rule and this final rule.
The 1987 Act made no change in the alternative demolition criterion
applicable to demolition of only a portion of a project; i.e., where
demolition will help to assure the useful life of the remaining portion
of the project. An example of this would be selective demolition of
units to reduce [[Page 3707]] project density incident to the
modernization of the rest of the project.
The 1987 Act made no change in the disposition criteria.
Section 121 of the 1987 Act also mandated detailed requirements for
a replacement housing plan for the provision of a decent, safe,
sanitary, and affordable rental dwelling unit--on a one-for-one basis--
for each public housing dwelling unit to be demolished or disposed of.
The replacement housing plan must contain a schedule for completing the
plan, within a period consistent with the size of the proposed
demolition or disposition, but the schedule may in no event exceed six
years. Questions have been raised regarding the meaning of
``completion.'' ``Completion'' does not mean that the replacement
housing must be built or rehabilitated within the six years. For
replacement units developed under the public housing development
program, the completion of the plan would be when units have reached
the stage of notice to proceed for conventional units and contract of
sale for Turnkey units. Other replacement plan requirements contained
in the 1987 Act are (1) that the plan be approved by the unit of
general local government1 in which the project is located; (2)
that the plan ensure that the rent paid by the tenant after relocation
will not exceed that permitted under the Act; and (3) that there be no
action to demolish or dispose of any unit until the tenant has been
relocated to decent, safe, sanitary, and affordable housing that is, to
the maximum extent practicable, of the tenant's choice. (Some persons
displaced by a demolition or disposition activity are also covered by
the Uniform Relocation Act, as described later.) The rule also allows
replacement with units of different sizes, after analysis of local
needs as determined by the PHA, to accommodate changes in local
priority needs. However, at least the same total number of individuals
and families must be accommodated. The regulatory amendments for
implementation of these statutory requirements can be found in
Secs. 970.4(d) and 970.11 of both the interim rule and this final rule.
\1\The Department has interpreted the phrase ``unit of general
local government'' to mean the chief executive officer, e.g., the
mayor or the county executive, as discussed later in this preamble.
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Approval of an application for demolition or disposition requires a
commitment for the funds necessary to carry out the plan. To the extent
funding is not provided from other sources (e.g., from State or local
programs or the proceeds of disposition), HUD approval of the
application for demolition or disposition will be conditioned on HUD's
agreement to commit the funds--subject to availability of future
appropriations--necessary to carry out the plan in accordance with its
approved schedule. Because of the responsibility imposed on HUD to
commit the funds necessary to carry out the plan, a high degree of
certainty with respect to State and local commitments is necessary.
Therefore, in order for HUD to determine HUD's commitment, at the time
of application the PHA must provide written documentation of commitment
of State or local funding for the replacement housing if that is what
is contemplated in the replacement housing plan.
The statutory requirements for the plan enumerate the following
types of eligible replacement housing, to be used singularly or in any
combination: (1) The development of additional public housing dwelling
units (by acquisition with or without rehabilitation or new
construction); (2) the use of 15-year project-based assistance under
section 8, when appropriated;\2\ (3) the use of not less than 15-year
project-based assistance under other Federal programs; (4) the
acquisition with or without rehabilitation or development of dwelling
units assisted under a State or local government program that provides
for project-based assistance that is, in terms of eligibility,
contribution to rent, and length of assistance contract (not less than
15 years), comparable to assistance under section 8(b)(1) of the 1937
Act; or (5) any combination of such methods; or (6) the use of 15-year
tenant-based assistance under section 8 (excluding rental vouchers
under section 8(o)), including Section 8 Rental Certificates with 15-
year funding subject to the special additional statutory constraints
discussed below.
\2\Replacement housing under this provision is limited. When
section 121 of the 1987 Act was enacted, all Certificate Program
funding was appropriated with 15 years of budget authority and,
therefore, was readily available with a 15-year term. However, since
1989, Certificate Program funding has been appropriated with only a
5-year term, except for the special appropriations for Public
Housing Demo/Dispo replacement housing. The last such special
appropriation was in FY 1990.
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However, section 116(b) of the 1992 Act modifies the replacement
housing plan requirements by permitting, where 15-year project-based
assistance under section 8, 15-year project-based assistance under
other Federal programs, and 15-year tenant-based assistance under
section 8 (excluding vouchers) is not available, and where an
application proposes demolition or disposition of 200 or more units,
the use of available project-based assistance under section 8 having a
term of not less than 5 years, the use of available project-based
assistance under other Federal programs having a term of not less than
5 years, and the use of tenant-based assistance under section 8
(excluding vouchers) having a term of not less than 5 years,
respectively.
Note: In the case of 15-year project based assistance under
other Federal programs, the Department has determined that low-
income housing credits under Section 42 of the Internal Revenue
Service Code is a Federal program providing 15-year project-based
assistance and, therefore, qualifies as a source of replacement
housing. Any replacement housing plan proposing the use of these
credits must assure that the low-income housing units in the low-
income housing credit project which are designated as replacement
housing will be reserved for low-income families for the requisite
period. Units which at the time of allocation of the credit are also
receiving Federal assistance under Section 8 (except tenant-based
assistance) or Section 23 of the Act, or Section 236, 221(d)(3) BMIR
or Section 221(d)(5) of the National Housing Act, or Section 101 of
the Housing Act of 1965, or other similar Federal program, are not
eligible as replacement housing under this paragraph.
However, in the case of an application proposing demolition or
disposition of 200 or more units, not less than 50 percent of the
dwelling units for replacement housing shall be provided through the
acquisition or development of additional public housing dwelling units
or through project-based assistance, and not more than 50 percent of
the additional dwelling units shall be provided through tenant-based
assistance under section 8 (excluding vouchers) having a term of not
less than 5 years.
Section 116(b) also provides that, in any 5-year period, a PHA may
demolish not more than the lesser of 5 dwelling units or 5 percent of
the total dwelling units owned and operated by the PHA, without
providing an additional dwelling unit for each public housing dwelling
unit to be demolished, but only if the space occupied by the demolished
unit is used for meeting the service of other needs of the public
housing residents. It should be noted that this provision applies only
to demolition and not to disposition.
The provisions of section 116(b) are considered self-executing
also. Accordingly, this final rule contains revisions to Sec. 970.11(a)
and creates a new Sec. 970.11(j).
The following statutory limitations on the use of fifteen-year
section 8 tenant-based assistance should be kept in mind:
With the exception of applications for demolition or disposition of
200 or more [[Page 3708]] units that propose the use of tenant-based
assistance under Section 8 having a term of not less than five years
for the replacement of not more than 50 percent of the units to be
demolished or disposed of, the use of Section 8 tenant-based assistance
(Existing Housing rental certificates) for replacement housing requires
a two-part finding by HUD that (1) project-based assistance (including
public housing, as well as other types of project-based assistance) is
not feasible under the program standards or under any combination of
these programs, and (2) private rental housing is actually available to
those who would be assisted under the plan and that the supply of such
housing is sufficient for the total number of rental certificates and
rental vouchers available in the community and is likely to remain
available for the full 15-year term of the assistance. This two-part
finding must be based on objective information, such as the following
statutory data elements: Rates of participation by landlords in the
section 8 program; size, conditions and rent levels of available rental
housing as compared to section 8 standards; the supply of vacant
existing housing meeting the section 8 housing quality standards with
rents at or below the fair market rent, or the likelihood of adjusting
the fair market rent; the number of eligible families waiting for
public housing or housing assistance under section 8; and the extent of
discrimination against the types of individuals or families to be
served by the assistance.
To justify the two-part finding, the PHA must provide sufficient
information to support both parts of the finding--why any and all
combinations of project-based assistance are not feasible and how the
conditions for tenant-based assistance will be met, based on the
pertinent facts of the particular local situation.
The determination as to the lack of feasibility of project-based
assistance must be based on the standards for feasibility stated in the
regulations pertaining to each type of eligible project-based program
identified in Sec. 970.11, including public housing, as well as the
other types of eligible Federal, State and local programs. Thus, a
finding of lack of feasibility may be made only if the applicable
feasibility standards could not be met under any of the eligible
programs, or any combination of them. For example, with regard to the
feasibility of additional public housing development, relevant factors
would include local needs for new construction or rehabilitation,
availability of suitable properties for acquisition or sites for
construction, and HUD determinations under cost containment policies.
The second part of the finding--availability of housing for tenant-
based assistance--is a matter of whether the facts concerning local
need and housing supply justify such a finding. Above are listed the
statutory data elements on which a finding should be based. HUD may
require additional data as may be relevant in particular circumstances.
Note: The statutory limitations discussed above do not apply to
applications for demolition or disposition of 200 or more units that
propose the use of tenant-based assistance under section 8 having a
term of not less than 5 years for replacement of not more than 50
percent of the units to be demolished or disposed of.
Section 121 of the 1987 Act prohibits the use of rental vouchers
for replacement housing. However, the Department has determined that
rental vouchers may be an acceptable relocation housing resource,
provided the displaced tenant is given referrals to suitable/comparable
replacement housing (comparable housing, if the URA applies) where the
rent paid by the tenant following relocation will not exceed the amount
permitted under section 3(a) of the 1937 Act. (See Sec. 970.5(b)). The
PHA can meet its relocation housing obligation by providing a housing
voucher and referrals to units that fall within the voucher payment
standard and are owned by a person who agrees to rent to a voucher
holder. The rule also makes the PHA responsible for payment of moving
expenses and the provision of appropriate advisory services, including
timely information notices, counseling, and the inspection of housing
to which persons relocate.
The statutory restrictions on types of housing assistance that may
be counted as replacement units do not apply to relocation. For
example, tenants may relocate to other existing public housing units,
or to privately owned housing, with rental certificate or rental
voucher assistance, as qualified above. The purpose of relocation is to
assure that all displaced families obtain other suitable/comparable
housing at affordable rents, while the purpose of one-for-one
replacement is to assure that the total low-income housing stock
available is not diminished.
Public Comments
As a result of the interim rule published on August 17, 1988, at 53
FR 30984, public comments were received from six commenters: Three
legal services organizations, one public housing agency, one community
development organization, and one national association.
The commenters raised a variety of issues concerning the
applicability of part 970, including whether (1) the 1987 Act
amendments are applicable retroactively, (2) ``units approved for
deprogramming'' before the effective date of the 1987 Act should be
exempted, and (3) the exemption for homeownership sales to tenants
should be retained. Below is a discussion of these issues, as well as
some others raised by the commenters, and the Department's responses to
them.
Retroactivity
Some commenters argued that the 1987 Act amendments should be
applicable retroactively to cases where demolition or disposition was
approved by HUD but not completed by the PHA before February 5, 1988,
the effective date of the 1987 Act. These commenters maintained that
even before the 1987 Act, section 18 of the 1937 Act required
replacement housing in all instances of demolition or disposition of
housing units, and that the 1987 amendments did not change the
statutory requirements for replacement, but merely corrected an
erroneous interpretation by HUD in the then-existing regulations.
The effect of acceptance of this argument would be to revoke those
pre-1987 Act approvals, requiring the PHA to meet all added
requirements under the 1987 Act and obtain a new HUD approval. The
Department does not believe this effect to be defensible and disagrees
with the commenters for the reasons set forth below.
HUD's first regulation on the demolition and disposition of public
housing was published as a final rule (24 CFR part 870) on November 9,
1979 (44 FR 65368). At that time, the statutory language on this issue
afforded HUD considerable administrative discretion as to regulatory
policy. (See sections 6(f) and 14(f) of the 1937 Act). Neither these
statutory provisions nor their legislative history contain any mention
of replacement housing (except in connection with relocation), thus
allowing HUD administrative rule making discretion on this issue. HUD
exercised that discretion by providing in the 1979 regulation that ``If
there is a local need for low-income housing, the PHA's request for
demolition or disposition of dwelling units shall include a plan for
replacement housing on a one-for-one basis or as approved by HUD to be
warranted by current and projected needs for low-income housing and
subject to HUD's findings as to the availability of funds.'' Thus,
subject to [[Page 3709]] the need for low-income housing and the
availability of funds, HUD's original regulation required, as a matter
of policy, replacement housing as a condition for HUD approval in all
cases of either demolition or disposition of dwelling units. However,
the Housing and Urban-Rural Recovery Act of 1983 (``1983 Act'')
repealed former sections 6(f) and 14(f) and substituted a new section
18 that was more detailed and prescriptive. HUD decided to impose a
replacement housing requirement only where required by the statute, and
both the statute and the rule allowed the PHA discretion as to the
provision of replacement housing with one exception. The only
circumstance under which the statute and the rule required replacement
housing was where the justification for disposition is that it will
allow acquisition, development or rehabilitation of other units which
will be more efficiently or effectively operated as lower income
housing and will preserve the lower income housing stock available in
the community. (See section 18(a)(2)(A)(i), U.S. Housing Act of 1937,
42 U.S.C.1437p.) No replacement housing requirement was prescribed
under the other two alternative criteria for disposition, and no
replacement requirement was prescribed at all for demolition,
regardless of which of the demolition criteria was applicable.
The argument for retroactive application of the 1987 amendments is
not persuasive. Indeed, in Project B.A.S.I.C. v. Kemp, 907 F.2d 1242
(1st Cir., July 6, 1990) the Court of Appeals for the First Circuit
rejected the retroactive operation of the statute. The Fifth Circuit
was in accord in Walker v. HUD, 912 F.2d 819 (5th Cir., September 27,
1990).
To preclude any further misconceptions on this point, the final
rule adds clarifying language under Sec. 970.2(b). A demolition or
disposition application that received written HUD approval before
February 5, 1988, may be carried out according to the terms and
conditions of the approval and the regulations in effect at the date of
approval, without the necessity for meeting any additional requirements
under the 1987 Act or for seeking any additional HUD approval.
Applicability to Units Approved for Deprogramming
Several commenters objected to the inclusion in the interim rule's
listing of exceptions in Sec. 970.2(g) of ``units deprogrammed before
February 5, 1988'' (the effective date of the 1987 Act). In a
subsequent notice, however, this provision was corrected to read
``units approved for deprogramming before February 5, 1988''. (See 53
FR 40220, October 14, 1988).
The final rule removes the ``units approved for deprogramming''
exception. The term ``units approved for deprogramming'' refers to HUD
approval of a formal written request by a PHA to permanently remove a
unit from both its public housing inventory and its ACC. (See 24 CFR
990.102). The exception for ``units approved for deprogramming prior to
February 5, 1988'' was intended to exclude from the coverage of the
interim rule, units which HUD had approved for demolition or
disposition, prior to the effective date of the 1987 Act amendments.
Because the term ``units approved for deprogramming'' is misinterpreted
by some to include units temporarily removed for non-dwelling use, as
well as, units approved for demolition or disposition, utilizing this
term has caused unnecessary confusion in the administration of HUD's
demolition or disposition regulations. Therefore, the exception which
references ``units approved for deprogramming'' is being deleted. A new
Sec. 970.2(b) of the final rule more clearly states the intended
exception which is that demolitions and dispositions approved by HUD
prior to February 5, 1988, are exempt from the requirements of the 1987
Act. Demolitions or dispositions that were approved by HUD before
February 5, 1988, but not carried out by that date, may be carried out
according to the terms of such approval, without reference to
subsequent amendments to this part and without obtaining any further
HUD approval. Conversions and reconfigurations of interior space are
exempted by Sec. 970.2(a)(5).
Other commenters argued for some degree of flexibility. One urged
that the exception from the replacement housing requirement be extended
to include units that were uninhabitable as of February 5, 1988, and
defined such housing as housing stock that was not suitable and usable
for housing purposes and that was not being used by the PHA as part of
its housing stock as of February 5, 1988. Another commenter suggested
that HUD be authorized to waive the replacement requirement in special
situations, such as where there is an urgent need for demolition, but
special problems preclude replacement. While arguments for some degree
of flexibility have considerable merit the statute does not provide for
such flexibility.
Exemption for Homeownership Sales to Residents
Some commenters argued that the 1987 Act amendments make the
disposition provisions applicable to homeownership sales to tenants,
because the 1987 Act removed the paragraph that specifically excepted
such sales. One commenter asserted that Congress intended to make only
the replacement housing provisions applicable to homeownership sales.
There is nothing to suggest that Congress intended to make
homeownership sales subject to the disposition provisions, including
not only the replacement housing provision, but also the justifiability
provisions under the statutory criteria, the local government approval
provision, and the tenant consultation provision. This means that the
issue is not germane to any of the following homeownership units whose
sales were approved (even if not completed) before February 5, 1988:
--All existing Turnkey III units, because approval for sale was
incident to approval for development. (Development of additional
Turnkey III units was suspended before enactment of the 1987 Act, so
there is no issue as to post-February 5, 1988 approvals for Turnkey III
sales.)
--All Mutual Help units approved for development before February 5,
1988, whether in existence or in the process of development as of that
date. (Like Turnkey III, approval of sales of Mutual Help units were
incident to approvals for development.)
--All units approved for sale under the Public Housing Homeownership
Demonstration, because all such approvals were made before the
effective date of the 1987 Act.
--All units approved for sale under the section 5(h) Homeownership
Program before the effective date of the 1987 Act. (This refers to the
regular Section 5(h) Homeownership Program under which a number of PHAs
have chosen to initiate homeownership sales to tenants over the 15
years since this statutory option was added in 1974, as distinguished
from the demonstration that was undertaken by HUD under the authority
of section 5(h).)
The Department believes that it was not the intent of Congress to
make the disposition requirements applicable to homeownership sales via
resident management corporations under the new Public Housing
Homeownership and Management Opportunities program established by
section 123 of the 1987 Act (section 21 of the 1937 [[Page 3710]] Act),
because the legislative provisions for that program contain separate
requirements on replacement, rights of tenants in occupancy, public
hearings, and use of sale proceeds.
HUD does not believe that Congress intended to make the disposition
requirements applicable to future approvals for sale of Mutual Help
units. Since approval for sale to eligible homebuyers is incident to
approval for development, imposing the disposition requirements would
seriously hinder, if not entirely preclude, development of new Mutual
Help projects that have been expressly authorized by Congress as the
principal vehicle for additional units under the Indian Housing
Program. Also, we do not believe that Congress intends to treat future
approvals for homeownership sales under the Section 5(h) Program as
dispositions subject to part 970. Property that would be suitable for
homeownership could not satisfy the disposition criteria, so that the
effect of interpreting the disposition requirements of section 18 as
applicable to the Section 5(h) Program would be de facto repeal of the
program. This would be contrary to the Conference Report language
regarding section 123(d) of the 1987 Act, which states that ``any
homeownership program in existence prior to enactment may be continued
under existing requirements * * *'' [H.R. Rep. No. 100-426, 100th
Cong., 1st Sess. p. 175 (Conference Report on S. 825)] Also, it should
be noted that the National Affordable Housing Act subjects 5(h)
proposals to replacement housing requirements contained in the HOPE for
Public and Indian Housing Homeownership (HOPE 1) program. This
represents further evidence of congressional intent that 5(h) sales not
be subject to the disposition requirements of section 18. However,
proposals by a PHA to demolish units that are the subject of these
various homeownership programs would have to satisfy the demolition
requirements of section 18 and part 970.
In keeping with section 412(b) of NAHA, the provisions of this rule
do not apply to the disposition of a public housing project in
accordance with an approved homeownership program under title III of
the 1937 Act, as added by section 411 of that legislation, (HOPE 1). In
the case of a homeownership proposal under HOPE 1 or section 5(h) from
a PHA involving partial or total demolition of units, Section 18 and
this rule apply. HOPE for Homeownership of Single Family Homes (Hope 3)
proposals involving public housing units approved prior to the 1992 Act
are likewise covered by the requirements of section 18. [The 1992 Act
took scattered-site single family public housing from under the
requirements of HOPE 3 and moved it to HOPE 1.]
Criteria for Demolition or Disposition
None of the commenters objected to the change in the disposition
criteria under the interim rule. Some, however, objected to the
language in place before the 1988 interim rule regarding the criteria
for demolition which did not change because of the 1987 Act amendments.
The language to which the commenters objected is Sec. 970.6(a)(2),
which lists adverse neighborhood conditions among the three types of
``major problems indicative of obsolescence.'' Section 970.6(a)(2) was
included in the interim rule merely to provide the context for the
change that combined ``obsolescence as to physical condition, etc.''
with ``no reasonable program of modifications, etc.'' as necessary
criteria to justify demolition. Although the language in question is
not open to public comment, the next paragraph provides clarification
on this issue.
Concern for this issue reflects a misreading of the fundamental
rationale of the whole of paragraph (a) of this section. The commenters
mistakenly assume that demolition is necessarily justified when any of
the problems listed in subparagraphs (a)(1) through (3) are found to
exist. That is not the case. The provision is not intended as a
simplistic formula, and no such formula would be adequate for the kind
of complex analysis that is called for in making these types of
determinations. The Department believes that Congress intended a
common-sense viability determination, based on a thorough examination
of all of the facts that are pertinent to both obsolescence and the
feasibility of rehabilitation.
One commenter objected to Sec. 970.6(b)--the alternative criterion
that applies in cases of partial demolition only; i.e., to permit
demolition of a portion of a project where demolition will help assure
the useful life of the remaining portion of the project. [Where
demolition of all units of a project is proposed, the only option is
the criterion of paragraph (a). Where partial demolition is proposed,
the PHA has the choice of seeking approval under either paragraph (a)
or (b)]. This commenter, expressing concern about possible abuse, urged
further amendment of the regulation to add guidelines for interpreting
the alternative criterion in paragraph (b).
The Department believes that Congress intended to give PHAs
reasonable discretion in making the judgments required to determine
when partial demolition may be justified to ``help assure the useful
life of the remaining portion of the project.'' However, the Department
is considering providing some guidance on this provision in the
revision to the Demolition/Disposition/Conversion Handbook (HUD
7486.1).
Tenant Consultation
While not making specific recommendations for changes in the
requirements for tenant consultation (see Sec. 970.4(a)), some
commenters expressed concern about this subject. Neither the interim
nor the final rule changes this provision of the old regulation.
However, in view of the comments, the Department takes this opportunity
to clarify that this regulatory requirement remains unchanged by the
later statutory requirements set forth in the NAHA or the 1992 Act.
Neither the interim rule nor this final rule changes the
requirement that the tenants of the project affected and any tenant
organizations for the project or on a PHA-wide basis must be consulted
in the developmental stage of the PHA's proposal, with fair notice and
opportunity to submit comments and recommendations, including any
recommendations for alternative strategies. While the PHA retains the
authority to make the final decision whether to submit a demolition or
disposition proposal, ``consultation'' implies a requirement for the
PHA to give full and serious consideration to tenant comments and
recommendations before making a decision. Where a building, or group of
buildings, at the development is vacant, the PHA is responsible for
consulting with any remaining residents or resident organizations, as
well as any PHA-wide resident organizations. If the development is
totally vacant, the PHA is still responsible for consulting with PHA-
wide resident organizations on the issue of whether to demolish or
dispose of the property.
Recognizing the variety of local circumstances in a program that
encompasses PHAs of different sizes in many different kinds of
communities throughout a diverse country, the regulation allows
flexibility as to the exact methods that may be employed to satisfy the
tenant consultation requirements, provided that there is genuine
compliance with the essential elements stated in Sec. 970.4(a).
Note: Section 412(a) of NAHA, as amended by the 1992 Act,
amended section 18 of the U.S. Housing Act of 1937, to require that
tenant councils, resident management [[Page 3711]] corporation, and
tenant cooperative, of the project or portion of the project covered
by the application, if any, be given appropriate opportunities to
purchase the project or portion of the project covered by the
demolition or disposition application. Therefore, a separate Federal
Register document was published in the Federal Register on October
6, 1992, at 57 FR 46074, that sets forth the procedures and
requirements for affording the opportunity to purchase to tenant
councils, resident management corporations, or tenant cooperatives.
This document was open to public comment and is being made final by
this rule. Further discussion of this document (and the public
comments received on it) is set forth later in this preamble. The
requirements of section 412(a) are separate and distinct from the
tenant consultation requirements discussed immediately above.
Relocation Assistance
Two commenters recommended that Sec. 970.5 be amended to make it
clear that, when offering a displaced tenant the choice of using a
Section 8 rental voucher or rental certificate, the PHA must inform the
tenant that rent due to the owner under the lease following relocation
may exceed the Section 8 fair market rent. The Department has included
language to clarify its policy. The Department has determined that
rental vouchers may be an acceptable relocation housing resource,
provided the PHA ensures that referrals are made to units where the
monthly amount the family must pay to the owner to cover the family's
portion of the rent due to the owner will not exceed the amount
determined in accordance with 24 CFR 813.107. (See Sec. 970.5(b)). Such
referral may be to other public housing units or units made affordable
with a Section 8 rental certificate or voucher. If the PHA provides
referrals to suitable/comparable relocation housing (comparable housing
when the displacement is subject to the URA) and a tenant with a rental
voucher elects to rent a housing unit with a rent to owner that exceeds
the voucher payment standard as determined by the Housing Voucher
program, the tenant will be responsible for the difference between the
voucher payment standard and the rent to owner. Furthermore,
Sec. 970.5(e)(2) requires the PHA to provide ``counseling and advisory
services to assure that full choices and real opportunities exist for
tenants displaced * * *.'' That language, which remains unchanged from
the old regulation, requires the PHA to give displaced tenants full and
fair information about all relocation options, including use of rental
vouchers where that option is available. As in all other matters, this
implies a duty of good faith and diligence on the part of the PHA.
There is no evidence to support the commenters' assertions that
``tenants will only select rental vouchers if they are presented (or
pushed) by the PHA as the only alternative''.
A more complete discussion of the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970 (URA) requirements is
set forth later in this preamble.
One commenter objected to the statement that tenants become
eligible for relocation assistance as of the date of receipt of
official notice to move, asserting that tenants sometimes vacate before
official notice as a result of PHA pressure or reduction of services.
This commenter recommended that tenants be entitled to relocation
benefits at any time if the PHA is encouraging tenants to move or fails
to maintain the property. The commenter is referred to the definition
of ``displaced person'' under Sec. 970.5(i) and the definition of
``initiation of negotiations'' under Sec. 970.5(k) to determine
eligibility for relocation assistance. A person becomes eligible for
relocation assistance when HUD approves the demolition or disposition
under this part. Also, a person forced to vacate the property by an
action associated with the planned demolition or disposition of the
property, may qualify as a ``displaced person'' who is eligible for
relocation assistance, even if the action occurs before HUD approval of
the demolition or disposition. A person who is dissatisfied with the
PHA's determination of eligibility may appeal to HUD under
Sec. 970.5(g). If HUD determines that the PHA's action resulted from
the demolition or disposition of the property, the PHA would be
required to provide the appropriate relocation assistance.
Note: If the PHA's action was found to be an ``action to
demolish or dispose of'' the property under Sec. 970.12, then the
PHA would be required to cease those actions (e.g., stop vacating a
development). If tenants believe that the PHA's actions are contrary
to its lease obligations, they may pursue the remedies available to
them under the lease.
Actual Availability of Replacement Housing
One commenter expressed concern over the fact that HUD cannot
approve demolition or disposition until there is a commitment of funds
for the necessary replacement units, and recommended that HUD propose
to Congress options for PHAs that ``desperately need to get rid of
units but for which no funds are immediately available''. The commenter
also suggested that Congress be updated regularly on the yearly needs
and costs for pending and approved demolition projects, so that
adequate funding may be appropriated.
The commenter's concern that the Department cannot approve
applications for demolition or disposition until the funds are
committed is unfounded. The Department processes requests for
demolition or disposition under section 18. However, under section 18,
applications are approved subject to the availability of funds for
replacement housing. As a point of clarification, section 513 of the
National Affordable Housing Act of 1990 requires the Department to
report to Congress each year on its replacement housing needs beginning
in FY 1992.
One commenter recommended a requirement that the replacement
housing be available for occupancy before the demolition or disposition
is carried out. This recommendation has not been incorporated into the
final rule, which conditions HUD approval and PHA action on commitment
of funds for the replacement units, rather than availability of the
units for occupancy. Once the decision has been properly approved,
requiring that the actual demolition or disposition be delayed until
replacement units are available for occupancy would be unwarranted. The
old units may be a blight on the neighborhood, vacant and substandard,
and perhaps a threat to public health and safety or a financial drain
on the PHA. In some cases, selective demolition may be an essential
part of a comprehensive modernization plan. One of the disposition
criteria was developed in contemplation of the kind of case where the
existing property will be sold to obtain funds to finance the
replacement units. Where the replacement units are to be produced by
new construction, several years will probably be required before the
new units will be available for occupancy. The commenter's
recommendation may reflect the misconception that replacement units are
always needed for relocation. However, past experience indicates that
replacement units do not normally serve as the source for relocation of
the affected residents. The affected residents are usually relocated to
other units within the PHA's inventory or provided with Section 8
assistance. There is no statutory or regulatory requirement that the
relocated residents be placed in the replacement housing.
This Final Rule
In addition to the regulatory amendments being made as a result of
the public comments discussed above, [[Page 3712]] the following
additional revisions are made in this final rule. These revisions
include modifications and new requirements originating out of the URA,
the NAHA, and the 1992 Act.
Section 970.2, Applicability, is revised to except, from coverage
of the disposition requirements of section 18 and part 970,
homeownership sales under (1) section 21 of the 1937 Act (as added by
section 123 of the 1987 Act); (2) the Turnkey III/IV and Mutual Help
Homeownership Opportunity Programs; and (3) other homeownership
programs established under sections 5(h) or 6(c)(4)(D) of the 1937 Act
and in existence before February 5, 1988, the effective date of the
1987 Act. (Section 21 pertains to homeownership programs through
resident management corporations.) Thus, the demolition/disposition
regulations will be inapplicable to all conveyances under existing
homeownership programs. In addition, in keeping with section 412(b) of
NAHA, the provisions of Part 970 do not apply to the disposition of a
public housing project in accordance with an approved homeownership
program under title III of the 1937 Act, as added by section 411 of
that legislation, (Hope 1 for Public and Indian Housing Homeownership).
However, in the case of a homeownership proposal under HOPE 1 or
section 5(h) from a PHA involving partial or total demolition of units,
Section 18 and this rule apply. Hope 3 proposals involving public
housing units approved prior to the 1992 Act are likewise covered by
the requirements of section 18. [The 1992 Act took homeownership for
scattered-site single family public housing from under the requirements
of HOPE 3 and moved it to HOPE 1.]
Section 970.2 is also revised to except easements, rights-of-way,
and transfers of utility systems incident to the normal operations of
the development.
A correction is made to Sec. 970.4(b) to be redesignated as
Sec. 970.4(c) the paragraph regarding the requirements of the
environmental and historic preservation statutes. Furthermore, this
section requires that where the site for the replacement housing is
known at the time of application for the demolition or disposition, the
site must comply with these requirements. However, the amendment to
this section clarifies that where the site(s) of the replacement
housing is not known at the time of application (whether federally or
non-federally funded), the PHA shall follow the requirements of 24 CFR
50.3(i), as set forth in the rule text at Sec. 970.4(c).
In addition, paragraphs (d), (e), (f), and (g) are added to
Sec. 970.4(c) regarding assurances and certifications for commitment of
funds to carry out the replacement housing plan, compliance with the
offering to resident organizations, relocation of residents, and site
and neighborhood standards.
[Note: In sec. 970.4 of the final rule as it existed prior to
the 1988 interim rule, paragraph (c) required a certification from
the chief executive officer that the proposed activity was
consistent with the housing assistance plan (HAP). The requirements
regarding the HAP were replaced by the Comprehensive Housing
Affordability Strategy (CHAS). However, under 24 CFR 91.1(b)(3), all
public housing programs, except HOPE 1, are excluded from the
requirements of the CHAS.] Therefore, the previous requirement for
consistency with the HAP has been dropped.
Paragraph (c) of Sec. 970.5 of this final rule is added to set
forth the requirements of the URA. Effective April 2, 1989, the URA was
amended to, among other things, expand coverage. It now covers all
persons displaced as a direct result of publicly or privately
undertaken rehabilitation, demolition or acquisition for a Federal or
federally assisted project. Therefore, demolition of any public housing
property that is owned by PHAs and that is subject to the Annual
Contributions Contract under the 1937 Act, or the disposition of the
property to a Federal agency or to any person or entity that acquires
the property for a federally assisted project, would make the
transaction subject to the URA and make any person displaced as a
result of such action eligible for relocation assistance at URA levels.
Families and individuals who are not eligible for relocation assistance
at URA levels are eligible for the relocation assistance described in
section 970.5(e). Required relocation assistance is described in HUD
Handbook 1378, Tenant Assistance, Relocation and Real Property
Acquisition.
Section 970.8, paragraph (f) is revised to clarify that approval of
the replacement housing plan shall be provided by the unit of general
local government which shall be the chief executive officer of the
jurisdiction in which the project is located (e.g., the mayor or the
county executive).
In Sec. 970.9, paragraph (b)(1) is amended to state that net
proceeds (after payment of HUD-approved costs of disposition and
relocation) shall be used for the retirement of outstanding
obligations, if any, issued to finance original development or
modernization of the project. This is in recognition of the possibility
that such obligations may not have been forgiven. (See 42 U.S.C.
1437b.) (If project debt has been forgiven, there will be no
outstanding obligations.) Reference to the payment of development costs
has been removed because development cost is contained in the
outstanding obligation, and double payment should not be implied.
A new paragraph (c) is added to Sec. 970.9 which states that in the
case of scattered-site housing of a public housing agency, the net
proceeds of a disposition shall be used in an amount that bears the
same ratio to the total of such costs and obligations as the number of
units disposed of bears to the total number of units of the project at
the time of disposition. This is a direct statutory requirement in
compliance with section 512 of the National Affordable Housing Act
(Pub. L. 101-625) and, therefore, is contained in this final rule. An
example of how this provision would be applied in cases where debt has
not been forgiven is: If a development project of ten units that cost
$100,000 has one unit disposed of for $10,000, then there would be no
net proceeds after paying off the proportional cost ($100,000 divided
by 10 = $10,000/unit) of the project. If, however, the unit was
disposed of and net proceeds were $12,000, there would be $2,000
available that the PHA would use for the provision of housing
assistance for low-income families.) Where debt has been forgiven, all
the net proceeds may be used by the PHA for the provision for low-
income housing.
Section 970.11(a) is revised to clarify that in the event that the
replacement housing will be located outside the political boundaries of
the locality of the PHA, all relevant program requirements must be
satisfied, including approval of the replacement housing plan by the
unit of general local government in which the project being demolished
or disposed is located, and the execution of such agreements as may be
necessary between the PHA and the locality in which the replacement
housing will be located. In the case of new public housing, this would
require a Cooperation Agreement between the PHA and the locality in
which the replacement housing would be located. It is expected that
replacement housing would be operated or administered by the PHA.
However, in instances where the PHA can make arrangements for another
PHA to develop, operate or administer the new public housing, the
section 8 assisted housing, or other replacement housing such as a
State or Local program Section 8 assisted housing that is outside the
PHA's area of operation, the PHA must ensure that the families that
would have been eligible to occupy the replacement housing if it had
been replaced in the same locality as the project being
[[Page 3713]] demolished or disposed, will be the same families that
benefit from the replacement housing. In addition to the Cooperation
Agreement for public housing, and in the case of Section 8 replacement
housing or other replacement housing, other agreements may be necessary
in order to assure that this and other program requirements are
satisfied.
Section 970.11(c) is revised to reflect the requirement that when
demolition or disposition of dwelling units is proposed, the PHA
application for HUD approval must contain documentation of approval by
the unit of general local government in which the project proposed for
demolition or disposition is located, which approval shall be provided
by the chief executive officer of the jurisdiction in which the project
is located (e.g., the mayor or county executive). Section 970.3 has
been revised to add to the list of definitions, a definition for
``chief executive officer of a State or unit of general local
government.''
Since October 1988 when the interim rule became effective, the
Department has interpreted the phrase ``unit of general local
government'' to mean the local governing body, e.g., the City Council
or the Board of Aldermen. Consequently, in order to comply with this
requirement, a PHA requesting permission to demolish or dispose of one
or more dwelling units was required to provide the Department with a
copy of a resolution from the City Council or the appropriate local
governing body approving the replacement housing plan. However,
experience has demonstrated that obtaining the approval of the local
governing body has proven to be an extremely time consuming and
difficult process, particularly when the replacement housing is public
housing development. In some communities the local governing body has
strenuously objected to putting public housing in the community. The
effect of local governing body opposition to a replacement housing plan
has been to delay approval of demolition or disposition applications
for extended periods of time. After a review of the problem and
research of the legislative history on this point, the Department has
determined that it is permissible to allow the chief executive officer,
e.g., the mayor or the county executive, to approve the replacement
housing plan.
Section 970.11(h) of the interim rule is revised by the final rule
for technical and clarifying reasons. The purpose of this provision is
to assure that the replacement sites will satisfy standards related to
nondiscrimination and housing opportunities. In some instances the time
for compliance with the site and neighborhood standards is during the
demolition or disposition application and review process, and in other
instances compliance is deferred. The requirements regarding site and
neighborhood standards will be as follows:
(1) If funds have been committed to provide replacement units under
the Public Housing Development Program or the Section 8 project-based
assistance program, except when the PHA plans to build back on the same
site, the site and neighborhood standards applicable for those programs
will apply and be assessed at the appropriate time as required by that
program rule or handbook and not at the time of the demolition or
disposition application. The PHA must certify to HUD at the time of the
demolition or disposition application, that once the site is
identified, the PHA will comply with the site and neighborhood
standards applicable for those programs.
(2) If funds have been committed to provide replacement units under
the Public Housing Development Program or the Section 8 project-based
assistance program and the PHA plans to build back on the same site,
the PHA shall comply with the site and neighborhood standards
applicable for those programs when the demolition or disposition
application is submitted to HUD. A complete site and neighborhood
standards review shall be done by HUD subsequent to the submission of
the demolition or disposition application but prior to approval.
(3) If the replacement housing units are to be provided under a
State or local program, and the site is known (including building back
on the same site), the PHA is required to comply with site and
neighborhood standards comparable to 24 CFR part 882 when the
demolition or disposition application is submitted to HUD. A complete
site and neighborhood standards review shall be done by HUD subsequent
to the submission of the demolition or disposition application but
prior to approval.
However, if the site is not known, the PHA shall include in the
application for demolition or disposition a certification that it will
comply with site and neighborhood standards comparable to 24 CFR part
882 once the site is known.
In the case of replacement housing funded by State or local
government funds, the PHA must demonstrate in the application that it
has a commitment for funding the replacement housing.
(4) If the replacement housing units are to be provided out of the
proceeds of the disposition of public housing property, and the site is
known (including building back on the same site), the PHA is required
to comply with site and neighborhood standards comparable to 24 part
941 (or under 24 CFR part 882 in the case of use of Section 8
assistance) when the demolition or disposition application is submitted
to HUD. A complete site and neighborhood standards review shall be done
by HUD subsequent to the submission of the demolition or disposition
application but prior to approval.
However, if the site is not known, the PHA shall include in the
application for demolition or disposition a certification that it will
comply with site and neighborhood standards comparable to 24 CFR part
941 or under 24 CFR part 882 once the site is known.
Section 970.12 of the August 1988 interim rule is not made final by
this final rule. Comments received on Sec. 970.12 will be considered in
the development of a separate proposed rulemaking on the issue of
required and permitted actions prior to approval of an application for
demolition or disposition. Until a final rule is issued on Sec. 970.12,
the provisions of the August 1988 interim rule remain effective.
Changes Required by Section 412(a) of the National Affordable Housing
Act--Resident Organization Opportunity to Purchase
Section 412(a) of the National Affordable Housing Act (``NAHA''),
Pub.L. 101-625, amended section 18 of the U.S. Housing Act of 1937 to
require that ``tenant councils, resident management corporation, and
tenant cooperative, if any,'' be given appropriate opportunities to
purchase the project or portion of the project covered by the
demolition or disposition application.
Section 116(a) of the Housing and Community Development Act of 1992
(the ``1992 Act'') amended section 18 of the U.S. Housing Act of 1937
to require PHAs to limit the opportunity to purchase the development or
portion of the development proposed for demolition or disposition only
to the resident organization(s) at the affected development. This
provision clarifies an ambiguity regarding the breadth of the offer (as
discussed below in the public comments to the October 6, 1992 Notice)
and is considered self-executing. Accordingly, the Department issued
Notice PIH 93-17 (PHA) on April 2, 1993 to inform program
administrators and participants of this clarification and its immediate
effect. This final rule [[Page 3714]] accommodates this clarification
in the new Sec. 970.13.
Section 418 of NAHA permitted the Department to establish by notice
the requirements necessary to carry out this provision. Therefore, the
Department published a notice of guidelines on October 6, 1992, at 57
FR 46075 and solicited public comments on the provisions set forth in
that notice. The Department received public comments from five
organizations: Two large national associations, one housing finance
corporation, one public school system, and a HUD field office. Below is
a listing of the issues raised by the commenters. Each issue is
followed by a discussion of the Department's resolution of the issue.
Comment: There should be a distinction provided between real
property that is developed with dwelling units and is occupied and real
property that is vacant and abandoned (which should be excluded from
the section 412(a) requirements. [a public school system]
Response: Section 412(a) does not apply in the case of totally
vacant or abandoned development. There would be no residents to
organize and, consequently, no organization to receive the offer.
However, if the development is only partially vacant, the PHA is
required to offer the property under application to the existing
resident group, or where no group exists, the PHA must make a
reasonable effort to allow the residents of the affected development to
organize. The PHA has the same responsibility where only a building, or
group of buildings, is vacant within the development.
Comment: There is no rationale for limiting the area of land to be
acquired by a public body to less than two acres. [a public school
system]
Response: On the basis of experiences in the program, the
limitation of two acres was selected to reduce the possibility of
injustice from profit-motivated actions. However, the Department's
experience is rather limited. The threshold was established based upon
experience for the last six years. It is inappropriate to allow more
flexibility in this area without (1) more time to see the impact of the
existing provision, and (2) a better understanding of the number of
PHAs affected by the provision.
Comment: Financial capabilities of resident councils, resident
management corporations, resident cooperatives or other similar legal
instrumentalities should be assessed independent of possible future
Federal grants, because such organizations may flounder when these
resources are gone. [a public school system]
If the units being sold will continue as rental units, the plan for
the use of the property should include financial operations/solvency of
the development. [a HUD field office]
Response: The long-term financial capability of a possible resident
group as a purchaser should be considered by the PHA when it reviews
the group's proposal. Absent any prior experience under the new
resident purchase requirement, the Department sees no reason to require
the PHA to give more weight to one factor over another.
Comment: The guidelines should include realistic but firm
timetables for plan implementation which should be enforced. [a public
school system]
Response: The requirements related to providing resident
organizations the opportunity to organize are very new. To date only
one resident organization has prepared a proposal for PHA
consideration. Based on this experience, there is no reason to require
strict timetables.
Comment: Another case, regarding applicability, which does not
present an appropriate opportunity for resident purchase is when the
housing authority plans to redevelop the real estate with replacement
public housing. [a housing finance corporation]
Response: The PHA is required to consult with residents and
resident organizations under Sec. 970.4 regarding any proposals to
demolish or dispose of any property. This consultation should include
advisements of any PHA plans to reuse the property and a complete
discussion of any replacement housing plans. It is clear that Congress
wanted resident organizations to be given the opportunity to purchase
the property.
Comment: It is an incorrect interpretation that is a violation of
the statute to afford notice and opportunity to purchase to city-wide
resident groups or, in the case where there is no organized resident
group at the affected project, to allow 45 days for a resident
organization to be formed. A process that is already lengthy is made
more protracted and burdensome by the time periods created by the
Department. The statutory reference to tenant groups, ``if any,''
refers to groups already in existence. [two national associations]
HUD cannot avoid the cost/benefit analysis of Executive Order
12291, by designating the document as a guideline. No cost/benefit
analysis or regulatory review was performed prior to the issuance of
the notice. The benefits of imposing a ``notice'' do not outweigh the
cost to PHAs as a result of the long delays and increased liabilities
they will have to face before being permitted to submit an application.
A PHA is permitted to demolish or sell only its very worst projects
which are often extremely unsafe. [one national association]
Response: The Department has examined the notice and the process
for permitting resident organizations to form and recognizes that the
additional time periods may be burdensome. However, the Department
still believes that as a matter of policy, residents should have the
opportunity to form a resident organization. In response to the
concerns raised by the commenter, however, this rule abbreviates the
process considerably. The process can be further truncated into the
already established requirement for tenant consultation under 24 CFR
970.4(a). Therefore, where the affected development does not have an
existing resident council, resident management corporation or resident
cooperative at the time of the PHA proposal to demolish or dispose of
the development or a portion of the development, the PHA shall make a
reasonable effort to inform residents of the development of the
opportunity to organize and purchase the property proposed for
demolition or disposition. Examples of ``reasonable effort'' at a
minimum include at least one of the following activities: Convening a
meeting, sending letters to all residents, publishing an announcement
in the resident newsletter, where available, or hiring a consultant to
provide technical assistance to the residents. The Department will not
approve any application that cannot demonstrate that the PHA has
allowed at least 45 days for the residents to organize a resident
organization. The PHA should initiate its efforts to inform the
residents of their right to organize as an integral part of the
resident consultation requirement under 24 CFR 970.4(a).
While the Department is concerned about the costs and the benefits
as they relate to the PHAs, the Department also has similar regard and
concerns for the residents who are also beneficiaries of the public
housing program. Therefore, we believe that giving residents the
opportunity to purchase projects that the PHA has deemed unusable for
public housing purposes could benefit the residents both socially and
economically. Furthermore, under Executive Order 12866 (which replaced
Executive Order 12291), only ``significant regulatory actions'' are
required to have an assessment of the costs and benefits of the action
prior to promulgation. This final rule does not [[Page 3715]] meet the
definition of ``significant regulatory action.''
Comment: The guidelines should not have been made effective upon
publication but should have permitted public comment before taking
effect. The guidelines are in violation of HUD's part 10 which requires
the Department to follow APA procedures for rulemaking. The guidelines
should be withdrawn and a new proposed rule issued, incorporating the
provisions of the Housing and Community Development Act of 1992. The
term ``notice'' in section 418 of NAHA refers to ``notice and public
comment'' and not the Federal Register format. [two national
associations]
Response: Section 418 of the National Affordable Housing Act,
Public Law 101-625, permitted the Department to establish by notice the
requirements necessary to carry out the provision in a more timely
manner. It is clear that the Congress intended that the Department
establish the requirements and procedures for offerings to resident
organizations as soon as possible. The determination as to the meaning
of ``notice'' was made after substantial consideration.
Comment: The fact that the statute and the guidelines give resident
groups the right to demand to purchase a project, but impose no
requirement on the purchasing group to use the project for housing
purposes, raises serious constitutional and policy questions. The U.S.
Constitution prohibits the Federal Government from appropriating
private property unless just compensation is provided and the taking is
pursuant to a public purpose. Without a use restriction, it is
questionable whether forcing a PHA to transfer its project to a
resident group, and thereby suffer the loss of a competitive price,
serves a valid public purpose when the end result is not increased
housing opportunity. [one national association]
The guidelines should require some type of guarantee by the
resident group purchasers that the units will be utilized as housing
for low-income households. [one national association]
If a PHA may consider an offer that proposes a purchase of less
than fair market value with demonstrated commensurate public benefit,
``demonstrated commensurate public benefit'' should be defined. [a HUD
field office]
Response: There is nothing in the statute or the legislative
history which would lead the Department to believe that Congress
intended that resident organizations be restricted in the use of the
property. Therefore, the Department did not impose such a restriction.
The final rule gives the PHA the authority to establish the terms of
sale and to approve or disapprove of the resident organization's
proposal. With this kind of authority, the PHA is not being forced to
transfer its property to a resident organization.
Examples of ``demonstrated commensurate public benefit'' will be
provided in the new handbook for demolition/disposition activities.
Comment: The Department's ``federalism'' certification under
Executive Order 12612 incorrectly rules that PHAs are not units of
local government. There are serious federalism implications because the
guidelines intrude in to the day-to-day management decisions of PHA
directors, who are State or local officials. The guidelines threaten
the balance of power between the respective levels of government
because they direct State or local officials to incur increased costs
related to delay and maintenance of blighted or unsafe buildings. [one
national association]
Response: The Department recognizes that overall section 18 places
significant requirements on PHAs; however, the requirement that
offerings be made to resident organizations is mandated by statute. The
Department has determined that these requirements do not have
``federalism implications'' because they do not have substantial direct
effects on the States (including their political subdivisions), or on
the distribution of power and responsibilities among the various levels
of government.
Comment: The guidelines cannot be applied to pending applications
because HUD does not have the power to promulgate rules with
retroactive effect. Congressional enactments and administrative rule
will not be construed to have retroactive effect unless their language
requires this result. [one national association]
Response: ``Pending'' does not mean ``approved.'' Section 18
prohibits approval by the Secretary unless all of the requirements of
the section are met.
Note: Other comments received from the HUD field office were
technical corrections related to appropriate cross-references and
definitions. These technical comments were reviewed and accommodated
where indicated.
The regulatory provisions implementing section 412 of NAHA, as
those provisions have been revised to accommodate the public comments
discussed above, can be found at a new Sec. 970.13 added by this rule.
Applicability to the Native American Program
As a result of section 201(b)(1) of the 1937 Act, the provisions of
title I of the 1937 Act apply to low-income housing developed or
operated pursuant to a contract between the Secretary and an Indian
housing authority. Therefore, the demolition and disposition provisions
under part 970 (as it is revised by the 1988 interim rule) extend to
Indian housing authorities and have been incorporated in part 905, the
regulations for the Indian Housing Program. However, under section
201(b)(2) no provision of title I, or amendment to title I, that is
enacted after the date of enactment of the Indian Housing Act of 1988
(June 29, 1988) shall apply to public housing developed or operated
pursuant to a contract between the Secretary and an Indian housing
authority unless the provision explicitly provides for applicability.
Therefore, absent such a provision, section 116 of the 1992 Act does
not extend to Indian housing authorities.
This issue, as well as finalizing the 1988 interim rule in part 905
and sections 412 and 512 of NAHA, as they apply to Indian housing
units, will be addressed in a separate final rule.
Other Matters
Environmental Review
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. The Finding of No Significant Impact is available for
public inspection during regular business hours in the Office of the
Rules Docket Clerk, Office of the General Counsel, Department of
Housing and Urban Development, Room 10276, 451 Seventh Street, S.W.,
Washington, D.C. 20410.
Executive Order 12866
This rule was reviewed by the Office of Management and Budget (OMB)
under Executive Order 12866 on Regulatory Planning and review, issued
by the President on September 30, 1993. Any changes made in the rule
subsequent to its submission to OMB are identified in the docket file,
which is available for public inspection in the Office of the Rules
Docket Clerk, Department of Housing and Urban Development, Room 10276,
451 Seventh Street, SW, Washington, DC 20410.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of [[Page 3716]] Executive Order 12612, Federalism, has determined that
this rule does not have ``federalism implications'' because it does not
have substantial direct effects on the States (including their
political subdivisions), or on the distribution of power and
responsibilities among the various levels of government. This rule
pertains to certain PHAs that are subject to Annual Contributions
Contracts (ACCs) under the U.S. Housing Act of 1937 and the
requirements that they must meet in order to demolish or dispose of
public housing.
Executive Order 12606, the Family
The General Counsel, as the Designated Official under Executive
Order 12606, the Family, has determined that this rule does not have
potential significant impact on family formation, maintenance, and
general well-being because it redefines previous demolition and
disposition criteria so as to hold applications for demolition and
disposition to more stringent requirements.
Information Collection
The collection of information requirements contained in this rule
have been submitted to OMB for review under section 3504(h) of the
Paperwork Reduction Act of 1980 and have been assigned OMB control
number 2577-0075.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does have a significant economic
impact on a substantial number of small entities because the 1987 Act
provides for substantial contributions of funds by the Federal
government to assist in bearing the costs associated with the policy
changes reflected in the rule. This cost sharing is, of course,
available both to large and small PHAs whose demolition and disposition
decisions are affected by the rule.
Semi-Annual Agenda of Regulations
This rule was listed as item number 1899 in the Department's
Semiannual Agenda of Regulations published on November 14, 1994 (59 FR
57632, 57673) in accordance with Executive Order 12866 and the
Regulatory Flexibility Act.
List of Subjects in 24 CFR Part 970
Grant programs--housing and community development, Public housing,
Reporting and recordkeeping requirements.
Accordingly, the interim rule amending 24 CFR part 970 which was
published at 53 FR 30984 on August 17, 1988, is adopted as a final rule
with the following changes:
PART 970--PUBLIC HOUSING PROGRAM--DEMOLITION OR DISPOSITION OF
PUBLIC HOUSING PROJECTS
1. The authority citation for part 970 continues to read as
follows:
Authority: 42 U.S.C. 1437p and 3535(d).
2. Section 970.2 is revised to read as follows:
Sec. 970.2 Applicability.
(a) This part applies to public housing projects that are owned by
public housing agencies (PHAs) and that are subject to Annual
Contributions Contracts (ACCs) under the Act. It also applies to
Section 23 bond-financed projects that have received modernization
(i.e., Comprehensive Improvement Assistance Program (CIAP) or
Comprehensive Grant funds (CGP)). This part does not apply to the
following:
(1) PHA-owned Section 8 housing, or housing leased under section
10(c) or section 23 of the Act, except for section 23 bond-financed
projects that have received modernization funding under the CIAP or the
Comprehensive Grant Programs;
(2) Demolition or disposition before the End of the Initial
Operating Period (EIOP), as determined under the ACC, of property
acquired incident to the development of a public housing project;
(however, this exception shall not apply to dwelling units);
(3) The conveyance of public housing for the purpose of providing
homeownership opportunities for lower income families under section 21
of the Act, the Turnkey III/IV or Mutual Help Homeownership Opportunity
Programs, or other homeownership programs established under sections
5(h) or 6(c)(4)(D) of the Act and in existence before February 5, 1988,
the date of enactment of the 1987 Act. (Where a plan submitted by the
PHA for homeownership includes a component of demolition, the plan must
meet the requirements of section 18 and this part.);
(4) The leasing of dwelling or nondwelling space incident to the
normal operation of the project for public housing purposes, as
permitted by the ACC;
(5) The reconfiguration of the interior space of buildings (e.g.,
moving or removing interior walls to change the design, sizes, or
number of units) without ``demolition'', as defined in Sec. 970.3.
(This includes the conversion of bedroom size, occupancy type, changing
the status of unit from dwelling to nondwelling.);
(6) Easements, rights-of-way and transfers of utility systems
incident to the normal operation of the development for public housing
purposes, as permitted by the ACC;
(7) A whole or partial taking by a public or quasi-public entity
through the exercise of its power of eminent domain; however, HUD
requirements with respect to the replacement housing requirement for
one-for-one dwelling units shall be followed (see HUD Handbook 7486.1,
Demolition, Disposition and Conversion);
(8) Disposition of a public housing project in accordance with an
approved homeownership program under title III of the United States
Housing Act of 1937 (42 U.S.C. 1437p) (Hope 1);1
\1\In keeping with section 412(b) of the National Affordable
Housing Act (Pub.L. 101-625), the provisions of this part do not
apply to the disposition of a public housing project in accordance
with an approved homeownership program under title III of the United
States Housing Act of 1937, as added by section 411 of that
legislation, (HOPE 1 for Public and Indian Housing Homeownership).
In the case of a HOPE 1 proposal from a PHA involving partial or
total demolition of units, this part does apply. HOPE 3 proposals
involving public housing units approved prior to the 1992 Act are
likewise covered by the requirements of section 18. [The 1992 Act
took scattered-site single family public housing from under the
requirements of HOPE 3 and moved it to HOPE 1.]
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(9) Demolition after conveyance of a public housing project to a
non-PHA entity in accordance with an approved homeownership program
under title III of the United States Housing Act of 1937 (42 U.S.C.
1437p) (HOPE 1); and
(10) Units leased for non-dwelling purposes for one year or less.
(b) Demolition or disposition that was approved by HUD before
February 5, 1988, but not carried out by that date, may be carried out
according to the terms of such approval, without reference to
subsequent amendments to this part and without obtaining any further
HUD approval.
3. Section 970.3 is amended by adding in alphabetical order a
definition for ``Chief Executive Officer of a unit of general local
government'', to read as follows:
Sec. 970.3 Definitions.
* * * * *
Chief Executive Officer of a unit of general local government means
the elected official or the legally designated official, who has the
primary responsibility for the conduct of that entity's governmental
affairs. Examples [[Page 3717]] of the ``chief executive officer of a
unit of general local government'' are: the elected mayor of a
municipality; the elected county executive of a county; the chairperson
of a county commission or board in a county that has no elected county
executive; and the official designated pursuant to law by the governing
body of a unit of general local government.
* * * * *
4. Section 970.4 is amended by:
a. Removing paragraphs (b) and (c);
b. Redesignating paragraphs (d) and (e) as paragraphs (b) and (c),
respectively;
c. Revising newly redesignated paragraph (c); and
d. Adding new paragraphs (d), (e), (f), and (g), to read as
follows:
Sec. 970.4 General requirements for HUD approval of applications for
demolition or disposition.
* * * * *
(c) Demolition or disposition (including any related replacement
housing plan) will meet the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321), the National Historic Preservation
Act of 1966 (16 U.S.C. 469), and related laws, as stated in the
Department's regulations at part 50 of this title. Where the site of
the replacement housing is unknown at the time of submission of the
application for demolition or disposition, the application shall
contain an certification that the applicant agrees to assist HUD to
comply with part 50 of this title and that the applicant shall:
(1) Supply HUD with all available, relevant information necessary
for HUD to perform for each property any environmental review required
by part 50 of this title;
(2) Carry out mitigating measures required by HUD or select
alternate eligible property; and
(3) Not acquire, rehabilitate, convert, lease, repair or construct
property, or commit HUD or local funds to such program activities with
respect to any eligible property, until HUD approval is received.
(d) The public housing agency has developed a replacement housing
plan, in accordance with Sec. 970.11, and has obtained a commitment for
the funds necessary to carry out the plan over the approved schedule of
the plan. To the extent such funding is not provided from other sources
(e.g., State or local programs or proceeds of disposition), HUD
approval of the application for demolition or disposition is
conditioned on HUD's agreement to commit the necessary funds (subject
to availability of future appropriations).
(e) The PHA has complied with the offering to resident
organizations, as required under Sec. 970.13.
(f) The PHA has prepared a certification regarding relocation of
residents, in accordance with Sec. 970.5(h)(1). If relocation is
required, the PHA must submit a relocation plan in accordance with
Sec. 970.5.
(g) The PHA has made the appropriate certifications regarding site
and neighborhood standards, in accordance with Sec. 970.11(h) (2) and
(4).
5. Section 970.5 is revised to read as follows;
Sec. 970.5 Displacement and relocation.
(a) Relocation of displaced tenants on a nondiscriminatory basis.
Tenants who are to be displaced as a result of demolition or
disposition must be offered opportunities to relocate to other
comparable/suitable (see HUD Handbook 1378, Tenant Assistance,
Relocation and Real Property Acquisition) decent, safe, sanitary, and
affordable housing (at rents no higher than permitted under the Act,)
which is, to the maximum extent practicable, housing of their choice,
on a nondiscriminatory basis, without regard to race, color, religion
(creed), national origin, handicap, age, familial status, or sex, in
compliance with applicable Federal and State laws.
(b) Relocation resources. Relocation may be to other publicly
assisted housing. Housing assisted under Section 8 of the Act,
including housing available for lease under the Section 8 Housing
Voucher Program, may also be used for relocation, provided the PHA
ensures that displaced tenants are provided referrals to comparable/
suitable relocation dwelling units where the family's share of the rent
to owner following relocation will not exceed the total tenant payment,
as calculated in accordance with Sec. 813.107 of this title. If the PHA
provides referrals to suitable/comparable relocation housing
(comparable housing if the displacement is subject to the URA) and a
tenant with a rental voucher elects to lease a housing unit where the
family's share of rent to owner exceeds the amount calculated in
accordance with Sec. 813.107 of this title, the tenant will be
responsible for the difference between the voucher payment standard and
the rent to owner. If there are no units with rents at or below the
voucher payment standard to which the PHA may refer families, then the
PHA cannot use vouchers as a relocation housing source.
(c) Applicability of URA rules. (1) The displacement of any person
(household, business or nonprofit organization) as a direct result of
acquisition, rehabilitation, or demolition for a Federal or federally
assisted project (defined in paragraph (j) of this section) is subject
to the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, as amended, (URA) (42 U.S.C. 4601-4655) and
implementing regulations at 49 CFR part 24. Therefore, if the PHA
demolishes the property, or disposes of it to a Federal agency or to a
person or entity that is acquiring the property for a federally
assisted project, the demolition or acquisition is subject to the URA,
and any person displaced (as described in paragraph (i) of this
section) as a result of such action is eligible for relocation
assistance at the levels described in, and in accordance with the
requirements of 49 CFR part 24.
(2) As described in Sec. 970.11, public housing units that are
demolished must be replaced. Any person displaced (see paragraph (i) of
this section) as a direct result of acquisition, demolition or
rehabilitation for a project receiving Federal financial assistance
(e.g., ACC) that provides the required replacement housing, must be
provided relocation assistance at the levels described in, and in
accordance with the requirements of 49 CFR part 24.
(d) Applicability of antidisplacement plan. If CDBG funds (part 570
of this title), or HOME funds (part 91 of this title) are used to pay
any part of the cost of the demolition or the cost of a project
(defined in paragraph (j) of this section) for which the property is
acquired, the transaction is subject to the Residential
Antidisplacement and Relocation Assistance Plan, as described in the
cited regulations.
(e) Relocation assistance for other displaced persons. Whenever the
displacement of a residential tenant (family, individual or other
household) occurs in connection with the disposition of the real
property, but the conveyance is not for a Federal or federally assisted
project (and is, therefore, not covered by the URA), the displaced
tenant shall be eligible for the following relocation assistance:
(1) Advance written notice of the expected displacement. The notice
shall be provided as soon as feasible, describe the assistance to be
provided and the procedures for obtaining the assistance; and contain
the name, address and phone number of an official responsible for
providing the assistance;
(2) Other advisory services, as appropriate, including counseling
and referrals to suitable, decent, safe, and sanitary replacement
housing. Minority [[Page 3718]] persons also shall be given, if
possible, referrals to suitable decent, safe and sanitary replacement
dwellings that are not located in an area of minority concentration;
(3) Payment for actual reasonable moving expenses, as determined by
the PHA;
(4) The opportunity to relocate to a suitable, decent, safe and
sanitary dwelling unit at a rent that does not exceed that permitted
under section 3(a) of the 1937 Act. All or a portion of the assistance
may be provided under section 8 of the 1937 Act; and
(5) Such other Federal, State or local assistance as may be
available.
(f) Temporary relocation. Residential tenants who will not be
required to move permanently, but who must relocate temporarily (e.g.,
to permit property repairs), shall be provided:
(1) Reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the temporary relocation, including the
cost of moving to and from the temporary housing, any increase in
monthly rent/utility costs, and the cost of reinstalling telephone and
cable TV service.
(2) Appropriate advisory services, including reasonable advance
written notice of:
(i) The date and approximate duration of the temporary relocation;
(ii) The suitable, decent, safe and sanitary housing to be made
available for the temporary period;
(iii) The terms and conditions under which the tenant may lease and
occupy a suitable, decent, safe and sanitary dwelling in the building/
complex following completion of the repairs; and
(iv) The provision for reimbursement of out-of-pocket expenses (see
paragraph (f)(1) of this section).
(g) Appeals. A person who disagrees with the PHA's determination
concerning whether the person qualifies as a ``displaced person'' or
the amount of the relocation assistance for which the person is
eligible, may file a written appeal of that determination with the PHA.
A person who is dissatisfied with the PHA's determination on his or her
appeal may submit a written request for review of the PHA's
determination to the HUD Field Office.
(h) Responsibility of PHA. (1) The PHA shall certify that it will
comply with the URA, implementing regulations at 49 CFR part 24, and
the requirements of this section, and shall ensure such compliance,
notwithstanding any third party's contractual obligation to the PHA to
comply with these provisions.
(2) The cost of required relocation assistance is an eligible
project cost in the same manner and to the same extent as other project
costs. (See definition of ``project'' in paragraph (j) of this
section.) Such costs may also be paid for with funds available from
other sources.
(3) The PHA shall maintain records in detail sufficient to
demonstrate such compliance. The PHA shall maintain data on the race,
ethnic, gender, and handicap status of displaced persons.
(i) Definition of displaced person. (1) General definition. For
purposes of this section, the term ``displaced person'' means any
person (household, business, nonprofit organization, or farm) that
moves from real property, or moves personal property from real
property, permanently, as a direct result of acquisition,
rehabilitation, or demolition for a Federal or federally assisted
project.
(2) Persons who qualify. The term ``displaced person'' includes,
but may not be limited to:
(i) A person who moves permanently from the real property after the
PHA, or the person acquiring the property, issues a vacate notice to
the person, or refuses to renew an expiring lease in order to evade the
responsibility to provide relocation assistance, if the move occurs on
or after the date of HUD approval of the demolition or disposition;
(ii) Any person who moves permanently, including a person who moves
before the date of HUD approval of the demolition or disposition, if
HUD or the PHA determines that the displacement resulted from the
demolition or disposition of the property and is subject to the
provisions of this section; or
(iii) A tenant-occupant of a dwelling who moves permanently from
the building/complex on or after the date HUD approves the demolition
or disposition, if the move occurs before the tenant is provided
written notice offering him or her the opportunity to lease and occupy
a suitable, decent, safe, and sanitary dwelling in the same building/
complex, under reasonable terms and conditions, upon completion of the
project. Such reasonable terms and conditions shall include a monthly
rent and estimated average monthly utility costs that do not exceed
that permitted under section 3(a) of the 1937 Act.
(iv) A tenant-occupant of a dwelling who is required to relocate
temporarily and does not return to the building/complex, if either:
(A) The tenant is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with such temporary relocation
(including the cost of moving to and from the temporarily occupied
unit, any increase in rent/utility costs, and the cost of reinstalling
telephone and cable TV service).
(B) Other conditions of the temporary relocation are not
reasonable.
(v) A tenant-occupant of a dwelling who moves from the building/
complex permanently after he or she has been required to move to
another unit in the same building/complex if either:
(A) The tenant is not offered reimbursement for all reasonable out-
of-pocket expenses incurred in connection with the move; or
(B) Other conditions of the move are not reasonable.
(3) Persons not eligible. Notwithstanding the provisions of
paragraphs (i)(1) and (i)(2) of this section, a person does not qualify
as a ``displaced person'' (and is not eligible for relocation
assistance under this section), if:
(i) The person has been evicted for serious or repeated violation
of the terms and conditions of the lease or occupancy agreement,
violation of applicable Federal, State or local law, or other good
cause, and the PHA determines that the eviction was not undertaken for
the purpose of evading the obligation to provide relocation assistance;
(ii) The person moved into the property after the submission of the
application for the demolition or disposition and, before commencing
occupancy, received written notice of the project, its possible impact
on the person (e.g., the person may be displaced, temporarily
relocated, or suffer a rent increase) and the fact that he or she would
not qualify as a ``displaced person'' (or for assistance under this
section) as a result of the project;
(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
(iv) HUD determines that the person was not displaced as a direct
result of an action covered by this section.
(j) Definition of project. For purposes of this section, the term
``project'' means one or more activities (e.g., real property
acquisition, demolition or construction) paid for in whole or in part
with Federal financial assistance. Two or more activities that are
integrally related, each essential to the other(s), are considered one
project, whether or not all of the component activities are federally
assisted.
(k) Definition of initiation of negotiations. For purposes of
providing the appropriate notices and determining the formula for
computing a replacement housing payment under the URA to a tenant
displaced from a [[Page 3719]] dwelling as a direct result of
demolition or private owner acquisition, the term ``initiation of
negotiations'' means HUD approval of the demolition or disposition
under this part.
6. Section 970.6 is revised to read as follows:
Sec. 970.6 Specific criteria for HUD approval of demolition requests.
In addition to other applicable requirements of this part, HUD will
not approve an application for demolition unless HUD determines that
one of the following criteria is met:
(a) In the case of demolition of all or a portion of a project, the
project, or portion of the project, is obsolete as to physical
condition, location, or other factors, making it unusable for housing
purposes and no reasonable program of modifications, is feasible to
return the project or portion of the project to useful life. The
Department generally shall not consider a program of modifications to
be reasonable if the costs of such program exceed 90 percent of total
development cost (TDC). Major problems indicative of obsolescence are--
(1) As to physical condition: Structural deficiencies (e.g.
settlement of earth below the building caused by inadequate structural
fills, faulty structural design, or settlement of floors), substantial
deterioration (e.g., severe termite damage or damage caused by extreme
weather conditions), or other design or site problems (e.g., severe
erosion or flooding);
(2) As to location: physical deterioration of the neighborhood;
change from residential to industrial or commercial development; or
environmental conditions as determined by HUD environmental review in
accord with part 50 of this title, which jeopardize the suitability of
the site or a portion of the site and its housing structures for
residential use;
(3) Other factors which have seriously affected the marketability,
usefulness, or management of the property.
(b) In the case of demolition of only a portion of a project, the
demolition will help to assure the useful life of the remaining portion
of the project (e.g., to reduce project density to permit better access
by emergency, fire, or rescue services).
7. In Sec. 970.7, paragraph (a)(2) is revised to read as follows:
Sec. 970.7 Specific criteria for HUD approval of disposition requests.
(a) * * *
(2) Disposition will allow the acquisition, development, or
rehabilitation of other properties that will be more efficiently or
effectively operated as lower income housing projects, and that will
preserve the total amount of lower income housing stock available to
the community. A PHA must be able to demonstrate to the satisfaction of
HUD that the additional units are being provided in connection with the
disposition of the property.
* * * * *
8. Section 970.8 is amended by:
a. Revising paragraphs (f) and (g);
b. Redesignating existing paragraphs (h), (i), (j), (k), (l), and
(m), as paragraphs (k), (l), (m), (n), (o), and (p), respectively; and
c. Adding new paragraphs (h), (i), and (j), to read as follows:
Sec. 970.8 PHA application for HUD approval.
* * * * *
(f) A replacement housing plan, as required under Sec. 970.11, and
approved by the unit of general local government which approval shall
be provided by the chief executive officer of the jurisdiction in which
the project is located (e.g., the mayor or the county executive),
indicating approval of the replacement plan.
(g) Evidence of compliance with the offering to resident
organizations, as required under Sec. 970.13.
(h) A certification regarding relocation of residents, in
accordance with Sec. 970.5(h)(1).
(i) Appropriate certifications regarding site and neighborhood
assessment, in accordance with Secs. 970.11(h) (2), (3), and (4).
(j) Appropriate certification regarding compliance with
environmental authorities, where required in accordance with
Sec. 970.4(c).
* * * * *
9. In Sec. 970.9, paragraphs (b) introductory text and (b)(1) are
revised, and a new paragraph (c) is added, to read as follows:
Sec. 970.9 Disposition of property; use of proceeds.
* * * * *
(b) Net proceeds, including any interest earned on the proceeds,
(after payment of HUD-approved costs of disposition and relocation
under paragraph (a) of this section) shall be used, subject to HUD
approval, as follows:
(1) For the retirement of outstanding obligations, if any, issued
to finance original development or modernization of the project; and
* * * * *
(c) In the case of scattered-site housing of a public housing
agency, the net proceeds of a disposition shall be used for the
retirement of outstanding obligations issued to finance original
development or modernization of the project, in an amount that bears
the same ratio to the total of such costs and obligations as the number
of units disposed of bears to the total number of units of the project
at the time of disposition. For example, in cases where debt has not
been forgiven, if a development project of ten units that cost $100,000
has one unit disposed of for $10,000, then there would be no net
proceeds after paying off the proportional cost ($100,000 divided by
10=$10,000/unit) of the project. If, however, the unit was disposed of
and net proceeds were $12,000, there would be $2,000 available that the
PHA would use for the provision of housing assistance for lower income
families. Where debt has been forgiven, all the net proceeds may be
used by the PHA for the provision of low income housing assistance.
10. Section 970.11 is revised to read as follows:
Sec. 970.11 Replacement housing plan.
(a) One-for-one replacement. HUD may not approve an application or
furnish assistance under this part unless the PHA submitting the
application for demolition or disposition also submits a plan for the
provision of an additional decent, safe, sanitary, and affordable
rental dwelling unit (at rents no higher than permitted under the Act)
for each public housing dwelling unit to be demolished or disposed of
under the application, except as provided in paragraph (j) of this
section. A replacement housing plan may provide for the location of the
replacement housing outside the political boundaries of the locality of
the PHA, provided all relevant program requirements are satisfied
including the approval of the replacement housing plan by the unit of
general local government in which the project being demolished or
disposed is located. In order to assure that all program requirements
are satisfied, the PHA must enter into any necessary agreements,
including where applicable, the execution of a Cooperation Agreement
between the PHA and the locality in which the replacement housing will
be located, prior to submission of the replacement housing plan to HUD
for approval. In addition, the PHA must ensure that such agreements
provide that the families selected for occupancy in the replacement
housing will be families who would have been eligible for occupancy in
the replacement housing if it had been replaced in the same locality as
the project being demolished [[Page 3720]] or disposed. The plan must
include any one or combination of the following:
(1) The acquisition or development of additional public housing
dwelling units;
(2) The use of 15-year project-based assistance under section 8, to
the extent available, or if such assistance is not available, in the
case of an application proposing demolition or disposition of 200 or
more dwelling units in a development, the use of available project-
based assistance under section 8 having a term of not less than 5
years;
(3) The use of not less than 15-year project-based assistance under
other Federal programs, to the extent available, or if such assistance
is not available, in the case of an application proposing the
demolition or disposition of 200 or more dwelling units in a
development, the use of available project-based assistance under other
Federal programs having a term of not less than 5 years. (NOTE: In the
case of 15-year project based assistance under other Federal programs,
the Department has determined that low-income housing credits under
Section 42 of the Internal Revenue Service Code is a Federal program
providing 15-year project-based assistance and, therefore, qualifies as
a source of replacement housing. Any replacement housing plan proposing
the use of these credits must assure that the low-income housing units
in the low-income housing credit project which are designated as
replacement housing will be reserved for low-income families for the
requisite period. Units which at the time of allocation of the credit
are also receiving Federal assistance under Section 8 (except tenant-
based assistance) or Section 23 of the Act, or Section 236, 221(d)(3)
BMIR or Section 221(d)(5) of the National Housing Act (12 U.S.C. 1701
et seq.), or Section 101 of the Housing and Urban Development Act of
1965 (12 U.S.C. 1701s), or other similar Federal program, are not
eligible as replacement housing under paragraph (a)(3) of this
section.);
(4) The acquisition or development of dwelling units assisted under
a State or local government program that provides for project-based
rental assistance comparable in terms of eligibility, contribution to
rent, and length of assistance contract (not less than 15 years) to
assistance under section (8)(b)(1) of the Act; or
(5)(i) The use of 15-year tenant-based assistance under section 8
of the Act, (excluding rental vouchers under section 8(o)), under the
conditions described in paragraph (b) of this section, to the extent
available, or if such assistance is not available, in the case of an
application proposing the demolition or disposition of 200 or more
dwelling units in a development, the use of tenant-based assistance
under section 8 (excluding rental vouchers under section 8(o)) having a
term of not less than 5 years.
(ii) However, in the case of an application proposing demolition or
disposition of 200 or more units, not less than 50 percent of the
dwelling units for replacement housing shall be provided through the
acquisition or development of additional public housing dwelling units
or through project-based assistance, and not more than 50 percent of
the additional dwelling units shall be provided through tenant-based
assistance under section 8 (excluding vouchers) having a term of not
less than 5 years. The requirements of Sec. 970.11(b) do not apply to
applications for demolition or disposition of 200 or more units that
propose the use of tenant-based assistance under section 8 having a
term of not less than 5 years for the replacement of not more than 50
percent of the units to be demolished or disposed of.
(b) Conditions for use of tenant-based assistance. Fifteen-year
tenant-based assistance under section 8 may be approved under the
replacement plan only if provisions listed in paragraphs (b)(1) through
(3) of this section are met.
(1) There is a finding by HUD that replacement with project-based
assistance (including public housing, as well as other types of
project-based assistance under paragraph (a) of this section) is not
feasible under the feasibility standards established for project-based
assistance; that the supply of private rental housing actually
available to those who would receive tenant-based assistance under the
plan is sufficient for the total number of rental certificates and
rental vouchers available in the community after implementation of the
plan; and that this available housing supply is likely to remain
available for the full 15-year term of the assistance;
(2) HUD's findings under paragraph (b)(1) of this section are based
on objective information, which must include rates of participation by
landlords in the Section 8 program; size, condition, and rent levels of
available rental housing as compared to Section 8 standards; the supply
of vacant existing housing meeting the Section 8 housing quality
standards with rents at or below the fair market rent or the likelihood
of adjusting the fair market rent; the number of eligible families
waiting for public housing or housing assistance under Section 8; the
extent of discrimination practiced against the types of individuals or
families to be served by the assistance; an assessment of compliance
with civil rights laws and related program requirements; and such
additional data as HUD may determine to be relevant in particular
circumstances; and
(3) To justify a finding under paragraph (b)(1) of this section,
the PHA must provide sufficient information to support both parts of
the finding--why project-based assistance is infeasible and how the
conditions for tenant-based assistance will be met, based on the
pertinent data from the local housing market, as prescribed in
paragraph (b)(2) of this section. The determination as to the lack of
feasibility of project-based assistance must be based on the standards
for feasibility stated in the respective regulations which govern each
type of eligible project-based program identified in paragraph (a) of
this section, including public housing under paragraph (a)(1) of this
section as well as the other types of eligible Federal, State and local
programs of project-based assistance under paragraphs (a)(2) through
(4) of this section. A finding of lack of feasibility may thus be made
only if the applicable feasibility standards cannot be met under any of
those project-based programs, or any combination of them. For example,
with regard to additional public housing development, feasibility would
be determined by reference to part 941 of this chapter and any other
applicable regulations and requirements, to include consideration of
such factors as local needs for new construction or rehabilitation,
availability of suitable properties for acquisition or sites for
construction, and HUD determinations under cost containment policies.
With regard to Section 8 programs involving rehabilitation, an example
of a major feasibility factor would be the prospects for participation
of private owners willing to meet the rehabilitation requirements.
(c) Approval of unit of general local government. The plan must be
approved by the unit of general local government in which the project
proposed for demolition or disposition is located, which approval shall
be provided by the chief executive officer (e.g., the mayor or the
county executive).
(d) Schedule for replacement housing plan. (1) The plan must
include a schedule for carrying out all its terms within a period
consistent with the size of the proposed demolition or disposition,
except that the schedule for completing the plan shall in no event
exceed 6 years from the date specified [[Page 3721]] to begin plan
implementation, which is the date of HUD approval of the demolition or
disposition application.
(2) Where demolition or disposition will occur in phases, the
schedule shall provide for completing the plan within six years from
the date of the HUD approval letter for a specific demolition or
disposition action requested. ``Completion'' does not mean that the
replacement housing must be built or rehabilitated within the six
years. For replacement units developed under the public housing
development program, the completion of the plan would be units that
have reached the stage of notice to proceed for conventional units and
contract of sale for Turnkey units.
(e) Housing the same number of individuals and families. The plan
must include a method which ensures that at least the same total number
of individuals and families will be provided housing, allowing for
replacement with units of different sizes to accommodate changes in
local priority needs, as determined by the PHA and reviewed and
approved by HUD as a part of the demolition or disposition application.
(f) Relocation plan. Where existing occupants will be displaced,
the plan must include a relocation plan in accordance with Secs. 970.5
and 970.8(d).
(g) Assurances regarding relocation. The plan must prevent the
taking of any action to demolish or dispose of any unit until the
tenant of the unit is relocated in accordance with Sec. 970.5. This
does not preclude actions permitted under Sec. 970.12, actions required
under this part for development and submission of the PHA's application
for HUD approval of demolition or disposition, or actions required to
carry out a relocation plan which has been approved by HUD in
accordance with Secs. 970.5 and 970.8(d).
(h) Site and neighborhood standards assessment. With respect to
replacement housing, PHAs must comply with site and neighborhood
standards, as follows:
(1) If units under the Public Housing Development Program or the
Section 8 project-based assistance program have been requested as
replacement housing in the PHA's application, except when the PHA plans
to build back on the same site, the site and neighborhood standards
applicable for those programs will apply and be assessed at the
appropriate time as required by that program rule or handbook and not
at the time of the demolition or disposition application. The PHA must
certify to HUD at the time of application for demolition or
disposition, that once the site is identified, the PHA will comply with
the site and neighborhood standards applicable for those programs.
(2) If units under the Public Housing Development Program or the
Section 8 project-based assistance program have been requested as
replacement housing in the PHA's application and the PHA plans to build
back on the same site, the PHA shall comply with the site and
neighborhood standards applicable for those programs when the
demolition or disposition application is submitted to HUD. A complete
site and neighborhood standards review shall be done by HUD subsequent
to the submission of the demolition or disposition application but
prior to approval.
(3)(i) If the replacement housing units are to be provided under a
State or local program, and the site is known (including building back
on the same site), the PHA is required to comply with site and
neighborhood standards comparable to part 882 of this title when the
demolition or disposition application is submitted to HUD. A complete
site and neighborhood standards review shall be done by HUD subsequent
to the submission of the demolition or disposition application but
prior to approval.
(ii) However, if the site is not known, the PHA shall include in
the application for demolition or disposition a certification that it
will comply with site and neighborhood standards comparable to part 882
of this title once the site is known.
(iii) In the case of replacement housing funded by State or local
government funds, the PHAs must demonstrate in the application that it
has a commitment for funding the replacement housing.
(4)(i) If the replacement housing units are to be provided out of
the proceeds of the disposition of public housing property, and the
site is known (including building back on the same site), the PHA is
required to comply with site and neighborhood standards comparable to
part 941 of this chapter (or under part 882 of this title in the case
of use of Section 8 assistance) when the demolition or disposition
application is submitted to HUD. A complete site and neighborhood
standards review shall be done by HUD subsequent to the submission of
the demolition or disposition application but prior to approval.
(ii) However, if the site is not known, the PHA shall include in
the application for demolition or disposition a certification that it
will comply with site and neighborhood standards comparable to part 941
of this chapter or under part 882 of this title once the site is known.
(i) Assurances regarding accessibility. The plan must contain
assurances that any replacement units acquired, newly constructed or
rehabilitated will meet the applicable accessibility requirements set
forth in Sec. 8.25 of this title.
(j) Exception for replacement housing in cases of demolition. In
any 5-year period, a public housing agency may demolish not more than
the lesser of 5 dwelling units or 5 percent of the total dwelling units
owned and operated by the public housing agency, without providing an
additional dwelling unit for each public housing unit to be demolished,
but only if the space occupied by the demolished unit is used for
meeting the service or other needs of public housing residents. If the
PHA elects to use this exception, it shall meet all other requirements
of this part except Sec. 970.11.
(Approved by the Office of Management and Budget under control
number 2577-0075.)
11. Existing Sec. 970.13 is redesignated as Sec. 970.14, and a new
Sec. 970.13 is added, to read as follows:
Sec. 970.13 Resident organization opportunity to purchase.
(a) Applicability. (1) This section applies to applications for
demolition or disposition of a development which involve dwelling
units, nondwelling spaces (e.g. administration and community buildings,
maintenance facilities), and excess land.
(2) The requirements of this section do not apply to the following
cases which it has been determined do not present appropriate
opportunities for resident purchase:
(i) The PHA has determined that the property proposed for
demolition is an imminent threat to the health and safety of residents;
(ii) The local government has condemned the property proposed for
demolition;
(iii) A local government agency has determined and notified the PHA
that units must be demolished to allow access to fire and emergency
equipment;
(iv) The PHA has determined that the demolition of selected
portions of the development in order to reduce density is essential to
ensure the long term viability of the development or the PHA (but in no
case should this be used cumulatively to avoid Section 412
requirements);
(v) A public body has requested to acquire vacant land that is less
than 2 acres in order to build or expand its services (e.g., a local
government wishes to use the land to build or establish a police
substation); or [[Page 3722]]
(vi) PHA seeks disposition outside the public housing program to
privately finance or otherwise develop a facility to benefit low-income
families (e.g., day care center, administrative building, other types
of low-income housing).
(3) In the situations listed in paragraph (a) of this section, the
PHA may proceed to submit its request to demolish or dispose of the
property, or the portion of the property, to HUD, in accordance with
Section 18 of the United States Housing Act of 1937 and 24 CFR part 970
without affording an opportunity for purchase by a resident
organization. However, resident consultation would be required in
accordance with Sec. 970.4(a). The PHA must submit written
documentation, on official stationery, with date and signatures to
justify paragraphs (a)(2)(i), (ii), (iii), (iv), and (v) of this
section. Examples of such documentation include:
(i) A certification from a local agency, such as the fire or health
department, that a condition exists in the development that is an
imminent threat to residents; or
(ii) A copy of the condemnation order from the local health
department. If, however, at some future date, the PHA proposes to sell
the remaining property described in paragraphs (a)(2)(i) through (iii)
of this section, the PHA will be required to comply with this section.
(b) Opportunity for residents to organize. Where the affected
development does not have an existing resident council, resident
management corporation or resident cooperative at the time of the PHA
proposal to demolish or dispose of the development or a portion of the
development, the PHA shall make a reasonable effort to inform residents
of the development of the opportunity to organize and purchase the
property proposed for demolition or disposition. Examples of
``reasonable effort'' at a minimum include one of the following
activities: convening a meeting, sending letters to all residents,
publishing an announcement in the resident newsletter, where available,
or hiring a consultant to provide technical assistance to the
residents. The Department will not approve any application that cannot
demonstrate that the PHA has allowed at least 45 days for the residents
to organize a resident organization. The PHA should initiate its
efforts to inform the residents of their right to organize as an
integral part of the resident consultation requirement under
Sec. 970.4(a).
(c) Established Organizations. Where there are duly formed resident
councils, resident management corporation, or resident cooperative at
the affected development, the PHA shall follow the procedures beginning
in paragraph (d) of this section. Where the affected development is
fully or partially occupied, the residents must be given the
opportunity to form under the procedures in paragraph (b) of this
section.
(d) Offer of sale to resident organizations. (1) The PHA shall make
the formal offer for sale which must include, at a minimum, the
information listed in this paragraph (d). All contacted organizations
shall have 30 days to express an interest in the offer. The PHA must
offer to sell the property proposed for demolition or disposition to
the resident management corporation, the resident council or resident
cooperative of the affected development under at least as favorable
terms and conditions as the PHA would offer it for sale to another
purchaser:
(i) An identification of the development, or portion of the
development, in the proposed demolition or disposition, including the
development number and location, the number of units and bedroom
configuration, the amount of space and use for non-dwelling space, the
current physical condition (e.g., fire damaged, friable asbestos, lead-
based paint test results), and occupancy status (e.g., percent
occupancy).
(ii) In the case of disposition, a copy of the appraisal of the
property and any terms of sale.
(iii) A PHA disclosure and description of plans proposed for reuse
of land, if any, after the proposed demolition or disposition.
(iv) An identification of available resources (including its own
and HUD's) to provide technical assistance to the resident management
corporation, resident council or resident cooperative of the affected
development to enable the organization to better understand its
opportunity to purchase the development, the development's value and
potential use.
(v) Any and all terms of sale that the PHA requires for the Section
18 action. (If the resident management corporation, resident council or
resident cooperative of the affected development submits a proposal
that is other than the terms of sale (e.g., purchase at less than fair
market value with demonstrated commensurate public benefit or for the
purposes of homeownership), the PHA may consider accepting the offer).
(vi) A date by which the resident management corporation, resident
council or resident cooperative of the affected development must
respond to the HA's offer to sell the property proposed for demolition
or disposition, which shall be no less than 30 days from the date of
the official offering of the PHA. The response from the resident
management corporation, resident council or resident cooperative of the
affected development shall be in the form of a letter expressing its
interest in accepting the PHAs written offer.
(vii) A statement that the resident council, resident management
corporation, and resident cooperative of the affected development will
be given 60 days to develop and submit a proposal to the PHA to
purchase the property and to obtain a firm financial commitment. It
shall explain that the PHA shall approve the proposal from the resident
council, resident management corporation or resident cooperative of the
affected development, if it meets the terms of sale. However, the
statement shall indicate that the PHA can consider accepting an offer
from the resident council, resident management corporation or resident
cooperative of the affected development that is other than the terms of
sale; e.g., purchase at less than fair market value with demonstrated
commensurate public benefit or for the purposes of homeownership. The
statement shall explain that if the PHA receives more than one proposal
from a resident council, resident management corporation or resident
cooperative at the affected development, the PHA shall select the
proposal that meets the terms of sale. In the event that two proposals
from the affected development meet the terms of sale, the PHA shall
chose the best proposal.
(2) After the 30 day time frame for the resident council, resident
management corporation, or resident cooperative of the affected
development to respond to the notification letter has expired, the PHA
is to prepare letters to those organizations that responded
affirmatively inviting them to submit a formal proposal to purchase the
property. The organization has 60 days from the date of its affirmative
response to prepare and submit a proposal to the PHA that provides all
the information requested in paragraph (g) of this section and meets
the terms of sale.
(e) PHA Review of Proposals. The PHA has up to 60 days from the
date of receipt of the proposal(s) to review them and determine whether
they meet the terms of sale set forth in its offer. If the resident
management corporation, resident council or resident cooperative of the
affected development submits a proposal that is other than the terms of
sale (e.g., purchase at less than the fair market value with
demonstrated [[Page 3723]] commensurate public benefit or for the
purposes of homeownership), the PHA may consider accepting the offer.
If the terms of sale are met, within 14 days of the PHA's final
decision, the PHA shall notify the resident management corporation,
resident council or resident cooperative of the affected development of
that fact and that the proposal has been accepted or rejected.
(f) Appeals. The resident management corporation, resident council
or resident cooperative of the affected development has the right to
appeal the PHA's decision to the HUD field office. A letter requesting
an appeal has to be made within 30 days of the decision by the PHA. The
request should include copies of the proposal and any related
correspondence. The field office will render a final decision within 30
days. A letter communicating the decision is to be prepared and sent to
the PHA and the resident management corporation, resident council or
resident cooperative of the affected development.
(g) Contents of Proposal. (1) The proposal from the resident
management corporation, resident council or resident cooperative of the
affected development shall at a minimum include the following:
(i) The length of time the organization has been in existence;
(ii) A description of current or past activities which demonstrate
the organization's organizational and management capability or the
planned acquisition of such capability through a partner or other
outside entities;
(iii) A statement of financial capability;
(iv) A description of involvement of any non-resident organization
(non-profit, for profit, governmental or other entities), if any, the
proposed division of responsibilities between these two, and the non-
resident organization's financial capabilities;
(v) A plan for financing the purchase of the property and a firm
commitment for funding resources necessary to purchase the property and
pay for any necessary repairs;
(vi) A plan for the use of the property;
(vii) The proposed purchase price in relation to the appraised
value;
(viii) Justification for purchase at less than the fair market
value in accordance with Sec. 970.9, if appropriate;
(ix) Estimated time schedule for completing the transaction;
(x) The response to the PHA's terms of sale;
(xi) A resolution from the resident organization approving the
proposal; and
(xii) A proposed date of settlement, generally not to exceed six
months from the date of PHA approval of the proposal, or such period as
the PHA may determine to be reasonable.
(2) If the proposal is to purchase the property for homeownership
under 5(h) or HOPE 1, then the requirements of Section 18 of the United
States Housing Act of 1937 and 24 CFR part 970 do not apply, but the
applicable requirements shall be those under the HOPE 1 guidelines, as
set forth at 57 FR 1522, or the section 5(h) regulation, as set forth
in parts 905 and 906 of this chapter. In order for a PHA to consider a
proposal to purchase under section 412, using homeownership
opportunities under section 5(h) or HOPE 1, the resident council,
resident management corporation or resident cooperative of the affected
development shall meet the provisions of this rule, including
paragraphs (g)(1)(i) through (g)(1)(xii) of this section.
(3) If the proposal is to purchase the property for other than the
aforementioned homeownership programs or for uses other than
homeownership, then the proposal must meet all the disposition
requirements of Section 18 of the United States Housing Act of 1937 and
24 CFR part 970.
(h) PHA obligations. (1) Prepare and disperse the formal offer of
sale to the resident council, resident management corporation and
resident cooperative of the affected development.
(2) Evaluate proposals received and make the selection based on the
considerations set forth in paragraph (b) of this section. Issuance of
letters of acceptance and rejection.
(3) Prepare certifications, where appropriate, as discussed in
paragraph (i)(3) of this section.
(4) The PHA shall comply with its obligations under Sec. 970.4(a)
regarding tenant consultation and provide evidence to HUD that it has
met those obligations. The PHA shall not act in an arbitrary manner and
shall give full and fair consideration to any qualified resident
management corporation, resident council or resident cooperative of the
affected development and accept the proposal if it meets the terms of
sale.
(i) PHA application submission requirements for proposed demolition
or disposition. (1) If the proposal from the resident organization is
rejected by the PHA, and either there is no appeal by the organization
or the appeal has been denied, the PHA shall submit its demolition or
disposition application to HUD in accordance with Section 18 of the
United States Housing Act of 1937 and part 970 of this chapter. The
demolition or disposition application must include complete
documentation that the requirements of this section have been met. PHAs
must submit written documentation that the resident council, resident
management corporation and tenant cooperative of the affected
development have been apprised of their opportunity to purchase under
this section. This documentation shall include:
(i) A copy of the signed and dated PHA notification letter(s) to
each organization informing them of the PHA's intention to submit an
application for demolition or disposition, the right to purchase; and
(ii) The responses from each organization.
(2) If the PHA accepts the proposal of the resident organization,
the PHA shall submit a disposition application in accordance with
Section 18 of the United States Housing Act of 1937 and part 970 of
this chapter, with appropriate justification for a negotiated sale and
for sale at less than fair market value, if applicable.
(3) HUD will not process an application for demolition or
disposition unless the PHA provides the Department with one of the
following:
(i) Where no resident management corporation, resident council or
resident cooperative exists in the affected development and the
residents of the affected development have not formed a new
organization in accordance with paragraph (b) of this section, a
certification from either the executive director or the board of
commissioners stating that no such organization(s) exists and
documentation that a reasonable effort to inform residents of their
opportunity to organize has been made; or
(ii) Where a resident management corporation, resident council or
resident cooperative exists in the affected development one of the
following, either paragraph (i)(3)(ii)(A) or paragraph (i)(3)(ii)(B) of
this section:
(A) A board resolution or its equivalent from each resident
council, resident management corporation or resident cooperative
stating that such organization has received the PHA letter, and that it
understands the offer and waives its opportunity to purchase the
project, or portion of the project, covered by the demolition or
disposition application. The response should clearly state that the
resolution was adopted by the entire organization at a formal meeting;
or
(B) A certification from the executive director or board of
commissioners of the PHA that the thirty (30) day timeframe has expired
and no response was received to its offer.
(Approved by the Office of Management and Budget under control
number 2577-0075.)
[[Page 3724]] Dated: January 5, 1995.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 95-1113 Filed 1-17-95; 8:45 am]
BILLING CODE 4210-33-P
