99-27519. Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 Certificate and Voucher Programs; Housing Choice Voucher Program  

  • [Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
    [Rules and Regulations]
    [Pages 56894-56915]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-27519]
    
    
    
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    _______________________________________________________________________
    
    Part VI
    
    
    
    
    
    Department of Housing and Urban Development
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    24 CFR Parts 888 and 982
    
    
    
    Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 
    Certificate and Voucher Programs; Housing Choice Voucher Program; Final 
    Rule
    
    Federal Register / Vol. 64, No. 203 / Thursday, October 21, 1999 / 
    Rules and Regulations
    
    [[Page 56894]]
    
    
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    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
    
    24 CFR Parts 888 and 982
    
    [Docket No. FR-4428-F-04]
    RIN 2577-AB91
    
    
    Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 
    Certificate and Voucher Programs; Housing Choice Voucher Program
    
    AGENCY: Office of the Secretary, HUD.
    
    ACTION: Final rule.
    
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    SUMMARY: This final rule adopts as final certain provisions of the 
    interim rule published on May 14, 1999, to implement the statutory 
    merger of the Section 8 tenant-based certificate and voucher programs 
    into the new Housing Choice Voucher Program, and makes amendments to 
    other provisions of this interim rule. This final rule takes into 
    consideration the public comments received on the interim rule, and 
    most of the amendments made at this final rule stage are in response to 
    public comment.
    
    EFFECTIVE DATE: November 22, 1999.
    
    FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and 
    Indian Housing, Department of Housing and Urban Development, Room 4210, 
    451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477. 
    (This is not a toll-free number.) Hearing or speech-impaired 
    individuals may access this number via TTY by calling the toll-free 
    Federal Information Relay Service at 1-800-877-8339.
    
    SUPPLEMENTARY INFORMATION:
    
    I. Background
    
        On May 14, 1999 (64 FR 26632), HUD published for public comment an 
    interim rule amending the regulations for the Section 8 tenant-based 
    program. The interim rule implemented most of the Section 8 tenant-
    based program provisions contained in the Quality Housing and Work 
    Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations 
    Act; Public Law 105-276, approved October 21, 1998; 112 Stat. 2461) 
    (the ``1998 Act''). Of particular significance, the May 14, 1999 
    interim rule implemented section 545 of the 1998 Act. Section 545 
    provides for the complete merger of the Section 8 tenant-based 
    certificate and voucher programs.
        HUD had previously promulgated regulations (known as the 
    ``conforming rule'') that combined and conformed rules for Section 8 
    tenant-based assistance to the extent permitted by prior law. The new 
    tenant-based program has features of the previously authorized 
    certificate and voucher programs, plus new features, as described in 
    the preamble to the interim rule.
        HUD provided for a 90-day delayed effective date for the interim 
    rule (in contrast to the customary 30-day delayed effective date for 
    most HUD rules issued for effect), in order to afford public housing 
    agencies (PHAs) additional time to prepare for the implementation of 
    the interim rule. On August 11, 1999, HUD published a notice changing 
    the effective date of the interim rule to October 1, 1999. (See 64 FR 
    43613.)
        This rule does not implement the 1998 Act revisions to the project-
    based certificate program, which is the subject of 24 CFR part 983. 
    Until HUD issues revisions to part 983, PHAs may continue to provide 
    project-based assistance in accordance with the published part 983.
    
    II. Public Forums
    
        In addition to the comments submitted in response to publication of 
    the interim rule, HUD convened three public forums on the May 14, 1999 
    interim rule. Section 559 of the 1998 Act requires that before HUD 
    publishes its final rule on the merger of the Section 8 certificate and 
    voucher programs, HUD is to seek recommendations from organizations 
    representing: (1) State or local PHAs; (2) owners and managers of 
    tenant-based housing assistance under section 8 of the U.S. Housing Act 
    of 1937; and (3) legal services organizations. Section 559 also 
    requires HUD to convene not less than two public forums at which the 
    persons or organizations making recommendations may express their views 
    concerning the proposed disposition of their recommendations.
        The three public forums convened by HUD on this rule were held in 
    Omaha, Nebraska on May 19, 1999, in Syracuse, New York on June 28, 
    1999, and in Washington, DC, on July 28, 1999. At each of these forums, 
    forum participants made helpful recommendations and suggestions, 
    discussed issues and exchanged ideas on the merger of the section 8 
    certificate and voucher programs, especially the requirements 
    established in the May 14, 1999 interim rule. Consistent with the 
    statutory requirements, HUD advised the forum participants of its 
    proposed disposition of the participants recommendations when HUD had 
    formulated a proposed disposition of a specific view or recommendation 
    offered. For certain issues, HUD was unable to offer the forum 
    participants a proposed disposition, because the issues required 
    further deliberation by HUD, but HUD discussed with the participants 
    the considerations involved in HUD's decisionmaking process.
    
    III. Significant Changes Between the May 14, 1999 Interim Rule and 
    This Final Rule
    
        This section highlights the significant changes made to the May 14, 
    1999 interim rule at this final rule stage. This final rule adopts 
    without change the amendments made to 24 CFR parts 248, 791, and 792 in 
    the May 14, 1999 interim rule. This rule makes a conforming amendment 
    to 24 CFR part 888 and also makes further amendments to several 
    sections of part 982. The major changes made by this final rule to 
    parts 888 and 982 are summarized below. Other changes are also noted in 
    the discussion of the public comments.
         Amendments to 24 CFR part 888. The final rule amends part 
    888, which describes the regulations governing fair market rents and 
    contract annual adjustment factors for the Section 8 housing assistance 
    payment program. Specifically, the final rule revises the part 888 
    requirements regarding fair market rents to increase the FMR for a 
    manufactured home space rental from 30 percent to 40 percent of the FMR 
    for a two-bedroom unit to reflect the new procedures applicable to 
    manufactured home space rental under the Section 8 Housing Choice 
    Voucher program.
         Definitions. The final rule revises Sec. 982.4 
    (Definitions) to provide three new definitions applicable to the 
    Section 8 Housing Choice Voucher program--``Family rent to owner,'' 
    ``Utility reimbursement,'' and ``Welfare-to-work (WTW) families.'' 
    Additionally, the final rule removes the definitions of ``extremely low 
    income family'' and ``utility reimbursement'' from part 982 and 
    replaces them with a cross-reference to part 5. The definitions of 
    these terms are applicable to several HUD programs. Part 5 was 
    established by HUD to provide the definitions and other program 
    requirements that are generally applicable to HUD programs. 
    Accordingly, it is unnecessary to repeat the definitions of these terms 
    in part 982.
         Equal opportunity requirements. The rule revises paragraph 
    (c) of Sec. 982.53 to provide that the actions to affirmatively further 
    fair housing must be in accordance with the requirements of the PHA 
    Plan regulation in 24 CFR 903.7(o).
         Administrative plan. The rule revises paragraph (b) of 
    Sec. 982.54 to specify that the PHA's administrative plan is a 
    supporting document to the
    
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    PHA plan and must be available for public review.
         Income targeting. The final rule amends the income 
    targeting provisions at Sec. 982.201(b)(2). Specifically, the final 
    rule establishes the limited circumstances in which a PHA may admit a 
    percentage of extremely low income families lower than the 75 percent 
    required under the income targeting provisions of the 1998 Act.
         Local admission preferences. The final rule amends 
    Sec. 982.207 to provide that a PHA must not deny a local preference, 
    nor otherwise exclude or penalize a family in admission to the 
    programs, solely because the family resides in public housing. Further, 
    the final rule clarifies and emphasizes certain requirements for PHA 
    adoption of residency preferences. For example, the rule specifies that 
    a PHA may only implement residency preferences in accordance with 
    applicable non-discrimination and equal opportunity requirements.
        The rule provides that a PHA may establish local admission 
    preferences for: (a) Working families; (b) persons with disabilities; 
    (c) victims of domestic violence; and (d) single persons who are 
    elderly, displaced, homeless, or a person with disabilities.
         PHA approval of assisted tenancy. The final rule amends 
    Sec. 982.305(a), which describes the requirements that must be 
    satisfied before a PHA may approve the assisted tenancy. Specifically, 
    the final rule provides that at the time a family initially receives 
    tenant-based assistance for occupancy of a dwelling unit, the PHA must 
    ensure that the family share may not exceed 40 percent of the family's 
    monthly adjusted income.
         PHA disapproval of owner. This rule adds to 
    Sec. 982.306(d) a statement that the restriction against a PHA approval 
    of a unit occupied by a family member only applies at the time a family 
    initially receives tenant-based assistance for occupancy of a 
    particular unit, but does not apply to PHA approval of a new tenancy 
    with continued tenant-based assistance in the same unit.
         Lease and tenancy. The final rule makes various revisions 
    to Sec. 982.308, which sets forth the lease and tenancy requirements 
    under the Section 8 Housing Choice Voucher program. Among other 
    changes, the final rule provides that owners may use another form of 
    lease (such as a PHA model lease) if the owner does not use a standard 
    lease form for rental to unassisted families. The final rule also 
    defines what constitutes ``legal capacity'' to enter into a lease. 
    Further, the rule specifies the minimum information that must be 
    contained in the lease. The final rule also establishes certain 
    requirements regarding changes to the lease or rent. For example, the 
    final rule specifies that all changes to the lease must be in writing. 
    Additionally, the rule specifies that in certain situations, Section 8 
    assistance will not be continued unless the PHA has approved a new 
    tenancy in accordance with program requirements and has executed a new 
    HAP contract with the owner.
         Owner notice of grounds for termination of lease. This 
    final rule amends Sec. 982.310 (captioned ``Owner termination of 
    tenancy'') to clarify that the owner must give the tenant a written 
    notice that specifies the grounds for termination of tenancy during the 
    term of the lease. The tenancy does not terminate before the owner has 
    given this notice, and the notice must be given before the commencement 
    of the eviction action.
         Portability. The final rule amends Sec. 982.355, which 
    establishes the portability procedures governing administration by the 
    receiving PHA. The final rule provides that when a family has a right 
    to lease a unit in the receiving PHA jurisdiction, the receiving PHA 
    must provide assistance for the family. Receiving PHA procedures and 
    preferences for selection among eligible applicants do not apply, and 
    the receiving PHA waiting list is not used. However, the receiving PHA 
    may deny or terminate assistance for family action or inaction in 
    accordance with Sec. 982.552 (``PHA denial or termination of assistance 
    for family'') and Sec. 982.553 (``Crime by family members'').
         PHA unit inspection. The final rule removes 
    Sec. 982.405(f) of the interim rule. Paragraph (f) of Sec. 982.405 
    required that a PHA adopt procedural guidelines and performance 
    standards for conducting required HQS inspections.
         Late payment penalties. The final rule amends the late 
    payment provisions located in Sec. 982.451(b)(5)(ii). Specifically, the 
    final rule provides that the HAP contract shall provide for penalties 
    against the PHA for late housing assistance payments due to the owner 
    only if all of the following conditions apply: (a) The penalties are in 
    accordance with generally accepted practices and law in the local 
    housing market; (b) it is the owner's practice to charge such penalties 
    for assisted and unassisted tenants; and (c) the owner also charges 
    such penalties against the tenant for late payment of family rent to 
    the owner. The interim rule provision regarding late payment penalties 
    only referenced the first condition identified above (i.e., generally 
    accepted local practice and law).
         Owner breach of contract. The final rule revises 
    Sec. 982.453 (captioned ``Owner breach of contract''). Specifically, 
    the final rule expands the list of owner actions considered to be a 
    breach of the HAP contract to include violent criminal activity.
         Payment standard for pre-merger voucher tenancies. The 
    final rule revises Sec. 982.502, which establishes the requirements 
    governing conversion to the Section 8 Housing Choice Voucher program. 
    The interim rule (and this final rule) provide that if the PHA entered 
    into a HAP contract for a voucher tenancy before the merger date, the 
    tenancy will continue to be considered and treated as a tenancy under 
    the voucher program, and will be subject to the voucher program 
    requirements of part 982. The final rule revises Sec. 982.502 to remove 
    the provision for a shopping incentive for over-FMR certificate 
    tenancies before the effective date of the second regular reexamination 
    of family income and composition on or after the merger date. The 
    shopping incentive was never applicable to over-FMR certificate 
    tenancies and will not be triggered by conversion of these families to 
    the voucher program.
         HUD approval of payment standard amount below the basic 
    range. The final rule amends Sec. 982.503 (captioned ``Voucher tenancy: 
    Payment standard amount and schedule'') to provide that HUD, in its 
    sole discretion, may approve a PHA request for approval to establish a 
    payment standard amount that is lower than the basic range. In 
    determining whether to approve the PHA request, HUD will consider 
    appropriate factors, including rent burden of families assisted under 
    the program. HUD will not approve a lower payment standard if the 
    family share for more than 40 percent of participants in the PHA's 
    voucher program exceeds 30 percent of adjusted monthly income.
         How to calculate housing assistance payment. The final 
    rule amends Sec. 982.505 (captioned ``Voucher tenancy: How to calculate 
    housing assistance payment''). Specifically, the final rule provides 
    that during the first 24 months of the HAP contract, the payment 
    standard for a family is the higher of: (a) the initial payment 
    standard (minus any amount by which the initial rent to owner exceeds 
    the current rent to owner); or (b) the payment standard, as determined 
    at the most recent regular reexamination of family income and 
    composition after the beginning of the HAP contract term. After the 
    first twenty four months of the HAP contract term, the payment standard 
    is the
    
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    payment standard as determined at the most recent regular reexamination 
    of family income and composition after the beginning of the HAP 
    contract term.
         PHA denial or termination of assistance for family. The 
    final rule revises Sec. 982.552(c)(1)(x) to elaborate on factors that a 
    PHA may consider in its decision to deny or terminate assistance 
    because of action or failure to act by members of the family.
         FMR for manufactured home space. As explained in more 
    detail in the comment section of this preamble, the final rule amends 
    Sec. 982.623 (captioned ``Manufactured home space rental: Housing 
    assistance payment'') to provide that the FMR for a manufactured home 
    space is generally 40 percent of the published FMR. Previously, the 
    FMRs for manufactured home spaces were based on a 30 percent figure.
    
    IV. Discussion of Public Comments.
    
        The public comment period closed on July 13, 1999. During that 
    period, HUD received written comments from PHAs; regional/State housing 
    agencies; organizations representing PHAs; organizations representing 
    women who are victims of domestic violence; legal services 
    organizations; advocates for persons with disabilities; low income 
    housing advocates; and various other organizations and individuals. At 
    the close of the public comment period, HUD had received 97 written 
    comments. The summary of public comments that follows presents the 
    major issues, recommendations and questions raised by the public on the 
    May 14, 1999 interim rule, whether made at the public forums, or 
    provided as written comments during the 60-day comment period on the 
    rule.
        The summary is organized by regulatory section (e.g., 
    Sec. 982.201). The underlined headings that follow each regulatory 
    section present the issue and are followed by a brief description of 
    the comment. Comments that are not directed to a specific regulatory 
    section are described under the heading ``Miscellaneous comments''.
        As previously indicated, the interim rule published on May 14, 1999 
    (as modified by the technical corrections published on September 14, 
    1999) was effective on October 1, 1999 and PHAs must implement that 
    rule beginning October 1, 1999. This final rule includes additional 
    changes to the interim rule, which PHAs must implement beginning on the 
    effective date of this rule.
    
    Section 982.4 Definitions.
    
        Comment: Definition of PHA. HUD should revise the definition of PHA 
    to include non-profit disability organizations administering the 
    Section 8 Mainstream Program for people with disabilities.
        HUD response. The rule contains the United States Housing Act of 
    1937 (42 U.S.C. 1437n(d)) (1937 Act) definition of ``PHA.'' In addition 
    to the traditional definition of a PHA as a governmental entity or 
    public body authorized to administer a 1937 Act program, for 
    administration of the tenant-based program only, the rule includes in 
    the definition of ``PHA'' additional entities: a consortium of PHAs; a 
    non-profit entity administering certificates or vouchers under a 
    contract with HUD or a PHA on October 21, 1998; and for any area 
    outside the jurisdiction of a PHA with a tenant-based program or where 
    HUD determines that the PHA is not administering the tenant-based 
    program effectively, a private non-profit or governmental entity or 
    public body that would otherwise lack jurisdiction to administer the 
    program in such area. A minor correction is made to this provision in 
    this final rule.
        Comment: Definition of ``tenant rent''. Tenant rent should be 
    defined as ``The amount payable by the tenant as rent to the unit 
    owner. In the certificate program, it is the total tenant payment minus 
    any utility allowance.''
        Rule needs to clarify whether the method of determining total 
    tenant payment (TTP) in the Admissions and Occupancy proposed rule 
    (published April 30, 1999) at Sec. 5.613 will apply to the voucher 
    program. Section 982.505 incorporates the TTP concept, but 
    Sec. 5.601(a)(2)(ii) of the current rule states that the definitions of 
    ``total rent'' and ``total tenant payment'' do not apply to the voucher 
    program. Clarification is needed.
        HUD response. The definition of TTP in part 5 will apply to the 
    voucher program resulting from the merger of the certificate and 
    voucher programs. However, the definitions of tenant rent and utility 
    reimbursement in part 5 will not apply to the voucher program. Instead, 
    in this part 982 rule, the term ``family rent to owner'' is used 
    instead of ``tenant rent.'' Definitions of ``family rent to owner'' and 
    ``utility reimbursement'' for the voucher program were added to 
    Sec. 982.4. Family rent to owner is the portion of the rent to owner 
    paid by the family. Family rent to owner is calculated by subtracting 
    the housing assistance payment to the owner from the rent to owner. A 
    utility reimbursement in the voucher program is the portion of the 
    housing assistance payment which exceeds the rent to owner. A utility 
    reimbursement is only paid when the housing assistance payment exceeds 
    the rent to owner.
        Comment: Merger date of August 12, 1999. PHAs expressed concern 
    about the merger date of August 12, 1999 because (1) the Admissions and 
    Occupancy proposed rule, published April 30, 1999 (64 FR 23460), 
    covered related topics; (2) HUD needs to revise the voucher contracts 
    and forms; and (3) PHAs need to obtain computer software capable of 
    implementing the changes required by part 982.
        HUD response. In a Federal Register notice of August 11, 1999 (64 
    FR 43613), HUD extended the merger date defined in Sec. 982.4 of the 
    interim merger rule to October 1, 1999.
    
    Section 982.53 Equal opportunity requirements.
    
        Comment: State equal opportunity requirements. The language in 
    Sec. 982.53(d) needs to be expanded to include not only State laws but 
    also local ordinances. These tools are used increasingly by local 
    communities to promote fair housing.
        HUD response. Section 982.53(d) was revised to change the ``state 
    law'' references to ``State and local laws''.
        Comment: Affirmatively furthering fair housing requirements. The 
    language of the section is too broad, requiring PHAs to take undefined 
    actions based on undefined criteria. HUD should require PHAs to 
    establish mechanisms to respond to complaints of discrimination in the 
    Section 8 program, including informing voucher holders of their rights 
    and the remedies available to them. This provision also should require 
    conformity with any city or county laws that prohibit discrimination.
        The final rule should provide that the PHA must refrain from 
    actions that are discriminatory or segregative, or that perpetuate the 
    effects of past discrimination or segregation by the PHA; administer 
    the program to remedy past discrimination and segregation in PHA 
    programs and local government policies; administer the program to 
    promote fair housing rights and choice; eliminate impediments to fair 
    housing choice; and remedy the effects of discrimination and 
    segregation in the market. HUD needs to clarify what it means by 
    ``impediments to fair housing choice''.
        HUD response. Many of the changes sought by the commenters are part 
    of existing rules. For example, under Sec. 982.301(b), PHAs must 
    include information about federal, State and local equal opportunity 
    requirements and housing discrimination complaint forms in the briefing 
    packet given to
    
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    new families. Section 982.304 specifies that the PHA must give the 
    family information on how to fill out and file a housing discrimination 
    complaint if the family claims that illegal discrimination has 
    prevented the family from finding or leasing a suitable unit. In 
    addition, Sec. 982.52 specifies that the voucher program requires 
    compliance with all equal opportunity requirements imposed by contract 
    or federal law and the PHA must submit a signed certification that it 
    will administer the program in conformity with civil rights laws.
        The PHA obligation to affirmatively further fair housing is 
    identical to the requirement contained in the PHA plan final rule. It 
    is important to note that in implementing program changes covered by 
    the 1998 Act, both HUD and the PHA must ensure compliance with 
    applicable nondiscrimination requirements and affirmatively further 
    fair housing. The PHA obligation to affirmatively further fair housing 
    is specifically required by both the part 982 (the housing choice 
    voucher program) and part 903 (the PHA plan) rules.
    
    Section 982.54 Administrative plan.
    
        Comment: Section 8 administrative plan. HUD should eliminate a 
    separate Section 8 administrative plan and incorporate the information 
    required by this plan in the PHA plan. A separate Section 8 
    administrative plan should apply only to those PHAs that are not yet 
    operating under an approved PHA plan.
        HUD response. Notice PIH 99-33 (HA) issued on July 30, 1999, 
    provided further PHA plan instructions, including a mandatory 
    electronic template for submission of the PHA plan. As stated in the 
    HUD notice, PHAs will provide statements of policy using short 
    responses and by checking boxes in the PHA plan template. To ensure 
    that the public has access to detailed information about all of the 
    PHA's discretionary policies, the HUD notice calls for the 
    administrative plan to be a supporting document to the PHA Plan and 
    available for public review. Therefore, the PHA will not be required to 
    repeat administrative plan information in the PHA plan.
    
    Section 982.151 Annual Contributions Contract.
    
        Comment: Funding. There should be no reduction in assistance 
    amounts based upon differences between the Fair Market Rent (FMR) and 
    payment standards in existing voucher Annual Contribution Contracts 
    (ACCs) and merged ACCs. All funding must be transferred.
        HUD response. Conversion to the merged program will not result in 
    the loss of PHA funding for the Section 8 program. HUD is publishing a 
    separate rule on renewal funding for the Section 8 tenant-based 
    assistance program.
    
    Section 982.152 Administrative fee.
    
        Comment: Administrative fees. The final rule needs more specific 
    guidance on when to apply for additional administrative funds, because 
    PHAs may be reluctant to apply for such fees.
        HUD response. Guidance concerning PHA administrative fees is 
    published annually in the Federal Register and in HUD handbooks and 
    notices.
        Comment: Administrative fee bonuses for high performers. This 
    section should provide for an additional administrative fee as a bonus 
    or incentive to particularly high-performing PHAs, if HUD chooses to 
    develop such an incentive.
        HUD response. The statute does not permit HUD to provide bonus 
    administrative fees to high performance PHAs.
        Comment: Additional administrative fees for conversion to the 
    merged program. HUD should provide additional administrative fees to 
    facilitate conversion, and HUD should convert the certificate program 
    quickly while ensuring rent neutrality through appropriate voucher 
    payment standards.
        HUD response. There are no funds available for this purpose; the 
    statute does not permit HUD to provide PHAs with additional 
    administrative fees to facilitate the merger.
    
    Section 982.154 ACC reserve account.
    
        Comment: ACC reserve account. A change in language (from the word 
    ``establishes'' to ``may'') will open the door to the elimination of 
    individual PHA reserve accounts. It is both prudent and essential for 
    the efficient operation of the Section 8 program that PHAs have access 
    to funds for various unexpected cost increases. HUD should change the 
    language back to the word ``establishes''.
        HUD response. The text of Sec. 982.154(a) was changed in the May 
    14, 1999 interim rule to more clearly reflect the fact that HUD has 
    discretion to determine the amount of the ACC reserve account as 
    provided in the ACC for many years. This change in regulatory text does 
    not signal a change in HUD authority to determine the amount of the ACC 
    reserve account. HUD is publishing a separate rule on renewal funding, 
    which will address the ACC reserve account.
    
    Section 982.162 Use of HUD-required contracts and other forms.
    
        Comment: HUD forms and contracts. HUD needs to revise its required 
    contracts in a timely manner and have an adequate supply for PHAs.
        HUD response. The merged program housing assistance payments (HAP) 
    contract (form HUD-52641) and tenancy addendum (form HUD-52641-A) are 
    posted on the HUD web at www.hudclips.org. Until other contracts and 
    forms are issued, PHAs may continue to use the current voucher program 
    forms (e.g., rental voucher and HAP contract for leasing manufactured 
    home spaces).
    
    Section 982.201 Eligibility and targeting.
    
        Comment: Targeting requirements effect on welfare reform and 
    working poor. Targeting that limits assistance to extremely low income 
    families is contrary to welfare reform efforts and will deny assistance 
    to the working poor. Targeting rewards welfare recipients by moving 
    them up on PHA waiting lists. Conversely, the rule penalizes the 
    working poor by moving those individuals further down the list.
        HUD response. The targeting requirements are statutory, but the 
    rule permits variations where needed and as authorized by the statute. 
    Section 16(d) of the 1937 Act provides that at least 75 percent of 
    annual admissions to the Section 8 tenant-based assistance program must 
    be families whose incomes do not exceed 30 percent of area median 
    income. In the final rule, such families are called ``extremely low 
    income families'', a new term defined at Sec. 5.603 of this title.
        The statute permits HUD to exercise some discretion to modify the 
    impact of the statutory requirement to target 75 percent of a PHA's 
    tenant-based program admissions to extremely low income families. 
    Section 16(b)(1) of the 1937 Act permits HUD to establish the extremely 
    low income limit higher or lower than 30 percent of area median income 
    where HUD determines a higher or lower limit is necessary because of 
    unusually high or low incomes.
        HUD has determined that one-person households with incomes below 
    their State Supplemental Security Income (SSI) benefit level are of 
    unusually low income and that a modification to the income limit for 
    extremely low income determination standards was needed. HUD issued 
    Notice PDR 99-04 (on July 21, 1999) to make changes in the Section 8 
    existing housing extremely low income limit determinations. The 
    extremely low income limit amounts have been increased wherever 
    necessary
    
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    so that the one-person 30 percent of median income limit is at least as 
    high as the State SSI benefit level.
        HUD will not make further adjustments to this year's 30 percent of 
    area median income determination to accommodate minimum wage 
    households. Such a change would go far beyond other adjustments and 
    drastically alter the thirty percent standard.
        In addition, under the authority of section 16(d) of the 1937 Act, 
    a provision has been added to the final rule that allows a reduced 
    targeting percentage for welfare-to-work voucher admissions, only if 
    and to the extent the PHA has demonstrated that compliance with the 
    targeting obligations for such welfare-to-work families would interfere 
    with the objectives of the welfare-to-work voucher program. HUD expects 
    this authority to be needed only in exceptional circumstances.
        Comment: Lower targeting requirements for good cause. The rule must 
    specify the standard for good cause requests made by PHAs to establish 
    different targeting requirements, and what documentation the PHAs must 
    provide to HUD. The rule should provide that a targeting exception will 
    be granted only in unusual or extraordinary circumstances.
        HUD should consider fair housing concerns and the consolidated plan 
    in approving a different targeting percentage.
        HUD response. HUD has authority under section 16(d) of the 1937 Act 
    to approve for good cause PHA establishment and implementation of 
    different targeting requirements for the PHA's Section 8 tenant-based 
    program, in accordance with the PHA plan. HUD will carefully scrutinize 
    all requests for targeting exceptions and will only approve exceptions 
    on a case-by-case when fully justified by exceptional circumstances. 
    The final rule adds provisions that specify two cases when a PHA may 
    adopt a different targeting standard:
    
    --When HUD has approved a lower targeting requirement for a PHA in 
    accordance with specific good cause standards specified in the rule, 
    which are designed to demonstrate that the PHA is not able to find a 
    sufficient number of extremely low income families to fill available 
    program openings despite outreach and marketing and that the vouchers 
    will substantially address worst case housing needs.
    --The targeting disregard for families that receive vouchers funded 
    under the HUD welfare-to-work program (or a renewal of that funding) 
    explained above.
    
        The following is a more detailed description of the first type of 
    targeting exception. In both cases, the use of a modified targeting 
    standard must be consistent with the PHA plan. In addition, any HUD 
    approval of a targeting exception must be consistent with the PHA 
    obligation to administer the program in a manner that affirmatively 
    furthers fair housing.
        The rule provides that a PHA may admit less than seventy five 
    percent of extremely low income families during the PHA fiscal year if 
    HUD determines there is good cause for, and approves the use of, a 
    lower targeting standard by the PHA. HUD may approve a lower targeting 
    requirement if HUD determines that:
        (1) The PHA has opened its waiting list for a reasonable time for 
    admission of extremely low income families residing in the same 
    metropolitan statistical area (MSA) or nonmetropolitan county, both 
    within and without the PHA jurisdiction;
        (2) The PHA has provided full public notice of such opening to such 
    families, and has conducted outreach and marketing to reach such 
    families, including families on waiting lists of other PHAs in the same 
    MSA or nonmetropolitan county.
        (3) Admission of the additional very low income families other than 
    extremely low income families to the PHA's tenant-based voucher program 
    will substantially address worst case housing needs as determined by 
    HUD.
        If there are not enough extremely low income families to fill 
    available program slots during the PHA fiscal year, even though the PHA 
    has opened the waiting list, given public notice, and conducted 
    outreach and marketing and the vouchers will address worst case housing 
    needs, then HUD may approve the PHA's use of a lower targeting 
    standard.
        Comment: Higher targeting goals. The rule should permit PHAs to 
    meet their targeting obligations by targeting at least 75 percent of 
    newly available vouchers to households with incomes below 20 or 25 
    percent of area median income.
        HUD response. The statute requires that at least 75 percent of new 
    admissions be families having incomes up to 30 percent of median. At 
    its option, a PHA may choose to limit admissions to families with 
    incomes lower than 30 percent of area median income. The extremely low 
    income limit is the maximum qualifying income. Any family with an 
    annual income below the extremely low income limit counts as an 
    extremely low income family, and the admission of such a family counts 
    toward satisfaction of the PHA's targeting responsibilities.
        Comment: Targeting requirements effect on the Section 8 
    homeownership program. By giving preference to welfare recipients, the 
    targeting limits negate the impact of HUD's recently issued Section 8 
    homeownership proposed rule, published April 30, 1999 (64 FR 23488).
        HUD response. HUD anticipates that most participants in the Section 
    8 homeownership program will be current program participants, not 
    applicants. Since families continuing to receive assistance under the 
    1937 Act are not considered as new admissions, their income levels are 
    not examined for compliance with income targeting requirements. 
    Therefore, the income targeting requirements may have minimal impact on 
    the implementation of the Section 8 homeownership program.
        Comment: Targeting requirements effect on deconcentration goals and 
    the number of families assisted. Targeting goals conflict with 
    deconcentration goals. The targeting policy may add additional cost to 
    the Section 8 tenant-based program, reducing the number of families 
    assisted.
        HUD response. The statutory and regulatory targeting requirement is 
    designed to assure that available assistance funds are targeted to the 
    families that need it most. HUD is making adjustments in the final rule 
    to assure reasonable use of the program by eligible families by 
    allowing targeting exceptions in accordance with the law, as described 
    above. Although assistance is targeted to extremely low income 
    families, such families have the right to move anywhere in the PHA 
    jurisdiction and may also receive housing assistance outside the PHA 
    jurisdiction under portability procedures.
        Comment: Income used to determine ``extremely low income''. 
    Adjusted income should be used to calculate targeting limits. Using 
    adjusted income in the determination of income targeting requirements 
    would be more appropriate, since it provides a more realistic picture 
    of those persons in need of housing assistance.
        HUD response. HUD has not made the recommended change. Annual 
    income, not adjusted income, is compared to the income limits to 
    determine whether the family is extremely low income. Use of annual 
    income for this purpose is consistent with both the statute and the 
    method used to determine whether the family is very low income, low 
    income, or moderate income.
    
    [[Page 56899]]
    
        Comment: Income targeting implementation. Will PHAs be forced to 
    skip very low income families on the waiting list to attain the 
    required percentage of extremely low income families? HUD should 
    provide directions for waiting list management. Will program slots be 
    held open until there are enough extremely low income applicants so 
    that the 75 percent admission requirement is satisfied, or should such 
    slots be filled by other eligible applicants until there is an 
    extremely low income applicant?
        HUD response. HUD expects to provide further guidance on techniques 
    for implementation of the income targeting requirements, and other 
    questions concerning requirements under this rule. Meeting the income 
    targeting requirements will require skipping higher income families on 
    the waiting list as necessary to satisfy the PHA's annual targeting 
    requirement.
        Comment: Effect of portability on targeting requirements. If a 
    family moves under portability, is the admission counted against the 
    initial PHA or the receiving PHA? If a family exercises its right of 
    portability, and the recipient PHA decides to absorb the family, does 
    the admission count toward the recipient PHA's targeting goal, or does 
    the admission always count toward the initial PHA's targeting goal? If 
    the receiving PHA bills but does not absorb, is the family classified 
    as a new admission? May a proposed recipient PHA refuse to accept a 
    porting family if acceptance will cause the recipient PHA to fall below 
    its targeting requirement? If a recipient PHA bills the initial PHA for 
    a participating family and the recipient PHA later decides to absorb 
    the family, does the absorption count as an admission for the purposes 
    of income targeting?
        HUD response. Admission of an applicant family that moves under 
    portability procedures is charged against the initial PHA's targeting 
    obligation--even if the family is initially assisted at the receiving 
    PHA--if the receiving PHA bills the initial PHA. The admission is 
    included in the initial PHA base of annual admissions (to which the 75 
    percent minimum targeting percentage is applied). If a portable family 
    is an extremely low income family at the time of admission, the 
    admission also counts toward satisfaction of the initial PHA's minimum 
    targeting percentage.
        As in the past, ``admission'' is the first execution of a HAP 
    contract by a PHA on behalf of a family. For purposes of targeting, the 
    initial PHA counts the admission of the portable family as an extremely 
    low income admission if the family's annual income is at or below 30 
    percent of median income at the location of the housing where the 
    family is initially assisted at admission to the program (in the 
    jurisdiction of the receiving PHA--if the family is initially assisted 
    (admitted in the receiving PHA jurisdiction).) If a portable family is 
    not an extremely low income family when admitted to the program (in the 
    initial PHA or receiving PHA jurisdiction), the admission does not 
    count towards meeting the initial PHA's income targeting requirements. 
    However, if the receiving PHA decides to absorb the portable family (at 
    admission), the receiving PHA counts the family towards the receiving 
    PHA's targeting requirements.
        Comment: Targeting requirements for PHAs with identical 
    jurisdictions. The rule provides that two or more PHAs with identical 
    jurisdiction must jointly meet the targeting goals. No PHA should be 
    responsible for the action of another PHA. This requirement unfairly 
    penalizes a high-performing PHA that has the identical jurisdiction as 
    a troubled PHA.
        HUD needs to define the meaning of ``identical jurisdiction.'' Does 
    ``overlapping'' mean the same as ``identical''?
        HUD response. The final rule has been revised to clarify--in 
    accordance with the law, and as intended by the interim rule--that the 
    requirement to jointly meet income targeting requirements only applies 
    when the geographic jurisdictions of two or more PHAs are 
    ``identical''--not merely overlapping, as is frequently the case for 
    county, regional and state PHAs. Thus, the obligation for PHAs to 
    coordinate their income targeting only applies if every part of the 
    jurisdiction of each PHA is also the jurisdiction of the other PHA. 
    Section 982.201(b)(2)(v) was also revised in the final rule to require 
    that coordination of income targeting only applies if the PHAs with 
    identical jurisdictions agree to being treated as a single jurisdiction 
    for purposes of income targeting.
        Comment: Income limit for issuance of a voucher. The reference to 
    ``family unit size'' in Sec. 982.201(b)(4) of the interim rule should 
    be just ``family size.''
        HUD response. HUD made the recommended change in the technical 
    corrections to the interim rule that were published in the Federal 
    Register on September 14, 1999 (64 FR 49656).
        Comment: Income limit for admission. Section 982.201(b)(4) of the 
    interim rule seems to permanently limit the use of a voucher to only 
    those areas for which the family was eligible for admission. In 
    reality, once admitted, the family is able to move to any area. The 
    last sentence of paragraph (b)(4) should be revised to read: ``At 
    admission, the family may only use the voucher to rent a unit in an 
    area where the family is income eligible.''
        HUD response. HUD has adopted this recommended change.
    
    Section 982.202 How applicants are selected: General requirements.
    
        Comment: Local admission preferences: income skipping. The 
    prohibition against local preferences for admission of higher income 
    families over families of lower income (Sec. 982.202(b)(3)(ii)) is not 
    required by statute and should be deleted. It is inconsistent with the 
    intent of the targeting requirements of the 1998 Act (section 513). 
    Unlike the express prohibition on income-skipping in the project-based 
    component of the Section 8 program, the parallel provision concerning 
    income targeting in the tenant-based Section 8 program says absolutely 
    nothing about income-skipping. Silence in the statute should not be 
    interpreted as a prohibition of income-skipping.
        HUD response. HUD has decided to continue this requirement. 
    Continuation of this requirement will help to ensure that extremely low 
    income families are admitted to the tenant-based program.
    
    Section 982.207 Waiting list: Local preferences in admission to 
    program.
    
        Comment: Local admission preferences: victims of domestic violence. 
    PHAs should consider preferences for individuals who are victims of 
    domestic violence, as provided in HUD's admission and occupancy 
    proposed rule (published in the Federal Register on April 30, 1999, 64 
    FR 23460).
        HUD response. The 1998 Act states that it is the ``sense of 
    Congress'' that each PHA involved in selection of families assisted in 
    the public housing program, or in the Section 8 tenant-based assistance 
    program, ``should * * * consider'' preferences for individuals who are 
    victims of domestic violence (section 514(e) of the 1998 Act). HUD has 
    amended this rule to provide that the PHA ``should consider'' whether 
    to adopt a local preference for admission of families that include 
    victims of domestic violence (Sec. 982.207). After such consideration, 
    the PHA may or may not choose to adopt such a preference.
        Comment: Local admission preferences: preference for elderly, 
    disabled and displaced over other singles. May a PHA continue to 
    provide
    
    [[Page 56900]]
    
    an admission preference to elderly, disabled and displaced single 
    persons over other single persons?
        HUD response. Yes. Even though the 1998 Act repealed the 
    requirement that PHAs must provide an admission preference to single 
    persons who are elderly, disabled, or displaced persons before other 
    single persons, the PHA may opt to continue this practice as part of 
    its local admission preference policies.
        Comment: Local admission preferences: equal opportunity 
    requirements. The final rule should provide that HUD will approve an 
    admission preference only if it is consistent with civil rights laws 
    and affirmatively furthers fair housing.
        HUD response. By law, the PHA may adopt local preferences in 
    accordance with local housing needs and priorities as determined by the 
    PHA. HUD does not approve the PHA's local admission preferences. HUD 
    only conducts a limited review to determine whether the PHA's selection 
    procedures ``are consistent with information and data available to 
    [HUD],'' and ``are not prohibited by or inconsistent with applicable 
    law'' (section 511 of the 1998 Act, adding section 5A(i)(1) of the 1937 
    Act).
        The PHA's local admission preferences must be consistent with the 
    PHA plan and the consolidated plans for local governments in the PHA 
    jurisdiction. Of course, PHAs must administer tenant-based assistance 
    in conformity with civil rights laws and must affirmatively further 
    fair housing. Equal opportunity requirements are specified in 
    Sec. 982.53.
        Comment: Local admission preferences: local housing needs. In light 
    of the demand and need for affordable housing, HUD should require that 
    all admission preferences used by the PHA should be based on local 
    housing needs.
        HUD response. Sections 982.207(a)(1) and (2) reflect the statutory 
    requirements for local preferences in the merged program. The 
    regulations require that the PHA system of local preferences be based 
    on local housing needs and priorities, as determined by the PHA. The 
    PHA must use generally accepted data sources in determining local 
    housing needs and priorities, and must consider public comment on the 
    PHA plan and the jurisdiction's consolidated plan.
        Local admission preferences: waiting list. The rule should 
    explicitly require PHAs to consider the needs of persons on their 
    waiting list in determining local preferences.
        The rule should provide that the waiting list is a ``generally 
    accepted data source'' to be used by the PHA in determining housing 
    needs and priorities.
        HUD response. PHA waiting lists may be an excellent source of local 
    housing needs information in some communities, and an unreliable data 
    source in other communities. PHA practices in purging or updating their 
    waiting lists vary widely. Some PHAs periodically close the waiting 
    list, while other PHAs have never closed the waiting list since the 
    program began in 1975. For these reasons, HUD is not mandating use of 
    the waiting list as a basis for local admission preferences.
        Comment: Local admission preferences: preference for workers. The 
    rule currently provides that a PHA which grants an admission preference 
    to a family who is employed must grant the same preference to people 
    with disabilities and to the elderly. This requirement should be 
    included in the final rule.
        HUD response. The rule is revised to clarify that the PHA may 
    establish a preference for admission of working families 
    (Sec. 982.207(b)). An applicant family must be given the benefit of the 
    working family preference if the head and spouse, or sole member is 
    either age 62 or older or a person with disabilities.
        Comment: Local admission preferences: public housing tenants. HUD 
    should retain the prohibition against Section 8 preferences that 
    discriminate against public housing tenants.
        HUD response. The 1998 Act repealed the statutory requirement (the 
    so called ``Bartlett amendment'') that a PHA must permit public housing 
    tenants to retain their pre-public housing preference status on the 
    PHA's Section 8 waiting list. This prior requirement has therefore been 
    removed from the program rule.
        However, the Congress has not repealed section 8(s) of the 1937 Act 
    (42 U.S.C. 1437f(s)), which provides that a PHA must not deny a local 
    preference, nor otherwise exclude or penalize a family in admission to 
    the voucher program, solely because the family resides in a public 
    housing project. HUD has, therefore, added a new provision that 
    specifies this continuing statutory requirement (Sec. 982.207(a)(4)). 
    In addition, the regulation clarifies that a PHA may establish a 
    preference for public housing residents who are victims of a crime of 
    violence.
    
    Section 982.303 Term of voucher.
    
        Comment: Voucher term extensions. HUD should grant PHAs discretion 
    to extend voucher time limits if a discrimination complaint has been 
    filed with a proper fair housing enforcement agency, in connection with 
    reasonable accommodation requests, and to increase housing choice 
    opportunities.
        HUD response. The final rule is revised to allow PHA discretion to 
    extend the cumulative voucher term beyond the prior 120 day limit, 
    whether for reasonable accommodation or other good cause determined by 
    the PHA and stated in the administrative plan (Sec. 982.303(b)). This 
    change will permit additional local administrative flexibility 
    consistent with the Congressional policy to grant PHAs maximum local 
    discretion in administration of their programs.
    
    Section 982.305 PHA approval of assisted tenancy.
    
        Comment: 15-day initial inspection requirement for PHAs with 1250 
    units or less. The 15-day Housing Quality Standards (HQS) inspection 
    requirement is not reasonable for rural areas, where rental units are 
    scattered and often located miles away from a PHA office. The final 
    rule should provide rural PHAs with the same flexibility the interim 
    rule currently provides large PHAs in complying with the HQS inspection 
    requirements.
        HUD should permit all PHAs (regardless of size) to comply with HQS 
    inspection requirements within a ``reasonable time''.
        All PHAs should be required to comply with the 15-day inspection 
    requirement. Failure to conduct a timely HQS inspection imposes a 
    serious hardship on the family because voucher assistance cannot 
    commence until completion of the inspection. Therefore, a family must 
    usually pay a market rent for the unit pending completion of the HQS 
    inspection.
        PHAs faced with uncooperative tenants or owners should be exempted 
    from the 15-day inspection requirement.
        HUD response. The 15-day initial HQS inspection standard is 
    statutory and applies to all PHAs with 1250 or fewer budgeted tenant-
    based Section 8 units. The law provides a different standard for PHAs 
    with more than 1250 budgeted units. HUD does not have discretion to 
    provide rural (or non-rural) PHAs with relief from the 15-day deadline 
    unless a PHA has more than 1250 units.
        Although HUD cannot exempt PHAs faced with uncooperative owners or 
    tenants from the initial HQS inspection deadline, the regulation 
    provides that the 15-day clock begins after both the family and owner 
    request approval of the tenancy, and the 15-day clock is
    
    [[Page 56901]]
    
    suspended during any time when the unit is not available for 
    inspection. ``Not available for inspection'' encompasses a multitude of 
    reasons why the unit is unavailable, including lack of cooperation by 
    tenants or owners.
        HUD expects to enforce the 15-day inspection deadline by including 
    this element in the PHA's SEMAP rating, after appropriate rulemaking.
        Comment: 15-day initial inspection requirement for PHAs with more 
    than 1250 units. HUD lacks authority to establish a presumptive 
    standard of 15 days for inspections by large PHAs. The law only 
    requires a maximum 15-day inspection period for PHAs with 1250 or fewer 
    assisted units. For PHAs that provide assistance to more than 1250 
    families, the statute requires that pre-assistance inspections be 
    conducted ``before the expiration of a reasonable period.'' The interim 
    rule text requires PHAs with more than 1250 units to conduct the 
    initial HQS inspection within a reasonable time after the family 
    submits a request for approval of the tenancy and, to the extent 
    practicable, within 15 days after the family and the owner submit a 
    request for approval of the tenancy.
        The rule should provide that the period for PHA inspection of the 
    unit is tolled during any period when the unit is not available for 
    inspection.
        HUD response. The interim rule provides that PHAs with more than 
    1250 units must conduct the initial HQS inspection within a reasonable 
    time after the family submits a request for approval of the tenancy. To 
    the extent practicable, the inspection must be conducted within 15 days 
    after the family and the owner submit a request for approval of the 
    tenancy to the PHA. These provisions are an appropriate exercise of 
    HUD's rulemaking authority in implementing the statutory inspection 
    requirements for large PHAs. If it is practicable for a PHA to conduct 
    the inspection within 15 days, then 15 days is a reasonable inspection 
    deadline, and is consistent with the law.
        The interim rule already provides for suspending the clock for all 
    PHAs when the unit is not available for inspection.
        Comment: Applicability of rent burden cap to lease renewals. The 
    rule should require PHA approval of renewal tenancies. The rule should 
    also provide that the PHA may not approve a renewal tenancy unless the 
    family share (rent--including tenant-paid utilities--minus the Section 
    8 subsidy payment) does not exceed 40 percent of the family's adjusted 
    income.
        HUD response. The 40 percent rent burden threshold does not apply 
    to lease renewals. The 40 percent rent burden threshold only applies 
    when a unit is first leased by a family (on or after October 1, 1999--
    the effective date of the merger rule) with tenant-based assistance 
    under the voucher program. Thus the maximum rent burden requirement 
    applies to: (1) the initial rent for the unit rented with voucher 
    assistance by a family when admitted to the voucher program on or after 
    October 1, 1999 (the merger date); and (2) the initial rent for any 
    unit a participant first rents with voucher assistance on or after 
    October 1, 1999--i.e., to all moves by program participants on or after 
    October 1, 1999.
    
    Section 932.306 PHA disapproval of owner.
    
        Comment: Optional PHA disapproval of owners. HUD should provide an 
    appeals process for owners prohibited from participating in the 
    program. HUD should act as independent arbitrator between the PHA and 
    the owner.
        There must be clear definitions and processes for implementing this 
    provision; otherwise, the provision may used to deny Section 8 
    contracts to owners where local governmental officials or 
    ``influential'' residents simply do not want Section 8 families.
        Section 982.306(c)(5) of the interim rule provides that the PHA is 
    authorized to disapprove an owner if the owner has a history or 
    practice of ``failing'' to terminate tenancy of the undesirable tenants 
    described in the statute. The statutory language does not use the term 
    ``fail'' but uses the term ``refuse.'' This minor change from the 
    statutory language may seem innocuous, but in practice it can be 
    significant. This section needs to conform to the statutory language.
        HUD's HUB offices should consider coordinating information in 
    multi-State metropolitan areas to minimize chances for ``bad'' 
    landlords to become Section 8 program participants by ``PHA-shopping.''
        HUD response. Owners have no statutory or regulatory right to 
    participate in the housing choice voucher program, and consequently 
    have no due process right to a hearing on a PHA's decision to 
    disapprove owner participation. There is no federal mandate for PHAs or 
    HUD to grant owners a process for appeal of a PHA decision to 
    disapprove owner participation. The PHA has discretion whether to 
    provide a local review or appeal process to owners disapproved by the 
    PHA for the reasons authorized by the regulations, and the nature of 
    any such process.
        HUD has not substantively changed the statutory requirement. HUD 
    considers the term ``fail'' more appropriate to and consistent with the 
    statutory requirement, and clarifies that the PHA's authority to 
    disapprove an owner does not require a specific PHA demand and refusal 
    of the PHA demand by the owner. This implementation of the law is 
    within HUD's rulemaking authority.
        HUD will explore ways too coordinate this information as suggested 
    by the commenters. In the meantime, PHAs may wish to establish a 
    communication process to share information about owners denied 
    participation in the voucher program.
    
    Section 982.307 Tenant screening.
    
        Comment: Optional PHA screening of applicants: General. HUD should 
    eliminate the option for PHAs to screen family behavior or suitability 
    for tenancy. Does the PHA now owe any obligation to the landlord and 
    can a participant appeal this determination?
        The voucher program is based on the private market principle that 
    prospective private landlords (not PHAs or other third parties) can 
    best determine a family's suitability for tenancy. The only purpose of 
    PHA screening should be the provision of supplemental information for 
    prospective private landlords.
        PHAs should be encouraged to share their screening information 
    regarding family behavior and suitability for tenancy to owners to 
    assist owners in making the required independent determination of 
    suitability of potential tenants.
        The rule needs to clarify that the final decision on tenant 
    acceptability rests with the owner. The PHA can choose to collect 
    screening information and provide it to the private owner, but it is up 
    to the private owner, based on this information, to make a decision on 
    acceptability. However, if the final rule authorizes PHA denial of 
    admission based on screening criteria, the rule must establish clear, 
    objective and non-discriminatory guidelines on screening criteria.
        HUD response. The 1998 Act provides that PHAs ``may elect to screen 
    applicants for the [housing choice voucher] program in accordance with 
    such requirements as [HUD] may establish''. This final rule permits PHA 
    screening of program applicants, and permits the PHA to deny admission 
    as a result of the screening. In accordance with existing program 
    requirements, the PHA must give the opportunity for informal review of 
    the PHA decision to deny program admission as a result of the PHA 
    screening.
    
    [[Page 56902]]
    
        PHAs may establish local screening criteria. PHAs are encouraged to 
    share screening information, when practicable. It is important to note, 
    however, that regardless of whether the PHA opts to screen applicants, 
    the owner remains responsible for screening and selection of the family 
    to occupy the owner's unit.
        Comment: Optional PHA screening of applicants: equal opportunity 
    concerns. Screening will disproportionately exclude person with 
    physical or psychological disabilities. The final rule should require 
    PHAs to consider measures for reasonable accommodation of disabilities 
    before making a final decision to reject an applicant.
        HUD response. PHAs must administer tenant-based assistance in 
    conformity with civil rights laws and affirmatively further fair 
    housing. Equal opportunity requirements are specified in Sec. 982.53. 
    In addition, PHA denials of admission are subject to the program 
    requirements concerning informal reviews.
        Comment: Optional PHA screening of applicants: PHA plan. A PHA's 
    screening criteria should be part of the PHA plan, and should be 
    subject to public and resident scrutiny and comment.
        HUD response. Any PHA screening criteria will be included in PHA 
    administrative plan which is a supporting document to the PHA plan and 
    available for public review.
        Comment: Optional PHA screening of applicants: portability. The 
    portability provisions must continue to allow the receiving PHA to 
    screen participants with portable vouchers based on the receiving PHAs 
    local policies consistent with Sec. 982.307.
        HUD response. The receiving PHA may opt to screen the portable 
    family using the receiving PHA's screening criteria only if the family 
    is not a current participant in the tenant-based program (i.e., the 
    family is not receiving housing assistance pursuant to a certificate or 
    voucher HAP contract).
    
    Section 982.308 Lease and tenancy.
    
        Comment: Tenant's legal capacity. Additional guidance is required 
    regarding the tenant's legal capacity.
        HUD response. The rule is revised to specify that the tenant must 
    have legal capacity to enter a lease under State and local law, and 
    that ``legal capacity'' means that the tenant is bound by the terms of 
    the lease, and may enforce the terms of the lease against the owner 
    (Sec. 982.308).
        Comment: PHA model lease. In several jurisdictions, most landlords 
    use no written lease at all. In some jurisdictions, some landlords do 
    not use a written lease. If the lease term is not defined, PHAs will 
    not be able to plan reinspections and lease renewals in advance. Many 
    landlords rely on a PHA to provide the written lease. Further, the 
    landlords' standard leases might contain clauses that are contradictory 
    to Section 8 voucher program requirements.
        HUD response. Section 982.308(b)(2) was revised to specify that if 
    the owner does not use a standard lease form for rental to unassisted 
    tenants, the owner may use another form of lease, such as a PHA model 
    lease (including the HUD-prescribed tenancy addendum). The HAP contract 
    prescribed by HUD will contain the owner's certification that if the 
    owner uses a standard lease form for rental to unassisted tenants, the 
    lease is in such standard form. The regulations provide that a 
    participating owner must certify that the terms and conditions of the 
    lease are consistent with State and local law. It will be a violation 
    of the HAP contract if the owner certification of lease consistency 
    with State and local law is deficient.
        Comment: Prohibited lease provisions. A list of prohibited lease 
    provisions should be required by the final rule. The ``tenancy 
    addendum'' is a HUD form that is not subject to rulemaking procedures, 
    and the courts may not have access to the addendum or know what weight 
    to give the addendum.
        HUD response. The recommendation is inconsistent with the statutory 
    provision, which requires use of the lease that the owner uses in the 
    locality. Congress revised the lease provisions to minimize differences 
    between voucher tenancies and unassisted tenancies to facilitate 
    expanded owner participation in the Section 8 voucher program.
        Comment: Lease and Tenancy Addendum. Many property owners may 
    refuse to sign a written lease, but they will sign the HUD lease 
    addendum. To ensure a broad range of housing choice, the only required 
    rental agreement should be the HUD lease addendum. The voucher 
    recipient should be allowed the choice of a verbal agreement or any 
    type of written rental agreement or lease sufficient for execution of a 
    HAP contract.
        The tenancy addendum should not be part of the HAP contract. There 
    is an inherent conflict between including a legal document to be signed 
    by the owner and tenant, as an attachment to or part of a lease, in a 
    document (the HAP contract) to be signed by the owner and the PHA, and 
    barring the tenant from using any legal process to involve the PHA in 
    its enforcement.
        The regulations do not provide the tenant with all enforcement 
    tools that it may need to protect itself from a bad landlord.
        HUD response. The statute now requires use in the voucher program 
    of the lease the owner uses in the locality. The HUD-prescribed tenancy 
    addendum states the special requirements of a voucher tenancy in 
    accordance with federal law, but is not intended to be a substitute for 
    a complete lease. The lease is composed of two parts: The owner's 
    standard form lease, plus the federal tenancy addendum.
        Section 982.456 clarifies that the tenant is authorized to enforce 
    rights under the tenancy addendum, but does not have the right to 
    enforce other provisions of the HAP contract. The statute (section 
    8(o)(7)) specifically authorizes HUD to specify an addendum to the HAP 
    contract concerning the lease and the assisted tenancy. Accordingly, 
    the tenancy addendum, dealing with requirements of tenancy, is included 
    in the HAP contract executed between the PHA and owner. However, since 
    the tenancy addendum also sets forth owner lease obligations, HUD has 
    required that the tenancy addendum also be part of the lease executed 
    by the tenant and the owner, directly enforceable by the tenant against 
    the owner. The requirement that the tenancy addendum be part of the 
    lease assures tenant access to a legal process to enforce the rights 
    contained in the tenancy addendum.
        HUD has reexamined its position concerning whether a minimal amount 
    of leasing information is needed since leases vary widely, and some 
    owners do not typically provide a written lease. Accordingly, 
    Sec. 982.308(d) of the final rule provides that the lease must include, 
    in addition to the utilities and appliances to be furnished by the 
    owner, the names of the owner and tenant, the address of the unit 
    rented, the term of the lease, and the amount of monthly rent to owner.
        Comment: PHA approval of the lease. Final rule should require that 
    the lease be approvable by the PHA. The only practical way to make sure 
    that an owner's lease complies with State and local law is for the PHA 
    to review and approve the lease.
        Both the tenant and PHA should have 60 days advance notice of any 
    proposed changes to the lease so the PHA may screen leases and approve 
    the tenancy. This is especially important for any new changes in 
    security deposits, responsibility for utilities, and proposed rent 
    changes that may be affected by the new lease.
        If HUD no longer will require a new HAP contract for a revised 
    lease, which in itself is a welcome reduction in work,
    
    [[Page 56903]]
    
    it should retain the PHA's authority to disapprove the continued 
    tenancy if the revised lease violates any program requirements or State 
    and local law. The PHA should review the terms of the new tenancy, 
    determine whether a HAP contract should be executed for this tenancy, 
    and review the terms and conditions of the lease.
        HUD response. HUD has not revised the interim rule to require PHA 
    approval of leases. Instead, the housing choice voucher program 
    regulations provide that a participating owner must certify that the 
    terms and conditions of the lease are consistent with State and local 
    law. It will be a violation of the HAP contract if the owner 
    certification of lease consistency with State and local law is 
    deficient. PHAs are not required to review the lease to assure such 
    consistency, although the rule provides in Sec. 982.308(c) that the PHA 
    may opt to review leases for State and local law compliance.
        The PHA will only provide housing assistance for a tenancy approved 
    by the PHA. If both parties agree to terminate the lease, the family is 
    not considered to be moving in violation of the lease.
        The final rule is revised (Sec. 982.308(g)) to specify that PHA 
    approval of the tenancy, and execution of a new HAP contract, are 
    required for the following changes in the lease: (1) Changes in tenant 
    or owner responsibilities for utilities or appliances; (2) changes in 
    the lease term; and (3) if the family moves to a new unit, even if the 
    unit is in the same building or complex. PHA approval of the tenancy, 
    and execution of a new HAP contract, are not required for other changes 
    in the lease such as a change in family composition or a change in the 
    amount of rent to owner.
        Of course, lease changes are subject to the essential program 
    requirements, as stated in the tenancy addendum. In addition, 
    Sec. 982.308(g) of the final rule specifies that the owner must notify 
    the PHA of any changes in the amount of the rent to owner at least 
    sixty days before any such changes go into effect. Any such changes are 
    subject to rent reasonableness requirements that bar owner from 
    charging more than the market rent for comparable unassisted units.
    
    Section 982.309 Term of assisted tenancy
    
        Comment: Lease term of less than one year. HUD appropriately allows 
    PHAs ability to approve leases with initial terms of less than one 
    year.
        PHAs should have greater flexibility to approve lease term of less 
    than one year.
        Section 982.309(a) of the interim rule provides that a PHA may 
    approve a lease term of less than one year if such a lease term is the 
    prevailing local practice and the PHA determines that the shorter term 
    will improve housing opportunities for the family. Some PHAs serve a 
    number of communities, each with a prevailing local practice, thus 
    making it difficult for the PHA to develop a consistent lease term 
    policy. The final rule should provide PHAs with the latitude to allow a 
    lease term of less than one year (whether or not it is the prevailing 
    local practice in a particular community), as long as it appears to be 
    the prevailing practice in the State.
        Clients who reside in college communities have difficulty finding 
    owners who are willing to sign a one-year lease. Provision for leases 
    of less than one year will expand housing choice for these clients.
        The final rule should provide that under no circumstances may a PHA 
    allow for a lease term of less than 6 months; otherwise some PHAs may 
    use month-to-month leases, which do not adequately protect tenants from 
    arbitrary eviction.
        A lease term of less than one year should only be granted if the 
    landlord would reject the lease because of the one-year lease term.
        Initial lease terms of less than one year seem inconsistent with 
    the goal of family stabilization and allow a loophole for future rent 
    increases. The term ``prevailing local market practice'' should be 
    clarified.
        Rule should make clear that approval of lease terms of less than 
    one year must meet two tests: (1) The PHA determines that such shorter 
    term would improve housing opportunities for the tenant; and (2) such 
    shorter term is considered to be a prevailing local market practice. 
    This should be a case-by-case determination.
        HUD response. The statute authorizes PHA approval of initial lease 
    terms of less than one year under certain circumstances. The conditions 
    for approval of an initial lease term of less than one (1) year are 
    statutory. HUD intends to permit PHAs to use local judgment to 
    determine prevailing local practice with respect to lease terms.
        The regulatory text in the interim rule (and carried forward to the 
    final rule) is clear that approval of initial lease terms of less than 
    one year must meet both statutory tests. PHAs may opt to determine 
    case-by-case whether approval will improve an individual family's 
    housing opportunities, or the PHA may make a determination based on its 
    overall (not case-by-case) judgment of market opportunities. PHAs will 
    determine what is prevailing local practice with respect to lease 
    terms.
        Comment: Automatic lease renewals. The final rule needs to include 
    automatic renewal in the absence of the landlord or tenant 
    affirmatively terminating the tenancy. The automatic renewal will 
    protect a tenant from a landlord who decides at the last moment not to 
    renew.
        HUD response. The recommendation is inconsistent with the statutory 
    provision, which requires use of the lease that the owner uses in the 
    locality. Congress revised the lease provisions to minimize differences 
    between voucher tenancies and unassisted tenancies to facilitate 
    expanded owner participation in the Section 8 voucher program.
        Comment: Mutual termination of the lease by the owner and tenant; 
    termination of the lease by the tenant after notice. The mutual 
    termination provision in former Sec. 982.309(b)(3) should be retained 
    to clarify, at a minimum, that owners and tenants are free to negotiate 
    a mutual termination during the lease term.
        Lease termination provisions should remain as in former 
    Sec. 982.309(d) which provided that, after the initial term of the 
    lease, the family may terminate the lease at any time, and that the 
    lease may not require the family to give more than 60 calendar days 
    notice of such termination to the owner. It is desirable to not allow 
    the family's right to terminate the lease, after the initial term, to 
    be dependent upon the terms of the particular lease used. Families may 
    be locked into long periods, which will restrict their mobility.
        HUD response. The recommendations are inconsistent with the new 
    statutory requirement to use the standard lease form that an owner uses 
    for other tenancies in the locality. Congress revised the lease 
    provisions to minimize differences between voucher tenancies and 
    unassisted tenancies to facilitate expanded owner participation in the 
    Section 8 voucher program.
    
    Section 982.310 Owner termination of tenancy.
    
        Comment: Owner lease termination notice. The law provides that any 
    termination of a voucher tenancy by the owner ``shall be preceded by 
    the provision of written notice by the owner to the tenant specifying 
    the grounds for that action.'' Section 982.310(e)(1) contradicts this 
    statutory requirement because it permits an owner to combine the notice 
    of grounds with an initial pleading used to begin an eviction action.
    
    [[Page 56904]]
    
        The rule should specify how much notice the owner must give to end 
    the lease without cause at the end of a lease term.
        HUD response. Section 982.310(e) has been revised to specify that 
    the tenancy does not terminate during the term of the lease before the 
    owner has given notice to the tenant that specifies the grounds for 
    termination. The regulations continue to require that the notice must 
    be given at or before the beginning of any eviction action.
        The termination notice must be in accordance with the lease and 
    State and local law. HUD does not specify the length of notice periods 
    required for eviction of the tenant.
        Comment: Applicability of Part 247 to lease terminations. Paragraph 
    (g) of this section needs to be removed. It was originally included to 
    minimize the landlord's burden when Section 8 requirements and Part 247 
    requirements were roughly equivalent. Now the landlord is allowed to 
    terminate the lease without good cause. Leaving this paragraph in the 
    final rule would mean that Section 8 tenants in federally subsidized 
    projects under part 247 would not be entitled to the same protections 
    as other residents of the project.
        HUD response. HUD disagrees with the commenter. The same tenancy 
    requirements should apply to all voucher tenancies.
        Comment: Lease termination for a lease with an initial term 
    exceeding one year. Section 982.310(d)(2) needs to be revised because 
    it requires, in the case of a lease with an initial term of two years, 
    that the landlord cannot terminate the tenancy, except for tenant 
    misfeasance or nonfeasance for a full two years. The opening clause for 
    paragraph (d)(2) should read: ``During the shorter of the first year of 
    the lease term or the initial lease term, the owner may not terminate 
    the tenancy for `other good cause' unless. * * *''
        HUD response. The interim rule provision is not in error. The final 
    rule continues to provide that an owner may opt to offer an initial 
    lease term longer than one year. During the initial lease term, the 
    owner can only terminate tenancy for cause. This is not a new 
    requirement. Of course, the initial HAP contract term may not extend 
    beyond the ACC expiration date for the funding source from which the 
    HAP contact is to be funded.
        Definition of ``serious lease violation''. HUD should define what 
    constitutes a ``serious lease violation.'' This should be changed to 
    serious or repeated violation, the standard required for evictions in 
    the Section 8 programs.
        Serious lease violations should not include late payments or 
    ``minor violations''. The definition of ``serious lease violation'' 
    should not include ``other amounts due under lease.'' Tenants should 
    not be subject to eviction for failure to pay late charges or disputed 
    damage charges when a good faith dispute exists over liability for 
    charges.
        The definition of serious lease violation should not include minor 
    violations or repeated minor violations of the lease.
        HUD response. The regulation is clear that a ``minor'' lease 
    violation is not a ``serious'' lease violation. HUD has determined that 
    it would be impossible to provide an exhaustive list of actions or 
    inactions that are considered serious lease violations. The eviction 
    determination is ultimately made on a case-by-case basis by judges in 
    State or local landlord/tenant courts. The courts determine whether a 
    lease violation has occurred, and whether the violation is sufficiently 
    ``serious'' to justify eviction from the assisted unit.
    
    Section 982.314 Move with continued tenant-based assistance.
    
        Comment: Prohibition on family moves. Permitting a PHA to prohibit 
    a family from moving during the first year of the assisted tenancy may 
    result in the termination of a family's assistance without good cause. 
    This may occur when the initial lease term is less than one year and 
    the landlord refuses to renew the lease without good cause. The family 
    would be prohibited from moving and, therefore, lose its assistance. 
    HUD should revise Sec. 982.314(c)(2) to authorize PHAs to prohibit any 
    moves by a family during its initial lease term (instead of during its 
    initial year of assisted occupancy); and to permit a family to move 
    whenever the landlord refuses to renew the family's tenancy without 
    good cause.
        HUD response. Consistent with the commenter's recommendation, 
    Sec. 982.314(c)(2)(i) is revised to change the time frame from ``first 
    year'' to ``initial lease term.''
    
    Section 982.352 Eligible housing.
    
        Comment: PHA-owned units. The rule should not require a PHA to 
    obtain the services of an independent agency to determine rent 
    reasonableness and conduct HQS inspections. PHAs should be trusted to 
    offer a decent unit and reasonable rent to an otherwise eligible 
    family. Generally accepted accounting practices permit a separation of 
    duties and control within the same organization. The independent 
    auditor should be required to conduct a random sampling of Section 8 
    files where the PHA is the owner. PHA rent reasonableness data and 
    other periodic checks on leased units provide adequate protection for 
    the government and the taxpayer.
        HUD should permit high-performing PHAs to conduct their own 
    inspections of PHA-owned units.
        The final rule should clarify how HUD will approve an independent 
    agency. Is it HUD's intention to permit a neighboring PHA to perform 
    such services?
        HUD response. The special requirements for independent inspections 
    and contract rent negotiations and reviews for PHA-owned housing are 
    statutory. These requirements reflect legitimate and substantial 
    concern with the inherent conflict of interest when the PHA contract 
    administrator--responsible for oversight of the Section 8 owner--is 
    itself the Section 8 owner, or substantially controls the nominal 
    ownership entity.
        The HUD field office will review any independent agency arrangement 
    to ensure that the independent agency has an arms-length relationship 
    with the PHA. A neighboring PHA may act as an acceptable independent 
    agency--so long as the neighboring PHA is authentically independent of 
    the PHA unit owner. A unit of general local government such as the 
    Community Development Agency may also be an acceptable independent 
    agency, unless the PHA is itself part of the same unit of general local 
    government or an agency of such government.
        Comment: Administrative fees for PHA-owned units. The reasoning 
    behind requiring PHAs to obtain the services of independent entity is 
    sound, but PHAs should earn the full administrative fee for the unit.
        HUD response. The statute provides for a lower administrative fee 
    for PHA-owned units.
    
    Section 982.353 Where family can lease a unit with tenant-based 
    assistance.
    
        Comment: Portable moves during first 12 months. The rule should 
    provide that the PHA's discretion regarding whether to allow 
    portability in the first 12 month period from a non-resident family's 
    admission to the program must be exercised program-wide, not family-by-
    family.
        Rule should clarify that the PHA will provide reasonable 
    accommodation to families during the 12-month initial period that might 
    include waiver of its policy under Sec. 982.353(c).
    
    [[Page 56905]]
    
        HUD response. The statute permits PHAs to prohibit portability 
    during the first 12 months from admission for families who did not live 
    in the PHA jurisdiction when they applied for assistance. This 
    provision maintains the local character of a PHA's voucher program, and 
    prevents families from shopping for assistance from different PHAs, 
    regardless of where the family intends to live with assistance under 
    the program. The decision to allow or deny portability during the first 
    12 months after family admission is appropriately left to PHA 
    discretion--to exercise on a program-wide or case-by-case basis.
        Although HUD has not made the recommended change concerning 
    reasonable accommodation, PHAs must consider reasonable accommodation 
    in the context of all program requirements and functions in accordance 
    with the statute and HUD equal opportunity requirements. Equal 
    opportunity requirements are specified in Sec. 982.53.
        Comment: Income eligibility of portable family. HUD should 
    eliminate the requirement to determine income-eligibility of a porting 
    family admitted (initially assisted) in the jurisdiction of a receiving 
    PHA (Sec. 982.353(d)(3)). If the family is found eligible by the 
    initial PHA, there is no reason to impose the burden of a second 
    income-eligibility determination by the receiving PHA.
        HUD response. The statute requires that an applicant be income 
    eligible before initially receiving housing assistance. If the family 
    will first receive assistance in the receiving PHA's jurisdiction, then 
    the family must be income eligible in the receiving PHA's jurisdiction.
    
    Section 982.355 Portability: Administration by receiving PHA.
    
        Comment: Effect of preferences on portability. The final rule 
    should explicitly provide that a receiving PHA may not use a local 
    residency preference to deny portability.
        HUD response. The rule is revised to clarify that when the family 
    has a right to lease a unit in the receiving PHA jurisdiction under 
    portability procedures, the receiving PHA must provide assistance for 
    the family (Sec. 982.355(c)(10)). Receiving PHA selection preferences 
    (including any residency preferences) do not apply, and the receiving 
    PHA waiting list is not used. However, the receiving PHA may deny or 
    terminate assistance for family action or inaction in accordance with 
    Secs. 982.552 and 982.553.
        Comment: Portability to areas serviced by other PHAs. Section 
    982.353(b) imposes restrictions on portability by requiring that the 
    area to which the family wants to move must have a PHA administering a 
    Section 8 Housing Choice Voucher Program. In many instances this will 
    not allow families to leave urban areas for suburban areas or rural 
    areas.
        HUD response. The statute provides for portability to any area in 
    the United States that is in the jurisdiction of a PHA administering a 
    tenant-based Section 8 program. In practice, in most communities there 
    is a PHA that operates a Section 8 program. Often, multi-jurisdictional 
    PHAs (such as state agencies) administer the certificate and voucher 
    programs in areas where there are no local PHAs.
    
    Section 982.405 PHA initial and periodic unit inspection.
    
        Comment: HQS procedural guidelines and performance standards. HUD 
    needs to provide additional guidance regarding the procedural 
    guidelines and performance standards that must conform to practice 
    utilized in the private housing market.
        If the Secretary exercises discretion to issue procedural 
    guidelines and performance standards, they must be published for notice 
    and comment.
        The rule cannot directly delegate a secretarial duty to a PHA, and 
    HUD guidelines and standards need to be published in an accessible 
    format with no hidden criteria.
        HUD response. Section 982.405(f) of the interim rule which required 
    the PHA to adopt procedural guidelines and performance standards for 
    conducting required HQS inspections has been deleted. HUD has 
    determined that the pre-merger HQS inspection requirements and the 
    SEMAP HQS-related performance standards meet the section 8(o)(8)(E) 
    statutory requirement for the Secretary to establish inspection 
    guidelines and performance standards.
    
    Section 982.451 Housing assistance payments contract.
    
        Comment: PHA penalties for late housing assistance payments to 
    owners. The rule should exempt new or revised HAP contracts from 
    penalties for late payment of housing assistance to owners. The 
    paperwork and other administrative work involved in preparing a new or 
    revised HAP contract may make it difficult for a PHA (and in particular 
    a large PHA) to avoid a late payment. Recurring late payments should be 
    penalized.
        The rule should clarify whether a owner that normally does not 
    charge a late fee to tenants can still charge a late fee to the PHA. If 
    the owner can charge late fees to the PHA, does the PHA have the right 
    to determine the maximum amount of liability it will assume? Further 
    clarification is needed on whether late fees will be determined based 
    on date the payment is mailed.
        HUD response. The interim rule provided that the PHA may be 
    assessed a late rental payment penalty only if it is in accordance with 
    generally accepted practices and law in the local housing market. The 
    interim rule also stated that a PHA is not obligated to pay any late 
    payment penalty if HUD determines that the late payment is attributable 
    to factors beyond the PHA's control. Section 982.451 of the final rule 
    has been revised to add two more conditions for owner assessment of a 
    late fee to the PHA: it must be the owner's practice to charge such 
    penalties for assisted and unassisted tenants, and the owner must 
    charge such penalties against the tenant for late payment of family 
    rent to owner.
        The interim rule specified that the PHA may add to the HAP contract 
    a provision which defines when the housing assistance payment by the 
    PHA is deemed received by the owner. There is nothing that would 
    prohibit a PHA from defining ``receipt of the housing assistance 
    payment by the owner'' as the date the PHA mailed the funds to the 
    owner or the date of actual receipt by the owner.
        Comment: Funding for PHA penalties for late housing assistance 
    payments to owners. It is unfair to penalize PHAs for late payments 
    unless HUD headquarters is willing to pay for the late payments.
        HUD response. The statute provides for payment of penalties for 
    late payments of housing assistance under certain circumstances. The 
    statute further provides that a late payment fee may only be paid from 
    the PHA's administrative fee income, including any amounts in the PHA 
    administrative fee reserve. The PHA is not obligated to pay any late 
    fee if HUD determines that the late payment is due to factors beyond 
    the control of the PHA.
    
    Section 982.453 Owner breach of contract.
    
        Comment: Owner breach of HAP contract for ``drug-related criminal 
    activity''. The change to Sec. 982.453(a)(5) to make ``drug-related 
    criminal activity'' (instead of only ``drug trafficking'') an owner 
    breach of contract was a good one. Why did the change not also include 
    violent criminal activity as a contract breach?
        HUD response. Section 982.453(a) was revised to add commission of 
    any violent criminal activity by the owner as a breach of the HAP 
    contract.
    
    [[Page 56906]]
    
    Section 982.502 Conversion to voucher program.
    
        Comment: Deadline for conversion to the merged program after the 
    merger date. Conversion from pre-merger assistance should be expedited. 
    Conversion should be effective upon the next regular reexamination on 
    or after the merger date. The final rule should provide that a landlord 
    and tenant may jointly (not individually) convert their regular 
    certificate tenancy to a voucher tenancy at any time after the merger 
    date. Reducing the number of certificate conversions during the second 
    year after the merger date will reduce PHA administrative burdens that 
    may delay one or more assistance payments to a family.
        Conversion from pre-merger assistance should be delayed. Requiring 
    that conversion take place at the second regular reexamination is too 
    restrictive. HUD should permit an extension in situations where the 
    tenant and owner cannot agree to convert.
        PHAs should be permitted to delay the transition of certificate 
    families leased units with exception rents as a reasonable 
    accommodation until the family leaves the Section 8 program or moves to 
    another unit.
        HUD response. The interim rule provided for the complete conversion 
    of all pre-merger tenant-based assistance to the merged program no 
    later than the effective date of the second regular reexamination on or 
    after the merger date (October 1, 1999). HUD considers this time frame 
    reasonable and has not adopted the recommendations to shorten or 
    lengthen the time. It is noted, however, if both a participant and the 
    owner want to convert to the merged program sooner than required, they 
    may do so by executing a new lease and HAP contract. In addition, the 
    technical correction to the interim rule published on September 14, 
    1999, addresses approval of higher payment standards and approval of 
    exception payment standards as a reasonable accommodation for a tenant 
    with disabilities.
        Comment: Continuing current benefits after conversion. HUD should 
    not terminate program assistance upon conversion. HUD should allow 
    ``grandfathering'' of pre-existing benefits. Terminating program 
    assistance will create undue hardship on the family and create an 
    impact on PHA staff.
        HUD response. The conversion time frame is reasonable and the rule 
    provides for a uniform delay in increases in the family share of rent 
    that may result from implementation of the housing choice voucher 
    program.
        Comment: Delayed reductions in subsidy for over-FMR tenancies based 
    on payment standard revisions. To protect families with over-FMR 
    tenancies, the final rule could simply require that over-FMR tenancies 
    be treated no differently than other certificate tenancies. Alternately 
    the final rule could require that the subsidy for over-FMR tenancies be 
    calculated based on the higher of the FMR or payment standard for the 
    transition period before the second annual reexamination after October 
    1, 1999.
        HUD response. The regulation has been revised to require that any 
    reduction in subsidy attributable to the decrease in the payment 
    standard will be delayed until the effective date of the family's 
    second regular reexamination on or after the payment standard decrease. 
    This is a change in practice for the voucher program. Before this final 
    rule, a voucher participant's subsidy was based on the higher of the 
    current payment standard or the payment standard in effect when the 
    participant initially leased a specific unit under the voucher program.
        Comment: New certificate HAP contracts after the merger date. The 
    final rule should permit execution of a new certificate HAP contract 
    until the family's second annual reexamination after August 12, 1999 
    under certain circumstances.
        HUD response. HUD has not made the recommended change to permit 
    execution of new certificate program HAP contracts after the October 1, 
    1999 merger date. The requirement that only voucher HAP contracts may 
    be executed on or after October 1, 1999, will facilitate conversion to 
    the housing choice voucher program.
        Comment: Timing of HQS inspections and income reexaminations during 
    conversion period. HUD should clarify whether the regularly scheduled 
    annual HQS inspection and the family income determination for a 
    continually assisted tenant will suffice for the purpose of the 
    conversion. Unless the property is due for an annual HQS inspection, 
    the PHA should not be required to conduct an HQS inspection upon 
    conversion.
        HUD response. The regularly scheduled annual HQS inspection and 
    family income reexamination will suffice for purposes of the conversion 
    to the merged program. A new HQS inspection or income reexamination is 
    not automatically triggered because a certificate program unit is being 
    converted to the merged program and a voucher HAP contract will be 
    executed. A new HQS inspection and a new income reexamination for the 
    family is not required until 12 months lapse from the date of the last 
    HQS inspection and income reexamination under the certificate program.
        Comment: Currency of income verifications during conversion period. 
    HUD should clarify whether the period of time for which verifications 
    are valid may be extended for more than 120 days to allow the PHA to 
    determine income and the family share well in advance (more than 120 
    days) of the conversion date. At the mandatory 120 day notification 
    period, the PHA will not have income verifications for the current 
    year, and the PHA should probably be collecting such information with 
    the 120 day notice.
        HUD response. HUD recognizes that the PHA may not be able to meet 
    the normal time frames for the currency of the family's income 
    verification data during the transition period to the housing choice 
    voucher program. Chapter 10 of Handbook 7420.7, PHA Administrative 
    Practices Handbook, provides guidance (not requirements) with respect 
    to income reexaminations. That handbook states that income verification 
    data should not be older than 120 days. It is acceptable to HUD if the 
    income verification data is older than the 120 day norm in order to 
    facilitate the conversion to the housing choice voucher program and to 
    provide needed information to participant families.
        Comment: Reporting of conversions on Form HUD-50058. HUD should 
    confirm that the correct update type to be used is ``reexamination'' 
    for all Form HUD-50058 reporting of conversions of certificate to 
    voucher tenancies.
        HUD response. Termination of the certificate HAP contract and 
    execution of a voucher HAP contract does not constitute an admission. 
    The family is a current participant in the tenant-based Section 8 
    program and, therefore, ``reexamination'' is the correct term to 
    describe the process of updating the information concerning the 
    family's income and composition.
        Comment: Grandfathering of pre-merger units rented from relatives. 
    The final rule should clarify how current tenancies involving a 
    landlord who is leasing to a relative are to be treated when the 
    current certificate assistance is converted to a voucher HAP contract.
        HUD response. Section 982.306(d) was revised to clarify that the 
    prohibition on renting a unit from a relative does not apply for 
    continued assistance in the same unit. Therefore, the prohibition on 
    renting a unit from a relative is not triggered by the conversion to 
    the housing choice
    
    [[Page 56907]]
    
    voucher program if the Section 8 participant does not move from the 
    unit assisted under the certificate program.
        Comment: Owner damage claims during the conversion period. HUD 
    should clarify that all legitimate damage claims can be processed for 
    payment at the conversion of the family's assistance regardless of 
    whether the family moves or remains in place.
        HUD response. PHA reimbursement for damage claims was eliminated 
    beginning on October 2, 1995. However, HAP contracts executed before 
    that date permit owners to submit a damage claim to the PHA if the 
    family moves in violation of the lease. If a participant remains in the 
    same unit after conversion to the housing choice voucher program, there 
    is no ``move in violation of the lease'' to trigger eligibility for a 
    damage claim (for a unit under a HAP contract executed before October 
    2, 1995). If a certificate participant moves to another unit as a 
    result of the conversion to the voucher program (e.g., the owner does 
    not wish to participate in the voucher program), the PHA may process 
    any damage claim.
        Comment: Renewal of certificate tenancies during the conversion 
    period. Section 982.502(d) should emphasize conversion of certificate 
    assistance, not termination of assistance. The regulation should refer 
    to the renewal of the certificate tenancies under the voucher program.
        HUD response. HUD has not made the recommended change to 
    Sec. 982.502(d).
        The conversion process from the certificate program to the voucher 
    program cannot be characterized as a ``renewal.'' Any remaining 
    certificate HAP contracts must be terminated on the effective date of 
    the family's second regular reexamination after the October 1, 1999 
    merger date. Termination of the certificate HAP contract and the 
    certificate program tenancy and lease permits the PHA to execute a new 
    HAP contract under the housing choice voucher program on behalf of the 
    family.
        Comment: Unit rent increases after conversion. Clarification is 
    requested regarding whether owners will be able to raise rents they 
    were receiving under the regular certificate program to market level 
    (reasonable rent) at the time of conversion to a voucher tenancy. The 
    result may be in excess of the voucher payment standard and require 
    tenants to move.
        HUD response. Yes, if an owner were charging an artificially low 
    rent under the certificate program, it is possible that the owner would 
    be able to raise the rent after the certificate program HAP contract is 
    canceled. The PHA must ensure that any increases in the rent to owner 
    meet the program's rent reasonableness requirements.
        Comment: Rent burden caps during the conversion period. 
    Clarification is requested concerning whether there are any 
    restrictions on how great the family share can be if the family remains 
    in the same unit. Many families will prefer to remain in place even 
    though their family share will increase.
        HUD response. The initial rent burden cap does not apply to 
    participants who remain in the same unit.
    
    Section 982.503 Voucher tenancy: payment standard amount and schedule.
    
        Comment: Payment standards. The final rule should include guidance 
    on the legal standards applicable to PHA determination of the payment 
    standard schedule. Further, HUD should clarify a PHA's discretion to 
    vary the payment standard by unit size within designated parts of an 
    FMR area, and the final rule should specify requirements for HUD 
    approval of a payment standard below 90 percent of FMR. If justified by 
    rent burden and other data, HUD should be able to require a PHA to use 
    a payment standard above 110 percent of FMR.
        PHAs should not be permitted to lower payment standards for 
    existing certificate holders who will be converted, nor for current 
    voucher holders, without prior HUD approval.
        HUD response. HUD will provide further guidance on implementation 
    of the Housing Choice Voucher Program, including PHA establishment of 
    the payment standard. The statute provides that PHAs may set the 
    payment standard anywhere between 90 and 110 percent of the FMR. The 
    statute does not authorize HUD to require a PHA to use a payment 
    standard above 110 percent of FMR. The PHA may not set a lower standard 
    applicable only to prior certificate program participants. One payment 
    standard schedule will apply to participants in the pre-merger 
    certificate and voucher programs.
        PHAs may opt to set different payment standards by unit size within 
    the 90 to 110 percent FMR range. PHAs may opt to set different payment 
    standards within the 90 to 110 percent of FMR range for different 
    market areas of the PHA jurisdiction (e.g., a low poverty 
    neighborhood). If more than one PHA operates in a jurisdiction, each 
    PHA has discretion in deciding whether the PHA will use a uniform (or a 
    different) payment standard within the 90 to 110 percent of FMR range 
    for each unit size and geographic area.
        A new paragraph (d) was added to Sec. 982.503 to specify that HUD 
    will not approve a payment standard below 90 percent of FMR if the 
    family share for more than 40% of the current participants for the 
    applicable unit sizes exceeds TTP. Such funding may be based on the 
    most recent income examinations.
        Comment: Exception payment standards: HUD approval requirements. 
    The final rule should not limit the total population of an exception 
    area (i.e., an area where HUD has approved a payment standard higher 
    than the applicable FMR) to 50% of the population of the FMR area. In 
    FMR areas containing a large city, the granting of an exception rent 
    for the city may preclude other portions of the FMR area from obtaining 
    an exception rent. HUD should provide all PHAs with equal opportunity 
    to represent their case for an exception rent.
        HUD should make clear that every PHA that administers a voucher 
    program within an area for which HUD has approved an exception payment 
    standard must use the approved exception standard.
        HUD should (1) permit PHAs seeking an exception payment standard 
    above 120 percent of FMR to use the ``median rent method'' 
    justification, (2) permit PHAs to use a recent HUD/RDD survey to 
    justify an exception payment standard, and (3) in particularly tight 
    markets, permit PHAs to justify a payment standard exception by a 
    method that is not based on rent data.
        The rent for most decent, safe, and sanitary units in certain areas 
    is often greater than 10 percent more than the FMR. This may result in 
    tenants with more expensive special housing needs (such as persons with 
    disabilities) paying greater than 40 percent of their incomes in rent.
        PHAs need increased flexibility in establishing exception rents 
    based on local housing needs and demands.
        HUD response. The FMRs are housing market-wide estimates of rents 
    that provide opportunities to rent standard quality housing of a modest 
    nature. FMRs are set at the 40th percentile rent--the dollar amount 
    below which 40 percent of standard quality rental housing units rent in 
    the FMR geographic area. Consistent with the statute, the regulation 
    provides for HUD approval of PHA requests for payment standards higher 
    than 110 percent of the FMR.
        The rationale for limiting exception payment standards to 50 
    percent of the population in the FMR area is that to do otherwise would 
    result in approvals of exceptions being the norm, not an exception. If 
    an exception payment standard is necessary for more than 50
    
    [[Page 56908]]
    
    percent of the population in an FMR area, then the FMR is inappropriate 
    and should be revised. It is noted that the merger regulation permits 
    additional flexibility in this area than did the previous regulations 
    for the certificate and voucher program. The previous regulations for 
    the certificate and voucher program restricted the number of exceptions 
    over 100 percent of FMR, while the merger regulations restrict the 
    number of exceptions over 110 percent of FMR.
        Section 982.503(b)(3) provides that exception rents above 120 
    percent of the FMR will only be approved for the total area of a 
    county, PHA jurisdiction, or a U.S. census ``place'' (e.g., city, 
    borough, town, or village). Accordingly, the ``median rent method'' 
    which provides census tract data is not appropriate justification for 
    an exception rent applicable to areas larger than census tracts. 
    Likewise, the random digit dialing survey which provides MSA wide data 
    is not appropriate for an exception rent applicable to an area smaller 
    than a MSA.
        If more than one PHA operates in a jurisdiction, each PHA has 
    discretion in deciding whether they will use a uniform (or a different) 
    exception payment standard for each unit size and geographic area. The 
    final rule has not modified the interim rule requirement in Section 
    982.503 that any PHA with jurisdiction in the exception area may use 
    the HUD-approved exception payment standard amount.
        Comment: Exception payment standards: Persons with disabilities. 
    PHAs should be required to use 120% of FMR as the payment standard for 
    persons with disabilities who have already been granted an individual 
    exception rent. HUD also should require PHAs to use up to 120 percent 
    FMR as the payment standard when needed as a reasonable accommodation 
    for a tenant with disabilities.
        The rule needs to permit PHAs to approve exceptions to the 
    established payment standard to provide for reasonable accommodations 
    for persons with disabilities.
        HUD should inform PHAs to consider the high rental costs of 
    providing accessible units for people with disabilities. HUD should 
    issue guidance on exception rents and have an expedited and simple 
    process to grant such exceptions.
        HUD response. The technical correction to the interim rule 
    published on September 14, 1999 authorizes approval of exception 
    payment standards as a reasonable accommodation for a tenant with 
    disabilities. Section 982.503 was corrected to specify that a PHA may 
    establish a higher payment standard between 90 percent and 110 percent 
    of the FMR when required as a reasonable accommodation for a family 
    that includes a person with disabilities. In addition, HUD field 
    offices may approve a payment standard over 110 percent and up to 120 
    percent of the FMR for this purpose.
        Comment: Exception payment standards: equal opportunity concerns. 
    Section 982.503(c)(4) describes the condition that will permit HUD to 
    approve an exception rent. Among other factors, HUD will consider the 
    ability of families to find housing outside areas of high poverty. The 
    final rule should explicitly provide that PHAs have an obligation to 
    affirmatively further fair housing.
        The rule fails to make clear that the payment standard must comply 
    with the fair housing and civil rights laws, affirmatively further fair 
    housing, and be consistent with the applicable Consolidated Plan. The 
    rule should require PHAs to articulate the fair housing considerations 
    that went into setting the payment standard.
        HUD response. The statute specifically delegates to the PHA the 
    establishment of a payment standard between 90 to 110 percent of the 
    FMR. The PHA rationale for establishing the payment standard is 
    addressed in the PHA plan.
        HUD has retained the previous regulatory requirement that mandatory 
    justifications for approval of an exception payment standard include 
    that the higher amount is needed either (1) to help families find 
    housing outside of areas of high poverty, or (2) because families have 
    trouble finding housing for lease within the term of the voucher.
        Administration of all aspects of the merged program is subject to 
    civil rights laws and fair housing laws. Equal opportunity requirements 
    (including affirmatively furthering fair housing requirements) are 
    specified in Sec. 982.53.
        Comment: HUD review of PHA payment standard schedules. The final 
    rule should provide that HUD will initially monitor rent burdens of 
    PHAs utilizing payment standards at 90 percent of FMR and that a review 
    of payment standards should be triggered by a voucher failure rate 
    above 30 percent.
        The final rule should specify that the scope of HUD's payment 
    standard review includes mobility (i.e., the ability of families to 
    find housing outside of high poverty areas) and fair housing choice 
    (i.e., the ability of families to find housing outside areas of 
    minority concentration).
        The trigger for HUD review of the adequacy of the payment standard 
    should be when 30 (not 40) percent of the participants have high rent 
    burdens.
        HUD response. The statute provides that HUD shall monitor rent 
    burdens and review any payment standard that results in a significant 
    percentage of the families occupying units of any size paying more than 
    30 percent of adjusted income for rent. HUD intends to monitor rent 
    burdens on a case-by-case basis, PHA-by-PHA, in consideration of the 
    unique circumstances of different housing markets and PHA 
    administrative policies. As required by the statute, HUD's review of 
    the payment standard will be based on the rent burden of participants, 
    not the success rates of applicants.
        HUD has not revised the regulatory standard specified in the 
    interim rule for HUD review of the adequacy of the PHA payment 
    standard. However, HUD will reexamine the appropriateness of the 
    trigger for a HUD payment standard review after there is experience 
    with implementation of the housing choice voucher program.
    
    Section 982.504 Voucher tenancy: Payment standard for family in 
    restructured subsidized multifamily project.
    
        Comment: Future funding for restructured subsidized projects. 
    Funding for families converted from project-based assistance must be at 
    an adequate level in the future, using the same comparability method as 
    is used when the initial tenant-based contract is calculated.
        HUD response. HUD's policies for providing renewal funding for 
    expiring ACCs have been developed pursuant to negotiated rulemaking. 
    Actual costs are a factor in providing renewal funding.
        Comment: Payment standard for restructured subsidized projects. 
    This regulatory section is more appropriately part of HUD's regulations 
    in 24 CFR part 401. This section lacks clarity and consistency with the 
    rules on HUD's Mark-to-Market program.
        HUD response. The regulatory provision is consistent with HUD's 
    mark-to-market program. The regulations for the mark-to-market program 
    specifically provide that the amount of the voucher program rental 
    assistance will be as provided for in the voucher regulation.
    
    Section 982.508 Rent to owner: maximum rent at initial occupancy.
    
        Comment: Initial rent burden cap. The 40 percent maximum initial 
    rent burden requirement contradicts the intent of the Section 8 voucher 
    program,
    
    [[Page 56909]]
    
    which was designed to give families the freedom to find housing outside 
    of low income areas and to move closer to employment or educational 
    opportunities. It is not unusual for families to choose to pay more 
    than 40% of income in order to obtain good housing in non-impacted 
    areas. As an example, seniors often spend a higher percentage of their 
    income on housing in order to ensure their safety and security.
        The 40 percent maximum rent burden requirement might adversely 
    impact certain families, such as large families, seniors and persons 
    with disabilities requiring special amenities or services.
        In high-rent areas, such as New York, the 40 percent maximum rent 
    burden is unrealistic and will make it more difficult for families to 
    find safe and sanitary housing. A family may actually be prevented from 
    reducing its rent burden (for example from 55% of income to 45% of 
    income).
        The 40 percent rent burden limit should apply throughout the life 
    of the tenancy.
        HUD response. The maximum initial rent burden requirement is 
    statutory and cannot be waived by HUD. The 40 percent maximum rent 
    burden requirement applies when an applicant receives Section 8 tenant-
    based voucher assistance for the first time on or after October 1, 
    1999, and every time a participant (in the certificate or voucher 
    program) moves to different unit on or after October 1, 1999.
        After admission, the 40 percent maximum initial rent burden cap 
    does not apply to future changes of tenant income or changes in the 
    rent to owner amount if the participant stays in the same tenant-based 
    assistance unit. Further, the 40 percent initial rent burden cap does 
    not apply to families who will participate in the Section 8 tenant-
    based homeownership program (for which a proposed rule was published on 
    April 30, 1999, 64 FR 23488) since homeownership families do not pay 
    rent, or any of the project-based Section 8 programs.
        Comment: Effect of the minimum rent on the initial rent burden cap. 
    The part 5 regulation permits a PHA to set a minimum rent of up to $50. 
    The merger rule requires an initial rent burden cap of 40 percent of 
    the family's monthly adjusted income. These two regulations clash for 
    families who have very little or no income at the time of admission (or 
    at the time of a move while they are participants).
        HUD response. It is true that the initial 40 percent rent burden 
    cap will limit admission of any family whose total tenant payment is 
    based on a calculation other than 30 percent of adjusted income. For 
    example, elderly and disabled families with large medical expenses, 
    families with little or no income, welfare families in ``as paid'' 
    States, and families with undocumented alien family members most likely 
    will not be eligible to participate in the program because of this 40 
    percent rent burden cap. HUD is seeking a technical correction to the 
    40 percent rent burden legislative requirement to exempt families whose 
    total tenant payment is based on a minimum rent, welfare rent or 10 
    percent of gross income. In the meantime, a PHA should allow such 
    families that cannot find housing below the 40 percent rent burden cap 
    to retain their current position on the waiting list, in anticipation 
    of the requested legislation being enacted into law.
    
    Section 982.509 Rent to owner in subsidized projects
    
        Comment: Rent to owner in subsidized projects. The rule should 
    retain the provisions of former Sec. 982.512. This section has been 
    removed and should be retained.
        HUD response. The basic content of former Sec. 982.512 is now found 
    in Sec. 982.521, but with respect to certificates only.
    
    Section 982.521 Regular tenancy: Rent to owner in a subsidized project.
    
        Comment: HOME program rents. The HOME rent provisions should apply 
    equally to the certificate and the housing choice voucher program. The 
    previous clarifications with regard to rents in the HOME program have 
    been lost in this new rule.
        HUD response. The HOME program regulations specify how rents are 
    determined for HOME program units. Section 8 requirements do not over-
    ride the HOME rental limitations. It is not necessary to repeat HOME 
    rental requirements in the Section 8 rule.
    
    Section 982.552 PHA denial or termination of assistance for family.
    
        Comment: Mandatory termination of assistance for a tenant-based 
    program participant evicted for serious lease violations. A lease 
    violation should not be grounds for terminating assistance to a family. 
    There may be certain circumstances that merit leniency; for example, if 
    an abusive spouse abandons the family resulting in the family's 
    eviction for nonpayment of rent. The automatic termination provision 
    unfairly favors landlords, because it effectively deprives tenants from 
    the opportunity to contest a landlord's allegation of a serious lease 
    violation.
        Termination of assistance due to lease violations should remain a 
    discretionary ground for termination. This discretion is necessary to 
    avoid unjust and inappropriate terminations.
        HUD response. HUD has determined that the mandatory nature of this 
    provision is necessary in order to foster responsibility in the Section 
    8 program. Section 8 assistance is a scarce benefit. This provision 
    indicates that HUD will not reward serious lease violations, such as 
    behavior that threatens other residents or the safety or maintenance of 
    the premises, by providing continued Section 8 assistance in a 
    different unit. Furthermore, this policy will address the complaint 
    that some assisted families have kept their Section 8 benefits even 
    after they have caused extensive damage or incurred a large unpaid rent 
    debt. Additional efforts to hold families accountable for actions by 
    family members should increase owner participation and provide expanded 
    housing opportunities for low income families in nontraditional 
    neighborhoods. It is noted that termination of assistance is only 
    required for an eviction resulting from a serious lease violation (not 
    repeated lease violations). Therefore, the family will be protected by 
    the due process they receive through the judicial eviction process and, 
    additionally, the PHA must give the family the opportunity for an 
    informal hearing before assistance termination.
        Comment: Mandatory denial of admission if applicant is evicted from 
    federally assisted housing for serious lease violations. The provision 
    in Sec. 982.552(b) specifying denial of admission if the applicant is 
    evicted from federally assisted housing for serious lease violations 
    should be stated as a requirement and not a discretionary matter.
        HUD response. Section 982.552.(b)(1) is reserved and a new 
    paragraph (c)(1)(ii) is added to permit PHAs to deny admission or 
    terminate assistance if any member of the family has been evicted from 
    Federally assisted housing in the last five years. This is a change 
    from the interim rule, which prohibited admissions of families evicted 
    from Federally assisted housing for serious lease violations. HUD may 
    review this matter again as it finalizes the pending ``One Strike'' 
    regulation.
        Comment: Termination of assistance if participant fails to meet 
    welfare-to-work program obligations. HUD should remove 
    Sec. 982.552(c)(1)(x), which authorizes PHAs to terminate section 8 
    assistance if the family fails to fulfill its obligations under the 
    section 8 welfare-to-work voucher program. If HUD
    
    [[Page 56910]]
    
    decides to keep the provision, HUD should, at a minimum, modify the 
    rule to require a much higher threshold of improper behavior on the 
    part of the family before the family puts its housing assistance in 
    jeopardy.
        HUD response. The rule is revised to add requirements to the PHA 
    briefing of the family participating in the welfare-to-work voucher 
    program, and to the material provided in the family's information 
    packet (Sec. 982.301(a) and (b)). Specifically, the PHA must advise 
    (both verbally and in writing) the family of the local welfare-to-work 
    voucher program family obligations and that failure to meet these 
    obligations is grounds for PHA denial of admission or termination of 
    assistance.
        HUD is not mandating federal standards for family obligations under 
    the welfare-to-work voucher program, since there is local flexibility 
    in designing such obligations. The option for PHA termination of 
    assistance or denial of admission will permit PHAs to prevent program 
    abuse by families that willfully and persistently violate work-related 
    obligations under the welfare-to-work voucher program. Of course, the 
    PHA must give the family the opportunity for an informal review or 
    informal hearing before the PHA denies admission or terminates 
    assistance.
        Comment: HUD authority to regulate terminations of assistance. HUD 
    has exceeded Congressional authorization in mandating certain required 
    grounds for termination. Any required grounds for termination should be 
    limited to those which are mandated by Congress.
        HUD response. HUD has authority to define grounds for termination 
    of assistance and has done so in a comprehensive manner since 1984.
    
    Section 982.623 Manufactured home space rental: Housing assistance 
    payment, Section 888.111 Fair market rents for existing housing: 
    Applicability, and Section 888.113 Fair market rents for existing 
    housing: Methodology.
    
        Comment: Housing assistance payment calculation and FMR for 
    manufactured home space rentals. HUD should clarify that tenant-paid 
    utilities referenced in the regulations are directly related to the 
    space (such as water or sewer charges) and not utilities related to the 
    unit such as electricity or fuel.
        HUD response. The part 982 regulation refers to the utility 
    allowance for tenant-paid utilities. The PHA utility allowance for 
    manufactured home space rentals is not limited to the tenant-paid 
    utilities directly related to the space rental, such as water and sewer 
    expenses. Instead, the utility allowance covers all tenant-paid 
    utilities including electricity and gas for the manufactured home.
        Section 888.111 is revised primarily to delete references to the 
    certificate program and update the applicability language. Since the 
    maximum subsidy now includes utilities for the manufactured home and 
    the 1998 Act revised the subsidy formula, Sec. 888.113(e) is revised to 
    increase the FMR for a manufactured home space rental from 30 percent 
    to 40 percent of the FMR for a two-bedroom unit.
    
    Miscellaneous Comments
    
        Comment: Applicability of rule to the Shelter Plus Care and Housing 
    Opportunities for People with AIDS (HOPWA) programs. Clarification is 
    requested concerning whether the requirements of new Housing Choice 
    Voucher Program applicable to the tenant-based components of the 
    Shelter Plus Care and HOPWA regulations.
        HUD response. Although the regulations for the tenant-based 
    components of the Shelter Plus Care and HOPWA Programs are similar to 
    the Section 8 tenant-based regulations, a change to part 982 will not 
    automatically revise the Shelter Plus Care or HOPWA regulations unless 
    the part 982 regulations are incorporated by reference.
    
    III. Findings and Certifications
    
    Paperwork Reduction Act Statement
    
        The information collection requirements contained in this rule have 
    been approved by the Office of Management and Budget (OMB) in 
    accordance with the requirements of the Paperwork Reduction Act of 1995 
    (44 U.S.C. Chapter 35), and have been assigned OMB Control Number 2577-
    0226. An agency may not conduct or sponsor, and a person is not 
    required to respond to, a collection of information unless the 
    collection displays a valid control number.
    
    Environmental Impact
    
        A Finding of No Significant Impact with respect to the environment 
    was made on the May 14, 1999 interim rule in accordance with HUD 
    regulations in 24 CFR part 50 that implement section 102(2)(C) of the 
    National Environmental Policy Act of 1969 (42 U.S.C. 4223). The Finding 
    is available for public inspection between 7:30 a.m. and 5:30 p.m. 
    weekdays in the Office of the Rules Docket Clerk, Office of General 
    Counsel, Room 10276, Department of Housing and Urban Development, 451 
    Seventh Street, SW, Washington, DC.
    
    Unfunded Mandates Reform Act
    
        Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
    1531-1538) establishes requirements for Federal agencies to assess the 
    effects of their regulatory actions on State, local, and tribal 
    governments and the private sector. This final rule does not impose any 
    Federal mandates on any State, local, or tribal governments or the 
    private sector within the meaning of Unfunded Mandates Reform Act of 
    1995.
    
    Executive Order 12866
    
        The Office of Management and Budget (OMB) reviewed this final rule 
    under Executive Order 12866, Regulatory Planning and Review. OMB 
    determined that this final rule is a ``significant regulatory action,'' 
    as defined in section 3(f) of the Order (although not economically 
    significant, as provided in section 3(f)(1) of the Order). Any changes 
    made to the final rule subsequent to its submission to OMB are 
    identified in the docket file, which is available for public inspection 
    in the office of the Department's Rules Docket Clerk, Room 10276, 451 
    Seventh Street, SW, Washington, DC 20410-0500.
    
    Impact on Small Entities
    
        The Secretary, in accordance with the Regulatory Flexibility Act (5 
    U.S.C. 605(b)) (the RFA), has reviewed and approved this final rule and 
    in so doing certifies that this rule would not have a significant 
    economic impact on a substantial number of small entities. The final 
    rule is exclusively concerned with public housing agencies that 
    administer tenant-based housing assistance under Section 8 of the 
    United States Housing Act of 1937. Specifically, the final rule would 
    establish requirements governing tenant-based assistance for an 
    eligible family. The final regulatory amendments would not change the 
    amount of funding available under the Section 8 voucher program. 
    Accordingly, the economic impact of this rule will not be significant, 
    and it will not affect a substantial number of small entities.
    
    Executive Order 12612, Federalism
    
        The General Counsel, as the Designated Official for HUD under 
    section 6(a) of Executive Order 12612, Federalism, has determined that 
    this rule will not have federalism implications concerning the division 
    of local, State, and Federal responsibilities. No programmatic or 
    policy change under this rule will affect the relationship between the 
    Federal government and State and local governments.
    
    [[Page 56911]]
    
    Catalog of Domestic Assistance Numbers
    
        The Catalog of Domestic Assistance numbers for the programs 
    affected by this final rule are 14.146, 14.147, 14.850, 14.851, 14.852, 
    14.855, 14.857, and 15.141.
    
    List of Subjects
    
    24 CFR Part 888
    
        Grant programs--housing and community development, Rent subsidies.
    
    24 CFR Part 982
    
        Grant programs--housing and community development, Housing, Rent 
    subsidies.
    
        For the reasons discussed in the preamble, HUD adopts the 
    amendments made to 24 CFR parts 248, 791, and 792 in the interim rule 
    published on May 14, 1999 at 64 FR 26632 without change, and HUD amends 
    24 CFR parts 888 and 982 as follows:
    
    PART 888--SECTION 8 HOUSING ASSISTANCE PAYMENT PROGRAM--FAIR MARKET 
    RENTS AND CONTRACT RENT ANNUAL ADJUSTMENT FACTORS
    
        1. Revise the authority citation for part 888 to read as follows:
    
        Authority: 42 U.S.C. 1437f and 3535d.
    
        2. Revise Sec. 888.111 to read as follows:
    
    
    Sec. 888.111  Fair market rents for existing housing: Applicability.
    
        (a) The fair market rents (FMRs) for existing housing are 
    determined by HUD and are used in the Section 8 Housing Choice Voucher 
    Program (``voucher program'') (part 982 of this title), Section 8 
    project-based assistance programs and other programs requiring their 
    use. In the voucher program, the FMRs are used to determine payment 
    standard schedules. In the Section 8 project-based assistance programs, 
    the FMRs are used to determine the maximum initial rent (at the 
    beginning of the term of a housing assistance payments contract).
        (b) Fair market rent means the rent, including the cost of 
    utilities (except telephone), as established by HUD, pursuant to this 
    subpart, for units of varying sizes (by number of bedrooms), that must 
    be paid in the market area to rent privately owned, existing, decent, 
    safe and sanitary rental housing of modest (non-luxury) nature with 
    suitable amenities.
        3. In Sec. 888.113, revise paragraph (e) to read as follows:
    
    
    Sec. 888.113  Fair market rents for existing housing: Methodology.
    
    * * * * *
        (e) Manufactured home space rental. The FMR for a manufactured home 
    space rental (for the voucher program under part 982 of this title) is:
        (1) 40 percent of the FMR for a two bedroom unit, or
        (2) When approved by HUD on the basis of survey data submitted in 
    public comments, the 40th percentile of the rental distribution of 
    manufactured home spaces for the FMR area. HUD accepts public comments 
    requesting revision of the proposed manufactured home spaces FMRs for 
    areas where space rentals are thought to differ from 40 percent of the 
    FMR for a two-bedroom unit. To be considered for approval, the comments 
    must contain statistically valid survey data that show the 40th 
    percentile manufactured home space rent (including the cost of 
    utilities for the manufactured home) for the FMR area. Once approved, 
    the revised manufactured home space FMRs establish new base-year 
    estimates that will be updated annually using the same data used to 
    update the FMRs.
        4. Amend Sec. 982.4 as follows:
        a. In paragraph (b), add, in alphabetical order, definitions of the 
    terms ``family rent to owner'', ``utility reimbursement'', and 
    ``welfare-to-work (WTW) families'';
        b. In paragraph (b), in the definition of ``public housing agency'' 
    remove from the end of paragraph (1) of this definition the word ``or'' 
    and add in its place the word ``and'', and remove from paragraph (2)(i) 
    of this definition the word ``consortia'' and add in its place the word 
    ``consortium''; and
        c. Revise paragraph (a)(4) of Sec. 982.4 to read as follows:
    
    
    Sec. 982.4  Definitions.
    
        (a) * * *
        (4) Definitions concerning family income and rent. The terms 
    ``adjusted income,'' ``annual income,'' ``extremely low income 
    family,'' ``tenant rent,'' ``total tenant payment,'' ``utility 
    allowance,'' and ``utility reimbursement'' are defined in part 5, 
    subpart F of this title. The definitions of ``tenant rent'' and 
    ``utility reimbursement'' in part 5, subpart F of this title, apply to 
    the certificate program, but do not apply to the tenant-based voucher 
    program under part 982.
        (b) * * *
        Family rent to owner. In the voucher program, the portion of rent 
    to owner paid by the family. For calculation of family rent to owner, 
    see Sec. 982.515(b).
    * * * * *
        Utility reimbursement. In the voucher program, the portion of the 
    housing assistance payment which exceeds the amount of the rent to 
    owner. (See Sec. 982.514(b)). (For the certificate program, ``utility 
    reimbursement'' is defined in part 5, subpart F of this title.)
    * * * * *
        Welfare-to-work (WTW) families. Families assisted by a PHA with 
    voucher funding awarded to the PHA under the HUD welfare-to-work 
    voucher program (including any renewal of such WTW funding for the same 
    purpose).
        5. Amend Sec. 982.53 as follows:
        a. Revise paragraph (c) as set forth below;
        b. Amend paragraph (d) by revising the reference to ``State law'' 
    in the title to read ``State and local law''; and by revising both 
    references to ``State laws'' in the rule text to read ``State and local 
    laws''.
    
    
    Sec. 982.53  Equal opportunity requirements.
    
    * * * * *
        (c) Obligation to affirmatively further fair housing. The PHA shall 
    affirmatively further fair housing as required by Sec. 903.7(o) of this 
    title.
    * * * * *
        6. In Sec. 982.54, revise paragraph (b) to read as follows:
    
    
    Sec. 982.54  Administrative plan.
    
    * * * * *
        (b) The administrative plan must be in accordance with HUD 
    regulations and requirements. The administrative plan is a supporting 
    document to the PHA plan (part 903 of this title) and must be available 
    for public review. The PHA must revise the administrative plan if 
    needed to comply with HUD requirements.
    * * * * *
        7. Amend Sec. 982.201 as follows:
        a. Revise the section heading and paragraph (b)(2)(i) as set forth 
    below;
        b. Redesignate paragraphs (b)(2)(ii) through (iv) as paragraphs 
    (b)(2)(iv) through (vi) respectively.
        c. Add new paragraphs (b)(2)(ii) and (iii) as set forth below.
        d. Revise the first sentence of paragraph (b)(2)(vi), as 
    redesignated, to read as set forth below:
        e. Add new paragraph (b)(2)(vii) as set forth below.
        f. Revise the last sentence of paragraph (b)(4) to read as set 
    forth below:
    
    
    Sec. 982.201  Eligibility and targeting.
    
    * * * * *
        (b) * * *
        (2) * * *
        (i) Not less than 75 percent of the families admitted to a PHA's 
    tenant-
    
    [[Page 56912]]
    
    based voucher program during the PHA fiscal year from the PHA waiting 
    list shall be extremely low income families. Annual income of such 
    families shall be verified within the period described in paragraph (e) 
    of this section.
        (ii) A PHA may admit a lower percent of extremely low income 
    families during a PHA fiscal year (than otherwise required under 
    paragraph (b)(2)(i) of this section) if HUD approves the use of such 
    lower percent by the PHA, in accordance with the PHA plan, based on 
    HUD's determination that the following circumstances necessitate use of 
    such lower percent by the PHA:
        (A) The PHA has opened its waiting list for a reasonable time for 
    admission of extremely low income families residing in the same 
    metropolitan statistical area (MSA) or non-metropolitan county, both 
    inside and outside the PHA jurisdiction;
        (B) The PHA has provided full public notice of such opening to such 
    families, and has conducted outreach and marketing to such families, 
    including outreach and marketing to extremely low income families on 
    the Section 8 and public housing waiting lists of other PHAs with 
    jurisdiction in the same MSA or non-metropolitan county;
        (C) Notwithstanding such actions by the PHA (in accordance with 
    paragraphs (b)(2)(ii)(A) and (B) of this section), there are not enough 
    extremely low income families on the PHA's waiting list to fill 
    available slots in the program during any fiscal year for which use of 
    a lower percent is approved by HUD; and
        (D) Admission of the additional very low income families other than 
    extremely low income families to the PHA's tenant-based voucher program 
    will substantially address worst case housing needs as determined by 
    HUD.
        (iii) If approved by HUD, the admission of a portion of very low 
    income welfare-to-work (WTW) families that are not extremely low income 
    families may be disregarded in determining compliance with the PHA's 
    income-targeting obligations under paragraph (b)(2)(i) of this section. 
    HUD will grant such approval only if and to the extent that the PHA has 
    demonstrated to HUD's satisfaction that compliance with such targeting 
    obligations with respect to such portion of WTW families would 
    interfere with the objectives of the welfare-to-work voucher program. 
    If HUD grants such approval, admission of that portion of WTW families 
    is not counted in the base number of families admitted to a PHA's 
    tenant-based voucher program during the fiscal year for purposes of 
    income targeting.
    * * * * *
        (vi) If the jurisdictions of two or more PHAs that administer the 
    tenant-based voucher program cover an identical geographic area, such 
    PHAs may elect to be treated as a single PHA for purposes of targeting 
    under paragraph (b)(2)(i) of this section. * * *
        (vii) If a family initially leases a unit outside the PHA 
    jurisdiction under portability procedures at admission to the voucher 
    program on or after the merger date, such admission shall be counted 
    against the targeting obligation of the initial PHA (unless the 
    receiving PHA absorbs the portable family into the receiving PHA 
    voucher program from the point of admission).
    * * * * *
        (4) * * * At admission, the family may only use the voucher to rent 
    a unit in an area where the family is income eligible.
     * * * * *
        8. Amend Sec. 982.207 as follows:
        a. Add paragraph (a)(4) to read as set forth below;
        b. Revise paragraphs (b) and (d) to read as set forth below:
    
    
    Sec. 982.207  Waiting list: Local preferences in admission to program.
    
        (a) * * *
        (4) The PHA shall not deny a local preference, nor otherwise 
    exclude or penalize a family in admission to the program, solely 
    because the family resides in a public housing project. The PHA may 
    establish a preference for families residing in public housing who are 
    victims of a crime of violence (as defined in 18 U.S.C. 16).
        (b) Particular local preferences. (1) Residency requirements or 
    preferences. (i) Residency requirements are prohibited. Although a PHA 
    is not prohibited from adopting a residency preference, the PHA may 
    only adopt or implement residency preferences in accordance with non-
    discrimination and equal opportunity requirements listed at 
    Sec. 5.105(a) of this title.
        (ii) A residency preference is a preference for admission of 
    persons who reside in a specified geographic area (``residency 
    preference area''). A county or municipality may be used as a residency 
    preference area. An area smaller than a county or municipality may not 
    be used as a residency preference area.
        (iii) Any PHA residency preferences must be included in the 
    statement of PHA policies that govern eligibility, selection and 
    admission to the program, which is included in the PHA annual plan (or 
    supporting documents) pursuant to part 903 of this title. Such policies 
    must specify that use of a residency preference will not have the 
    purpose or effect of delaying or otherwise denying admission to the 
    program based on the race, color, ethnic origin, gender, religion, 
    disability, or age of any member of an applicant family.
        (iv) A residency preference must not be based on how long an 
    applicant has resided or worked in a residency preference area.
        (v) Applicants who are working or who have been notified that they 
    are hired to work in a residency preference area must be treated as 
    residents of the residency preference area. The PHA may treat graduates 
    of, or active participants in, education and training programs in a 
    residency preference area as residents of the residency preference area 
    if the education or training program is designed to prepare individuals 
    for the job market.
        (2) Preference for working families. The PHA may adopt a preference 
    for admission of working families (families where the head, spouse or 
    sole member is employed). However, an applicant shall be given the 
    benefit of the working family preference if the head and spouse, or 
    sole member is age 62 or older, or is a person with disabilities.
        (3) Preference for person with disabilities. The PHA may adopt a 
    preference for admission of families that include a person with 
    disabilities. However, the PHA may not adopt a preference for admission 
    of persons with a specific disability.
        (4) Preference for victims of domestic violence. The PHA should 
    consider whether to adopt a local preference for admission of families 
    that include victims of domestic violence.
        (5) Preference for single persons who are elderly, displaced, 
    homeless or a person with disabilities. The PHA may adopt a preference 
    for admission of single persons who are age 62 or older, displaced, 
    homeless, or a person with disabilities.
    * * * * *
        (d) Preference for higher-income families. The PHA must not select 
    families for admission to the program in an order different from the 
    order on the waiting list for the purpose of selecting higher income 
    families for admission to the program.
    * * * * *
        9. In Sec. 982.301, add new paragraph (a)(5) and revise paragraph 
    (b)(14) to read as follows:
    
    
    Sec. 982.301  Information when family is selected.
    
        (a) * * *
    
    [[Page 56913]]
    
        (5) In briefing a welfare-to-work family, the PHA must include 
    specification of any local obligations of a welfare-to-work family and 
    an explanation that failure to meet these obligations is grounds for 
    PHA denial of admission or termination of assistance.
    * * * * *
        (b) * * *
        (14) Family obligations under the program, including any 
    obligations of a welfare-to-work family.
    * * * * *
        10. In Sec. 982.303, revise paragraph (b) to read as follows:
    
    
    Sec. 982.303  Term of voucher.
    
    * * * * *
        (b) Extensions of term. (1) At its discretion, the PHA may grant a 
    family one or more extensions of the initial voucher term in accordance 
    with PHA policy as described in the PHA administrative plan. Any 
    extension of the term is granted by PHA notice to the family.
        (2) If the family needs and requests an extension of the initial 
    voucher term as a reasonable accommodation, in accordance with part 8 
    of this title, to make the program accessible to a family member who is 
    a person with disabilities, the PHA must extend the voucher term up to 
    the term reasonably required for that purpose.
    * * * * *
        11. Amend Sec. 982.305 as follows:
        a. In paragraph (a)(3), remove the word ``and''.
        b. In paragraph (a)(4), remove the period at the end and insert in 
    its place ``; and''.
        c. Add new paragraph (a)(5) to read as follows:
    
    
    Sec. 982.305  PHA approval of assisted tenancy.
    
        (a) * * *
        (5) At the time a family initially receives tenant-based assistance 
    for occupancy of a dwelling unit, the family share does not exceed 40 
    percent of the family's monthly adjusted income.
    * * * * *
        12. In Sec. 982.306, revise the section heading, amend the 
    introductory paragraph (c)(5) to add the words ``engaged in'' after the 
    words ``for activity'' and amend paragraph (d) to add a new final 
    sentence to that paragraph to read as follows:
    
    
    Sec. 982.306  PHA disapproval of owner.
    
    * * * * *
        (d) * * * This restriction against PHA approval of a unit only 
    applies at the time a family initially receives tenant-based assistance 
    for occupancy of a particular unit, but does not apply to PHA approval 
    of a new tenancy with continued tenant-based assistance in the same 
    unit.
    * * * * *
        13. In Sec. 982.308, revise paragraphs (a), (b), (d), and (f), and 
    add new paragraph (g), to read as follows:
    
    
    Sec. 982.308  Lease and tenancy.
    
        (a) Tenant's legal capacity. The tenant must have legal capacity to 
    enter a lease under State and local law. ``Legal capacity'' means that 
    the tenant is bound by the terms of the lease and may enforce the terms 
    of the lease against the owner.
        (b) Form of lease. (1) The tenant and the owner must enter a 
    written lease for the unit. The lease must be executed by the owner and 
    the tenant.
        (2) If the owner uses a standard lease form for rental to 
    unassisted tenants in the locality or the premises, the lease must be 
    in such standard form (plus the HUD-prescribed tenancy addendum). If 
    the owner does not use a standard lease form for rental to unassisted 
    tenants, the owner may use another form of lease, such as a PHA model 
    lease (including the HUD-prescribed tenancy addendum). The HAP contract 
    prescribed by HUD will contain the owner's certification that if the 
    owner uses a standard lease form for rental to unassisted tenants, the 
    lease is in such standard form.
    * * * * *
        (d) Required information. The lease must specify all of the 
    following:
        (1) The names of the owner and the tenant;
        (2) The unit rented (address, apartment number, and any other 
    information needed to identify the contract unit);
        (3) The term of the lease (initial term and any provisions for 
    renewal);
        (4) The amount of the monthly rent to owner; and
        (5) A specification of what utilities and appliances are to be 
    supplied by the owner, and what utilities and appliances are to be 
    supplied by the family.
    * * * * *
        (f) Tenancy addendum. (1) The HAP contract form required by HUD 
    shall include an addendum (the ``tenancy addendum''), that sets forth:
        (i) The tenancy requirements for the program (in accordance with 
    this section and Secs. 982.309 and 982.310); and
        (ii) The composition of the household as approved by the PHA 
    (family members and any PHA-approved live-in aide).
        (2) All provisions in the HUD-required tenancy addendum must be 
    added word-for-word to the owner's standard form lease that is used by 
    the owner for unassisted tenants. The tenant shall have the right to 
    enforce the tenancy addendum against the owner, and the terms of the 
    tenancy addendum shall prevail over any other provisions of the lease.
        (g) Changes in lease or rent. (1) If the tenant and the owner agree 
    to any changes in the lease, such changes must be in writing, and the 
    owner must immediately give the PHA a copy of such changes. The lease, 
    including any changes, must be in accordance with the requirements of 
    this section.
        (2) In the following cases, tenant-based assistance shall not be 
    continued unless the PHA has approved a new tenancy in accordance with 
    program requirements and has executed a new HAP contract with the 
    owner:
        (i) If there are any changes in lease requirements governing tenant 
    or owner responsibilities for utilities or appliances;
        (ii) If there are any changes in lease provisions governing the 
    term of the lease;
        (iii) If the family moves to a new unit, even if the unit is in the 
    same building or complex.
        (3) PHA approval of the tenancy, and execution of a new HAP 
    contract, are not required for changes in the lease other than as 
    specified in paragraph (g)(2) of this section.
        (4) The owner must notify the PHA of any changes in the amount of 
    the rent to owner at least sixty days before any such changes go into 
    effect, and any such changes shall be subject to rent reasonableness 
    requirements (see Sec. 982.503).
        14. In Sec. 982.310, paragraph (e)(1)(i) is revised to read as 
    follows:
    
    
    Sec. 982.310  Owner termination of tenancy.
    
    * * * * *
        (e) * * *
        (1) * * *
        (i) The owner must give the tenant a written notice that specifies 
    the grounds for termination of tenancy during the term of the lease. 
    The tenancy does not terminate before the owner has given this notice, 
    and the notice must be given at or before commencement of the eviction 
    action.
    * * * * *
        15. In Sec. 982.314, paragraph (c)(2)(i) is revised to read as 
    follows:
    
    
    Sec. 982.314  Move with continued tenant-based assistance.
    
    * * * * *
        (c) * * *
        (2) * * *
    
    [[Page 56914]]
    
        (i) Policies that prohibit any move by the family during the 
    initial lease term; and * * * * *
        16. Amend Sec. 982.355 as follows:
        a. Revise the section heading;
        b. In paragraph (c)(9), remove the phrase ``with Sec. 982.552'', 
    insert in its place the phrase ``with Secs. 982.552 and Sec. 982.553''; 
    and
        c. Add new paragraph (c)(10), to read as follows:
    
    
    Sec. 982.355  Portability: Administration by receiving PHA.
    
    * * * * *
        (c) * * *
        (10) When the family has a right to lease a unit in the receiving 
    PHA jurisdiction under portability procedures in accordance with 
    Sec. 982.353(b), the receiving PHA must provide assistance for the 
    family. Receiving PHA procedures and preferences for selection among 
    eligible applicants do not apply, and the receiving PHA waiting list is 
    not used. However, the receiving PHA may deny or terminate assistance 
    for family action or inaction in accordance with Secs. 982.552 and 
    982.553.
    * * * * *
    
    
    Sec. 982.405  [Amended]
    
        17. Amend Sec. 982.405 by removing paragraph (f).
        18. In Sec. 982. 451, revise paragraph (b)(5)(ii) to read as 
    follows:
    
    
    Sec. 982.451  Housing assistance payments contract.
    
    * * * * *
        (b) * * *
        (5) * * *
        (ii)(A) The HAP contract shall provide for penalties against the 
    PHA for late payment of housing assistance payments due to the owner if 
    all the following circumstances apply:
        (1) Such penalties are in accordance with generally accepted 
    practices and law, as applicable in the local housing market, governing 
    penalties for late payment of rent by a tenant;
        (2) It is the owner's practice to charge such penalties for 
    assisted and unassisted tenants; and
        (3) The owner also charges such penalties against the tenant for 
    late payment of family rent to owner.
        (B) The PHA is not obligated to pay any late payment penalty if HUD 
    determines that late payment by the PHA is due to factors beyond the 
    PHA's control. The PHA may add HAP contract provisions which define 
    when the housing assistance payment by the PHA is deemed received by 
    the owner (e.g., upon mailing by the PHA or actual receipt by the 
    owner).
    * * * * *
        19. Amend Sec. 982.453, by adding new paragraph (a)(6) to read as 
    follows:
    
    
    Sec. 982.453  Owner breach of contract.
    
        (a) * * *
        (6) If the owner has committed any violent criminal activity.
    * * * * *
        20. Amend Sec. 982.502 by revising the last sentence of paragraph
        (c) and adding paragraphs (c)(1) and (2) to read as follows:
    
    
    Sec. 982.502  Conversion to voucher program.
    
    * * * * *
        (c) * * * However, before the effective date of the second regular 
    reexamination of family income and composition on or after the merger 
    date, the payment standard for the family shall be the higher of:
        (1) The initial payment standard for the family at the beginning of 
    the HAP contract term; or
        (2) The payment standard for the family as calculated in accordance 
    with Sec. 982.505, except that Sec. 982.505(b)(2) shall not be 
    applicable.
    * * * * *
        21. Amend Sec. 982.503 by revising paragraph (d) and adding a new 
    paragraph (e) to read as follows:
    
    
    Sec. 982.503  Voucher tenancy: Payment standard amount and schedule.
    
    * * * * *
        (d) HUD approval of payment standard amount below the basic range. 
    HUD may consider a PHA request for approval to establish a payment 
    standard amount that is lower than the basic range. At HUD's sole 
    discretion, HUD may approve PHA establishment of a payment standard 
    lower than the basic range. In determining whether to approve the PHA 
    request, HUD will consider appropriate factors, including rent burden 
    of families assisted under the program. HUD will not approve a lower 
    payment standard if the family share for more than 40 percent of 
    participants in the PHA's voucher program exceeds 30 percent of 
    adjusted monthly income. Such determination may be based on the most 
    recent examinations of family income.
        (e) HUD review of PHA payment standard schedules. (1) HUD will 
    monitor rent burdens of families assisted in a PHA's voucher program. 
    HUD will review the PHA's payment standard for a particular unit size 
    if HUD finds that 40 percent or more of such families occupying units 
    of that unit size currently pay more than 30 percent of adjusted 
    monthly income as the family share. Such determination may be based on 
    the most recent examinations of family income.
        (2) After such review, HUD may, at its discretion, require the PHA 
    to modify payment standard amounts for any unit size on the PHA payment 
    standard schedule. HUD may require the PHA to establish an increased 
    payment standard amount within the basic range.
        22. Amend Sec. 982.505 as follows:
        a. Amend paragraph (b)(1) by removing the phrase ``payment 
    standard'' and inserting instead the phrase ``payment standard for the 
    family'';
        b. Revise paragraph (c)(1) introductory text;
        c. Amend paragraph (c)(3) by inserting ``first 24 months of the'' 
    after the words ``During the'';
        d. Redesignate paragraph (c)(4) as paragraph (c)(5); and
        e. Add new paragraph (c)(4) to read as follows:
    
    
    Sec. 982.505  Voucher tenancy: How to calculate housing assistance 
    payment.
    
    * * * * *
        (c) * * * (1) The payment standard for the family is the lower of:
    * * * * *
        (4) After the first 24 months of the HAP contract term, the payment 
    standard for a family is the payment standard as determined in 
    accordance with paragraphs (c)(1) and (c)(2) of this section, as 
    determined at the effective date of the most recent regular 
    reexamination of family income and composition after the beginning of 
    the HAP contract term.
    * * * * *
        23. Revise Sec. 982.508 to read as follows:
    
    
    Sec. 982.508  Maximum family share at initial occupancy.
    
        At the time the PHA approves a tenancy for initial occupancy of a 
    dwelling unit by a family with tenant-based assistance under the 
    program, the family share must not exceed 40 percent of the family's 
    adjusted monthly income. The determination of adjusted monthly income 
    must be based on verification information received by the PHA no 
    earlier than 60 days before the PHA issues a voucher to the family.
    
    
    Sec. 982.514  [Amended]
    
        24. In Sec. 982.514, amend paragraph (b) by inserting the 
    parenthetical ``(``utility reimbursement'')'' after the phrase ``the 
    balance of the housing assistance payment''.
        25. Amend Sec. 982.515 by revising paragraph (b) and adding a new 
    paragraph (c) to read as follows:
    
    [[Page 56915]]
    
    Sec. 982.515  Family share: Family responsibility.
    
    * * * * *
        (b) The family rent to owner is calculated by subtracting the 
    amount of the housing assistance payment to the owner from the rent to 
    owner.
        (c) The PHA may not use housing assistance payments or other 
    program funds (including any administrative fee reserve) to pay any 
    part of the family share, including the family rent to owner. Payment 
    of the whole family share is the responsibility of the family.
        26. Amend Sec. 982.516 by revising paragraph (a)(1) and by adding 
    new paragraph (g) to read as follows:
    
    
    Sec. 982.516  Family income and composition: Regular and interim 
    examinations.
    
        (a) * * *
        (1) PHA responsibility for reexamination and verification. The PHA 
    must conduct a reexamination of family income and composition at least 
    annually.
    * * * * *
        (g) Execution of release and consent. (1) As a condition of 
    admission to or continued assistance under the program, the PHA shall 
    require the family head, and such other family members as the PHA 
    designates, to execute a HUD-approved release and consent form 
    (including any release and consent as required under part 760 of this 
    title) authorizing any depository or private source of income, or any 
    Federal, State or local agency, to furnish or release to the PHA or HUD 
    such information as the PHA or HUD determines to be necessary.
        (2) The PHA and HUD must limit the use or disclosure of information 
    obtained from a family or from another source pursuant to this release 
    and consent to purposes directly in connection with administration of 
    the program.
        27. Amend Sec. 982.552 as follows:
        a. Revise the section heading and remove and reserve paragraph 
    (b)(1);
        b. Revise paragraphs (c)(1)(ii) and (c)(1)(x) to read as set forth 
    below;
        c. Remove paragraph (c)(3), and revise paragraph (c)(2) to read as 
    follows:
    
    
    Sec. 982.552  PHA denial or termination of assistance for family.
    
    * * * * *
        (c) * * *
        (1) * * *
        (ii) If any member of the family has been evicted from federally 
    assisted housing in the last five years;
    * * * * *
        (x) If a welfare-to-work (WTW) family fails to fulfill its 
    obligations under the welfare-to-work voucher program.
        (2) PHA discretion to consider circumstances. In determining 
    whether to deny admission or terminate assistance because of action or 
    failure to act by members of the family:
        (i) The PHA has discretion to consider all of the circumstances in 
    each case, including the seriousness of the case, the extent of 
    participation or culpability of individual family members, mitigating 
    circumstances related to the disability of a family member, and the 
    effects of denial or termination of assistance on other family members 
    who were not involved in the action or failure.
        (ii) The PHA may impose, as a condition of continued assistance for 
    other family members, a requirement that other family members who 
    participated in or were culpable for the action or failure will not 
    reside in the unit. The PHA may permit the other members of a 
    participant family to continue receiving assistance.
        (iii) If the family includes a person with disabilities, the PHA 
    decision concerning such action is subject to consideration of 
    reasonable accommodation in accordance with part 8 of this title.
    * * * * *
        28. Amend Sec. 982.623 by revising paragraph (b)(1) to read as 
    follows:
    
    
    Sec. 982.623  Manufactured home space rental: Housing assistance 
    payment.
    
    * * * * *
        (b) * * *
        (1) There is a separate fair market rent for a manufactured home 
    space. The FMR for a manufactured home space is determined in 
    accordance with Sec. 888.113(e) of this title. The FMR for a 
    manufactured home space is generally 40 percent of the published FMR 
    for a two-bedroom unit.
    * * * * *
    
        Dated: October 14, 1999.
    Harold Lucas,
    Assistant Secretary for Public and Indian Housing.
    [FR Doc. 99-27519 Filed 10-20-99; 8:45 am]
    BILLING CODE 4410-33-P
    
    
    

Document Information

Effective Date:
11/22/1999
Published:
10/21/1999
Department:
Housing and Urban Development Department
Entry Type:
Rule
Action:
Final rule.
Document Number:
99-27519
Dates:
November 22, 1999.
Pages:
56894-56915 (22 pages)
Docket Numbers:
Docket No. FR-4428-F-04
RINs:
2577-AB91: Section 8 Tenant Based Assistance: Statutory Merger (FR-4428)
RIN Links:
https://www.federalregister.gov/regulations/2577-AB91/section-8-tenant-based-assistance-statutory-merger-fr-4428-
PDF File:
99-27519.pdf
CFR: (29)
24 CFR 5.105(a)
24 CFR 982.353(b)
24 CFR 888.111
24 CFR 888.113
24 CFR 982.4
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