[Federal Register Volume 64, Number 32 (Thursday, February 18, 1999)]
[Notices]
[Pages 8192-8208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3731]
[[Page 8191]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
Quality Housing and Work Responsibility Act of 1998; Initial Guidance;
Notice
Federal Register / Vol. 64, No. 32 / Thursday, February 18, 1999 /
Notices
[[Page 8192]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4434-N-01]
Quality Housing and Work Responsibility Act of 1998; Initial
Guidance
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: On October 21, 1998, President Clinton signed into law the
Quality Housing and Work Responsibility Act of 1998. This new statute,
part of HUD's fiscal year 1999 HUD Appropriations Act, embodies many of
the reforms of the HUD 2020 Management Reform Plan that are directed at
revitalizing and improving HUD's public housing and Section 8
assistance programs. The purpose of this Notice is to advise the public
of those public and assisted housing statutory provisions that are
effective immediately and action that may or should be taken now. This
Notice also provides guidance on certain other provisions in the FY
1999 HUD Appropriations Act that impact public housing programs and
Section 8 assistance.
FOR FURTHER INFORMATION CONTACT: For further information regarding
public housing and the Section 8 certificate, voucher and moderate
rehabilitation programs contact Rod Solomon, Senior Director for Policy
and Legislation, Office of Public and Indian Housing, Department of
Housing and Urban Development, 451 Seventh Street, SW, Room 4116,
Washington, DC, 20410; telephone (202) 708-0713 (this is not a toll-
free number). For further information regarding other Section 8
programs contact Willie Spearmon, Director, Office of Multifamily
Business Products; telephone (202) 708-3000. Persons with hearing or
speech impairments may access that number via TTY by calling the
Federal Information Relay Service at (800) 877-8339. Program
specialists for more specific HUD program areas are listed on the HUD
web page at http://hudweb.hud.gov/offices.html.
SUPPLEMENTARY INFORMATION:
Introduction
On October 21, 1998, President Clinton signed into law HUD's fiscal
year (FY) 1999 Appropriations Act, which includes the Quality Housing
and Work Responsibility Act of 1998 (title V of the FY 1999 HUD
Appropriations Act) (QHWRA). The FY 1999 HUD Appropriations Act and the
QHWRA (Pub.L. 105-276, 112 Stat. 2461), together, enact landmark
measures that include transforming public housing, deconcentrating
poverty, creating additional housing assistance vouchers, merging the
Section 8 certificate and voucher programs, and enabling more families
to obtain FHA mortgages to become homeowners. Of particular importance
to HUD and its public housing and Section 8 program partners are the
reforms made by the QHWRA. The QHWRA makes significant and numerous
amendments to the United States Housing Act of 1937 (USHA). It is
important to note, however, that the USHA remains in effect except as
amended by the QHWRA.
The QHWRA constitutes a substantial overhaul of HUD's public
housing and Section 8 assistance programs. The QHWRA enacts into law
many of the reforms originally proposed in Secretary Andrew Cuomo's HUD
2020 Management Reform Plan, HUD's public housing bill and
Congressional bills that are directed at revitalizing and improving
HUD's public housing and Section 8 tenant-based programs. For public
housing, the HUD 2020 Management Reform Plan provides for consolidation
of public housing programs, decreased regulation of well-managed public
housing agencies (PHAs), higher performance standards for all PHAs, and
specific action to address PHAs with troubled management. The QHWRA
adopts these reforms, and enacts additional measures to protect access
to housing assistance for the poorest families, deconcentrate poverty
in public housing, support families making the transition from welfare
to work, and transform the public housing stock and the Section 8
tenant-based assistance programs.
The purposes of the QHWRA, as stated in section 502(b) of the
QHWRA, are as follows:
The purpose of this [the QHWRA] is to promote homes that are
affordable to low-income families in safe and healthy environments,
and thereby contribute to the supply of affordable housing, by--
(1) Deregulating and decontrolling public housing agencies,
thereby enabling them to perform as property and asset managers;
(2) Providing for more flexible use of Federal assistance to
public housing agencies, allowing the authorities to leverage and
combine assistance amounts with amounts obtained from other sources;
(3) Facilitating mixed income communities and decreasing
concentrations of poverty in public housing;
(4) Increasing accountability and rewarding effective management
of public housing agencies;
(5) Creating incentives and economic opportunities for residents
of dwelling units assisted by public housing agencies to work,
become self-sufficient, and transition out of public housing and
federally assisted dwelling units;
(6) Consolidating the voucher and certificate programs for
rental assistance under section 8 of the United States Housing Act
of 1937 into a single market-driven program that will assist in
making tenant-based rental assistance under such section more
successful at helping low-income families obtain affordable housing
and will increase housing choice for low-income families; and
(7) Remedying the problems of troubled public housing agencies
and replacing or revitalizing severely distressed public housing
projects.
Implementation of the QHWRA
The QHWRA makes several of its provisions effective upon enactment
(October 21, 1998). Other provisions of the QHWRA will take effect on
various dates between October 21, 1998, the enactment date of the
QHWRA, and October 1, 1999, the beginning of Federal fiscal year 2000.
(A Federal fiscal year runs from October 1st to September 30th). The
majority of the provisions of the QHWRA, however, will take effect on
October 1, 1999. Provisions of the QHWRA which are effective upon
enactment and which conflict with existing regulations prevail over the
regulations unless HUD has specifically stated otherwise, in this
Notice or elsewhere. In addition to specifying the dates by which
various statutory sections will take effect, the QHWRA also specifies
the method of implementation for many of its provisions. These methods
include notice and comment rulemaking (proposed rulemaking), interim
rulemaking, negotiated rulemaking, or issuance by direct notice or
Federal Register notice.
The purpose of this Notice is to advise HUD's public housing and
Section 8 program partners, as well as members of the public, of
certain provisions of the QHWRA and the FY 1999 HUD Appropriations Act
that are effective immediately and to provide guidance with respect to
actions that may now be taken or should be taken by PHAs and owners of
Section 8 assisted projects. This Notice does not provide a section-by-
section analysis of the QHWRA, nor does it provide guidance on all
sections. In this Notice, however, HUD has attempted to address those
key statutory sections that are effective now, and which HUD believed
would be helpful to PHAs and others to have early guidance. The
statutory sections that are effective now and for which HUD is issuing
initial guidance are covered in
[[Page 8193]]
Section I of this Notice. The majority of the statutory sections of the
QHWRA that are not addressed in this Notice (1) require rulemaking by
the QHWRA, (2) have been determined by HUD to be not immediately
effective, or (3) need elaboration or interpretation, and therefore
require rulemaking on the part of HUD or issuance of separate guidance
that addresses in detail the subject matter of a particular statutory
section. Section II of this Notice provides a list of those statutory
provisions for which the QHWRA requires rulemaking for implementation
or HUD has determined that rulemaking is necessary for implementation.
The guidance provided in this Notice, read together with reference
to the statutory language, will better assist the reader in
understanding (1) the changes that are being implemented in HUD's
public housing and Section 8 programs, (2) the prompt action that HUD
recommends be taken now or in the very near future, and (3) the reasons
for any deferred action with respect to certain statutory provisions.
Accordingly, the guidance in this Notice is complete only when read in
conjunction with the statutory language. The contents of the QHWRA are
available on the Internet by Thomas Legislative Information Service at
http://thomas.loc.gov or by contacting HUD's Office of Public and
Indian Housing or HUD's Office of Housing.
In addition to the guidance provided by this Notice, HUD staff, and
specifically the staff in the Office of Public and Indian Housing at
Headquarters and in the Field Offices, are ready to assist PHAs in
understanding the provisions of the QHWRA and with carrying out their
responsibilities under new provisions of the QHWRA. The Office of
Public and Indian Housing has established a section of its web site
that is devoted to providing additional information about the QHWRA and
includes a detailed summary of the new law (please see http://
www.hud.gov/pih/legis/titlev.html). HUD is committed to working closely
with its public housing and Section 8 partners to see that the changes
made by the QHWRA to HUD's public housing and Section 8 programs are
successfully implemented and these programs are significantly improved
with respect to the services and assistance they provide to low-income
families.
Other QHWRA Publications in Today's Federal Register
Elsewhere in today's Federal Register, HUD is publishing:
(1) One of the most significant rules required by the QHWRA--the
interim rule that would implement the Public Housing Agency Plan. This
rulemaking is required by section 511 of the QHWRA.
(2) An Advance Notice of Proposed Rulemaking on HUD's public
housing drug elimination program that solicits comments in advance of
rulemaking on HUD's proposal to provide for formula funding of HUD's
drug elimination grant funds.
(3) A notice on Section 8 renewals. Section 556 of the QHWRA added
a new provision, section 8(dd) to the U.S. Housing Act of 1937. Section
8(dd) specifies the method for calculating the amount of assistance to
be provided for renewal of all expiring tenant-based annual
contributions contracts. PHAs were advised of this methodology for
fiscal year 1999, by direct notice issued on December 31, 1998. Today's
Federal Register on Section 8 renewals publishes this notice for the
benefit of the public. The policy for Section 8 renewals for future
years will be the subject of negotiated rulemaking for the development
of final regulations.
Nondiscrimination Requirements
HUD's responsibilities and the responsibilities of its program
partners, in implementing new programs and program changes covered by
the QHWRA include (1) ensuring compliance with applicable
nondiscrimination requirements, such as the Fair Housing Act, title VI
of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act
of 1973, and Title II of the Americans with Disabilities Act, and (2)
affirmatively furthering fair housing. These responsibilities are
reiterated and reemphasized by amendments made by the QHWRA to the U.S.
Housing Act of 1937 or to HUD's programs, generally.
Section I. Statutory Provisions That Are Immediately Effective and
Accompanying Guidance
This section of the Notice lists those statutory provisions of both
the FY 1999 HUD Appropriations Act and the QHWRA that are immediately
effective and may require prompt action on the part of HUD's program
partners now or in the very near future. HUD notes that in many cases
the statutory provisions listed in this Section I may require
conforming rulemaking at a later date; that is, rulemaking that updates
HUD's regulations so that the regulations conform to statutory changes
to the programs.
A. FY 1999 HUD Appropriations Act
Elimination of Three-Month Delay on Reissuance of Section 8
Certificates and Vouchers. The FY 1999 HUD Appropriations Act does not
extend or continue the previous three month delay that was imposed on
the reissuance of certificates and vouchers.
Action Guidance for the Section 8 Certificate and Voucher Program:
Effective October 1, 1998, neither Section 8 certificates and vouchers
currently being held nor any further turnover of Section 8 certificates
and vouchers are subject to any statutory delay period on reissuance.
Elimination of the Shopping Incentive for Voucher Families Who
Remain in the Same Unit upon Initial Receipt of Assistance. Section 209
of the FY 1999 HUD Appropriations Act eliminates the ``shopping
incentive'' in the following situation involving admission to the
Section 8 voucher program by a family:
(1) Who is admitted to the voucher program after December 20, 1998;
(2) Who remains in the same unit or complex; and
(3) Where the applicable payment standard exceeds the gross rent
for the unit. (The applicable payment standards is the lower of the
payment standard for the ``family unit size'' or the payment standard
for the unit actually rented by the family.)
Therefore, the voucher program housing assistance payment for a
``stayer admission'' family who leases a unit with a gross rent (rent
to owner plus the utility allowance) below the applicable payment
standard for the family would be the amount by which the gross rent
exceeds the greater of 30% of the family's monthly adjusted income, 10%
of its monthly gross income, or the minimum rent.
Action Guidance for the Section 8 Voucher Program: This statutory
provision is effective for all voucher Housing Assistance Payment (HAP)
contracts for ``stayer admissions'' effective on or after December 20,
1998. HUD's Office of Public and Indian Housing (PIH) issued a notice
of December 18, 1998, Notice PIH 98-64, which provides additional
information on the statutory changes to the Section 8 voucher program.
Additionally, at PIH's website, PIH provides information about HUD's
Multifamily Tenant Characteristics System (MTCS). The January 1999
``MTCS News Flash'' provides information on calculating the rent for
voucher admissions and completing form HUD-50058. (Please see HUD's
website at http://www.hud.gov/pih/systems/mtcs/pihmtcs.html.) The
payment standard
[[Page 8194]]
on line 12(j) of form HUD-50058 for these stayer admissions is the
lower of (1) the PHA's payment standard for the family unit size, (2)
the PHA's payment standard for the unit actually rented by the family,
or (3) the unit's gross rent at the time of admission to the program.
Finally, it is noted that the section 209 amendment only applies
until HUD issues regulations that make effective the voucher and
certificate program merger legislation at section 545 of the QHWRA.
These changes will eliminate the shopping incentive for all voucher
families, not just for stayer admissions.
Rent Payments of Families with Enhanced Tenant-Based Assistance in
Conjunction with the Prepayment of Certain 236 and 221(d)(3) FHA
Mortgages. The FY 1999 HUD Appropriations Act, under the Housing
Certificate Fund heading, provides that during Federal fiscal year 1999
(October 1, 1998 through September 30, 1999), the minimum rent of
families who receive (or will receive) ``enhanced'' vouchers and whose
income ``declines to a significant extent'' must not exceed the greater
of:
(1) 30% of monthly adjusted income; or
(2) The percentage of monthly adjusted income paid by the family
for rent at the time of the mortgage prepayment.
This statutory rent limitation only applies to enhanced tenant-
based assistance that is provided to families located in projects where
owners prepaid certain federally assisted mortgages. HUD construes the
words ``significant extent'' to mean a decrease in income of fifteen
percent (15%) or more.
Action Guidance for the Section 8 Voucher Program. No action
required by the PHA at this time. HUD will issue further implementation
instructions on this statutory section.
Ineligibility of Individuals Convicted of Manufacturing or
Producing Methamphetamine (commonly referred to as ``speed'') for
Certain Housing Assistance. Section 428 of the FY 1999 HUD
Appropriations Act amends section 16 of the USHA to add a new
subsection (f) that makes individuals convicted of manufacturing or
producing methamphetamine (speed) ineligible for certain housing
assistance. New subsection (f) applies to public housing and the
certificate, voucher and moderate rehabilitation programs. PHAs must
have standards to:
(1) Permanently deny admission to public housing units and the
Section 8 certificate, voucher and moderate rehabilitation programs;
and
(2) Immediately and permanently terminate tenancy in public housing
or terminate Section 8 assistance, of persons convicted of
manufacturing or producing methamphetamine on the premises of the
assisted housing project in violation of any Federal or State law.
``Premises'' is defined as the building or complex in which the
dwelling unit is located, including common areas and grounds. Although
the statute does not define the term ``premises,'' HUD is defining the
term in this Notice to provide PHAs with guidance on what are the
parameters of ``premises.''
Action Guidance for the Public Housing Program. PHAs must revise
applicable occupancy policies and practices to reflect these standards.
Except to the extent this is already covered by lease provisions that
authorize eviction for drug-related criminal activity, public housing
leases must be modified to provide for eviction on these grounds.
Action Guidance for the Section 8 Certificate, Voucher and Moderate
Rehabilitation Programs. PHAs must revise their occupancy policies to
implement these admission and subsidy termination provisions.
B. Quality Housing and Work Responsibility Act of 1998 (QHWRA)
This notice does not address all sections of the QHWRA but strives
to provide as much guidance for as many sections of the QHWRA as
possible. The following lists the sections of the QHWRA that are
addressed in this Notice. The sections are either addressed in this
Section I or in Section II of this Notice.
Sec. 506. Definitions
Sec. 507. Minimum Rent.
Sec. 508. Determination of Adjusted Income and Median Income.
Sec. 509. Family Self-Sufficiency Program.
Sec. 511. PHA Plan.
Sec. 512. Community Service and Family Self-Sufficiency
Requirements.
Sec. 513. Income Targeting.
Sec. 514. Repeal of Federal Preferences.
Sec. 515. Joint Ventures and Consortia of Public Housing Agencies.
Sec. 519. Public Housing Capital and Operating Funds.
Sec. 520. Total Development Costs.
Sec. 522. Repeal of Modernization Fund.
Sec. 523. Family choice of rental payment.
Sec. 524. Occupancy by Police Officers and Over-Income Families.
Sec. 526. Pet Ownership in Public Housing.
Sec. 530. Housing Quality Requirements.
Sec. 531. Demolition and Disposition of Public Housing.
Sec. 533. Conversion of Public Housing to Vouchers; Repeal of Family
Investment Centers.
Sec. 535. Demolition, Site Revitalization, Replacement Housing, and
Tenant-Based Assistance grants for Projects.
Sec. 537. Required Conversion of Distressed Public Housing to
Tenant-Based Assistance.
Sec. 539. Mixed Finance Public Housing.
Sec. 545. Merger of Certificate and Voucher Programs.
Sec. 547. Administrative Fees.
Sec. 548. Law Enforcement and Security Personnel in Assisted
Housing.
Sec. 549. Advance Notice to Tenants of Expiration, Termination, or
Owner Nonrenewal of Assistance Contract.
Sec. 551. Funding and Allocation.
Sec. 554. Leasing to Voucher Holders.
Sec. 555. Homeownership (voucher) Option.
Sec. 556. Section 8 Renewals for Tenant-Based Certificate and
Vouchers Funds.
Sec. 559. Rulemaking and Implementation.
Sec. 561. Home rule flexible grant demonstration program.
Sec. 565. Expansion of powers for dealing with public housing
agencies in substantial default.
Sec. 575. Provisions applicable only to public housing and section 8
assistance.
Sec. 584. Use of American Products.
Sec. 586. Amendments to Public and Assisted Housing Drug Elimination
Act of 1990.
Sec. 592. Use of Assisted Housing by Aliens.
Sec. 597. Moderate rehabilitation program.
Sec. 599. Tenant participation in multifamily housing projects.
The following chart provides an overview of the above-listed
sections of the QHWRA, which have been designated by Congress as
immediately effective, and shows their applicability to HUD's public
housing program, Section 8 certificate and voucher program, Section 8
project-based certificate and moderate rehabilitation program, and
other Section 8 programs.
BILLING CODE 4210-33-P
[[Page 8195]]
[GRAPHIC] [TIFF OMITTED] TN18FE99.001
[[Page 8196]]
[GRAPHIC] [TIFF OMITTED] TN18FE99.002
[[Page 8197]]
[GRAPHIC] [TIFF OMITTED] TN18FE99.003
BILLING CODE 4210-33-C
Subtitle A of the QHWRA
Section 507--Minimum Rent for Public Housing and Section 8
Assistance. Section 507 amends section 3(a) of the USHA and follows the
previous statutory authority of requiring minimum rents of up to $50
for public housing and the Section 8 programs. In the public housing
program and the Section 8 programs other than vouchers, ``minimum
rent'' refers to minimum total tenant payment (TTP) and not a minimum
tenant rent (TR). For families subject to a utility allowance in these
programs, the families will be subject to a minimum total tenant
payment but could still be entitled to a utility reimbursement if the
utility allowance is greater than the TTP.
Action Guidance for Public Housing and Section 8 Certificate,
Voucher and Moderate Rehabilitation Programs. PHAs are not required to
take any action to maintain any current minimum rents of up to $50 for
the public housing, Section 8 certificate, voucher and moderate
rehabilitation programs.
Action Guidance for Other Section 8 Programs. The minimum rent of
$25 which HUD has imposed for other Section 8 project-based assistance
remains in place.
Exceptions to Minimum Rent. The QHWRA also establishes certain
exceptions to the minimum rent requirements for hardship circumstances.
Section 3(a)(3)(B) of the USHA generally states that financial hardship
includes the following situations (1) the family has lost eligibility
for is awaiting an eligibility determination for a Federal, State, or
local assistance program; (2) the family would be evicted as a result
of the imposition of the minimum rent requirement; (3) the income of
the family has decreased because of changed circumstance, including
loss of employment; (4) a death in the family has occurred; and (5)
other circumstances determined by the PHA or HUD.
The QHWRA provides that an exemption may not be provided if the
hardship is determined temporary. The QHWRA also provides, however,
that the PHA or owner may not evict the family for nonpayment of rent
on the basis of hardship if the hardship is determined by the PHA or
HUD to be temporary during the 90-day period beginning upon the date of
the family's request for the exemption. During this 90-day period, the
family must demonstrate that the financial hardship is of a long-term
basis. If the family demonstrates that the financial hardship is of a
long-term basis, the PHA or HUD shall retroactively exempt the family
from the applicability of the minimum rent requirement for the 90-day
period. (HUD's responsibilities will be carried out by owners as
appropriate.)
Action Guidance for the Public Housing Program. PHAs must revise
operating procedures to immediately carry out the new statutory minimum
rent hardship exception policies, and must immediately grant such
exceptions for families who qualify. The PHA can request reasonable
documentation of hardship under the circumstances. While HUD may issue
further guidance, HUD provides the following immediate guidance.
(1) As soon as practicable, the PHA must notify all families of
right to request a minimum rent hardship exemption under the law, and
that determinations are subject to the grievance procedure;
(2) If the family requests a hardship exemption, the minimum rent
requirement is immediately suspended.
(3) Suspension may be handled as follows: the minimum rent is
suspended until a determination is made whether:
[[Page 8198]]
(a) There is a hardship covered by the statute; and
(b) The hardship is temporary or long-term.
If the PHA determines that there is no hardship covered by the
statute, minimum rent is imposed (including backpayment for minimum
rent from time of suspension).
If the PHA determines that the hardship is temporary, the minimum
rent also is imposed (including backpayment for minimum rent from the
time of suspension) but the family cannot be evicted for nonpayment
during the 90-day period commencing on the date of the family's request
for exemption of minimum rent in excess of the tenant rent otherwise
payable. A reasonable repayment agreement must be offered for any such
rent not paid during that period. If the family thereafter demonstrates
that the financial hardship is of long-term duration, the PHA shall
retroactively exempt the family from the minimum rent requirement.
The new minimum rent policies are retroactive to the effective date
of the QHWRA, October 21, 1998. If a tenant in occupancy has qualified
for one of the mandatory hardship between October 21, 1998 and the date
of this Notice and was charged minimum rent, the PHA must make
arrangements to reimburse the tenant the overpayment by providing a
cash refund or otherwise offsetting future rent payments in an
equitable manner.
Action Guidance for Section 8 Certificate, Voucher and Moderate
Rehabilitation Programs. The entity responsible for determining rent
(the PHA or owner) must revise operating procedures to immediately
carry out the new statutory minimum rent hardship exception policies.
As soon as practicable, the entity responsible for determining rent
(the PHA or owner) must notify all families of the right to request
minimum rent hardship exceptions, and that the hardship determinations
are subject to applicable PHA informal hearing procedures. The entity
responsible for determining rent (the PHA or owner) can request
reasonable documentation of hardship under the circumstances. While HUD
may issue further guidance, HUD provides the following immediate
guidance.
If a family requests a minimum rent hardship exception, the entity
responsible for determining rent (the PHA or owner) must suspend
payment of the minimum rent beginning the month following the family's
hardship request. ``Suspension'' means that the entity responsible for
determining rent (the PHA or owner) must not charge the family a
minimum rent or, if applicable, discontinue charging the family a
minimum rent. During the minimum rent suspension period, the family
will not be required to pay a minimum rent and the housing assistance
payment will be increased accordingly.
The entity responsible for determining rent (the PHA or owner) must
determine promptly whether the hardship under the statute exists and
whether it is temporary or long term.
If the entity responsible for determining rent (the PHA or owner)
determines that there is no hardship covered by the statute, a minimum
rent is imposed retroactively to the time of suspension.
If the entity responsible for determining rent (the PHA or owner)
determines that the hardship is temporary, a minimum rent may not be
imposed for a period of 90 days from the date of the family's request.
At the end of the 90 day suspension period, a minimum rent is imposed
retroactively to the time of suspension. A reasonable repayment
agreement must be offered for any minimum rent backpayment by the
family. (Note that the statutory eviction prohibition is not applicable
since the entity responsible for determining rent (the PHA or owner)
will not charge a minimum rent for 90 days, and receipt of the contract
rent will not be impacted by the family's inability to pay the minimum
rent during the 90 day period.)
If the entity responsible for determining rent (the PHA or owner)
determines that the hardship is of long-term duration, the entity
responsible for determining rent (the PHA or owner) must exempt
(retroactively to the date of the family's request for a minimum rent
exception) the family from the payment of the minimum rent until the
hardship no longer exists.
The new minimum rent policies are retroactive to the effective date
of the QHWRA, October 21, 1998. If a tenant in occupancy has qualified
for one of the mandatory exceptions between October 21, 1998 and the
date of this Notice and was charged a minimum rent, the entity
responsible for determining rent (the PHA or owner) must make
arrangements to reimburse the tenant the overpayment by providing a
cash refund or otherwise offsetting future rent payment in an equitable
manner.
Section 508--Determination of Adjusted Income and Median Income in
the Public Housing and Section 8 Programs. Section 508 amends section
3(b)(5) of the USHA and as amended provides the manner in which
adjusted income and median income will be determined, and provides
certain mandatory exclusions.
Action Guidance for the Public Housing Program. Section 508
generally is not yet effective, except that the establishment of
separate public housing and Section 8 income units in Rockland County,
New York, is effective immediately. HUD's Notice PD&R 98-04, issued
November 23, 1998, implemented this provision for Rockland County, New
York, and provided the relevant income limits. (This information may
also be found under ``income limits'' at http//www.huduser.org/data/
factors.html.)
HUD will provide implementation instructions for the QHWRA's
revised mandatory earned income disregard for public housing residents,
effective October 1, 1999, at a later date. The current 18-month
disregard for earned income of public housing residents in training
programs (see 24 CFR 5.607(c)(8)(i) and (v) and (c)(13)) continues in
effect for families who:
(1) Enroll in such programs before October 1, 1999; and
(2) Continue to meet the requirements for receiving the income
disregard.
Action Guidance for Section 8 programs. The income limits
referenced in the Action Guidance for Public Housing for Rockland
County, New York, are applicable to the Section 8 programs.
Section 509--Family Self-Sufficiency (FSS) Program in the Public
Housing and Tenant-Based Section 8 Programs. Section 509 amends section
23 of the USHA and, as amended, allows PHAs to reduce their family
self-sufficiency obligation (mandatory minimum program size, prior to
any reductions previously approved by HUD) by one family for each FSS
graduate fulfilling the family's contract of participation obligations
on or after October 21, 1998. Additionally, the QHWRA provides that the
minimum FSS program size will not increase when a PHA receives
incremental Section 8 funding and public housing units on or after
October 21, 1998. The QHWRA continues the PHA's option to operate
programs larger than the minimum FSS program size. The QHWRA also
continues HUD's ability to authorize a reduced minimum program size.
HUD is currently authorized to permit a PHA to operate a public housing
or Section 8 FSS program that is smaller than the minimum program size
if the PHA provides to HUD a certification that the operation of an FSS
program of the minimum size is not feasible because of local
circumstances (see 24 CFR 984.105(d)).
[[Page 8199]]
These provisions are effective upon enactment of the QHWRA (October
21, 1998).
Action Guidance for the Public Housing Program. The FSS provisions
are effective upon enactment of the QHWRA (October 21, 1998). For
purposes of the FSS minimum program size, ``receipt of incremental
public housing units'' means reservation of funds to acquire or
construct additional public housing units on or after October 21, 1998.
The HUD Field Office will advise PHAs of these reservation dates.
Action Guidance for the Section 8 Certificate and Voucher Programs.
The FSS provisions are effective upon enactment of the QHWRA (October
21, 1998). For purposes of the FSS minimum program size, ``receipt of
incremental Section 8 funding'' means reservation of funds for the
Section 8 certificate or voucher program (other than renewal funding
and other funding excluded by HUD Notice PIH 97-45, issued September 3,
1997) on or after October 21, 1998. The HUD Field Office will advise
PHAs of these reservation dates.
Section 512--Public Housing Community Service and Public Housing
and Tenant-Based Section 8 Family Self-Sufficiency Requirements. Public
Housing Community Service Requirements. Section 512 amends section 12
of the USHA and adds new subsections (c) through (g). Subsection (c) of
section 12 of the U.S. Housing Act of 1937 (USHA) imposes a requirement
on adult public housing residents, with important exceptions, to
participate for at least 8 hours per month in community service or
economic self-sufficiency program. In some circumstances, PHAs must
refuse to renew a resident's 12-month lease for failure to satisfy this
requirement.
Action Guidance for the Public Housing Program. Subsection (c) is
not yet effective, but will be effective October 1, 1999. HUD will
issue implementing instructions and guidance before October 1, 1999.
PHAs should begin considering how community service requirements may be
fulfilled by residents, including the potential use of qualified
resident councils or other qualified entities either as agents for
program administration or providers of opportunities for fulfilling the
community service requirement. The provision requiring 1-year public
housing leases, automatically renewable except for failure to comply
with community service requirements, also is not yet effective. HUD
notes, however, that such leases may be self-renewing without an annual
signing process, as long as the leases are terminable for failure to
meet the community service obligation under the circumstances defined
in the statute. Again, HUD will issue additional guidance at a later
date, as well as amend HUD's applicable regulations.
Treatment of Income Changes Resulting from Welfare Program
Requirements. New subsection 12(d), Treatment of Income Changes
Resulting From Welfare Program Requirements, is effective immediately,
for public housing residents and tenant-based Section 8 certificate and
voucher families whose welfare assistance is reduced specifically
because of fraud or failure to participate in an economic self-
sufficiency program or comply with a work activities requirement. Such
families must not have their public housing rent or Section 8
contribution to rent reduced based on the benefit reduction. The
prohibition on reduction of public housing rent or Section 8 tenant-
based assistance contribution is applicable only if the welfare
reduction is neither the result of the expiration of a lifetime time
limit on receiving benefits, nor a situation where the family has
complied with welfare program requirements but cannot obtain employment
(e.g., the family has complied, but loses welfare because of a
durational time limit such as a cap on welfare benefits for a period of
no more than two years in a five year period). Any PHA receiving a
request for income reexamination and rent reduction predicated on a
reduction in tenant income from welfare may deny the request only after
obtaining written verification from the welfare agency that the
family's benefits have been reduced because of noncompliance with
economic self-sufficiency program or work activities requirements or
because of fraud.
Action Guidance for the Public Housing Program. Although this
subsection (d) is effective immediately, PHAs should note that this
subsection is subject to some procedural limitations. PHAs must first
take the necessary procedural steps so that this rent policy change
will be binding on affected families, and PHAs must take these steps
expeditiously. Section 12(e) requires incorporation into leases of the
provisions of this subsection (d). The PHA also must notify affected
residents that they have the right to administrative review through the
PHA's grievance procedure.
PHAs are to make best efforts to enter into cooperation agreements
with local welfare agencies, both to obtain the necessary information
regarding welfare sanctions and to target economic self-sufficiency and
other appropriate services to public housing residents and Section 8
tenant-based certificate and voucher families. PHAs are encouraged to
pursue the targeting of such services aggressively in these cooperation
agreements, and are reminded that the QHWRA amends the public housing
management assessment program to include the extent to which the public
housing agency coordinates, promotes or provides effective programs and
activities to promote the economic self-sufficiency of public housing
residents (effective in fiscal year 2000).
Action Guidance for Section 8 Tenant-Based Certificate and Voucher
Programs. The guidance provided in the Action Guidance for Public
Housing pertaining to the policies on cooperation agreements is
applicable to the Section 8 tenant-based certificate and voucher
programs. Rather than incorporating the provisions of subsection (d)
into leases, PHAs must revise operating procedures as needed to
effectuate this provision. The PHA also must notify affected families
that they may use the informal hearing procedure under 24 CFR
982.555(a)(i).
Section 513--Public Housing and Section 8 Income Targeting. Section
513 amends section 16 of the USHA to establish, among other things,
public housing deconcentration requirements, annual requirements for
admitting families with incomes below thirty percent (30%) of area
median income, and related income targeting requirements.
Prohibition of Concentration of Low-Income Families in Public
Housing (Deconcentration of Poverty). The QHWRA requires PHAs to submit
with their annual public housing agency plans an admissions policy
designed to provide for deconcentration of poverty and income mixing,
by bringing higher income tenants into lower income public housing
projects and bringing lower income tenants into higher income public
housing projects.
Action Guidance for the Public Housing Program. Through this Notice
and consistent with the immediate effective date of this section of the
USHA, HUD is requiring PHAs to begin implementing this public housing
deconcentration policy. PHAs must immediately develop this policy.
Within 120 days of this Notice or a longer time period if HUD grants an
extension for good cause, the PHA's Board of Commissioners must pass a
resolution indicating that any necessary changes have been made in the
PHA's admissions policy. PHAs must keep this Board resolution on file
for possible HUD review. While PHAs must take any necessary actions now
to have an
[[Page 8200]]
appropriate policy in place, the admissions policy to promote
deconcentration of poverty also will be part of the PHA plan process
from its inception. Material describing the deconcentration
requirements more fully is included in the PHA plan interim rule
published elsewhere in today's Federal Register.
Income Targeting Requirements
(1) Public housing. With respect to income targeting, the general
rule is that in each fiscal year, at least 40 percent of families
admitted to public housing by a PHA must have incomes that do not
exceed 30 percent of area median. The ``fungibility'' provisions allow
a PHA to admit less than 40 percent of families with incomes below 30
percent of median (``very poor families'') in a fiscal year, to the
extent the PHA has provided more than seventy-five (75) percent of
newly available vouchers and certificates (including those resulting
from turnover) to very poor families. Thus, the provision is called
``fungibility'' because to a limited extent, it makes the targeting
requirements in public housing and tenant-based assistance
interchangeable or fungible. There are three further limitations on a
PHA's use of fungibility. Fungibility ``credits'' only can be used to
drop the annual requirement for housing very poor families below 40
percent of newly available units in public housing, by the lowest of
the following amounts:
(a) The number of units equivalent to ten (10) percent of the
number of newly available vouchers and certificates in that fiscal
year; or
(b) The number of units that (i) are in projects located in census
tracts having a poverty rate of 30% or more, and (ii) are made
available for occupancy by and actually occupied in that year by very
poor families; or
(c) The number of units that cause the PHA's overall requirement
for housing very poor families to drop to 30% of its newly available
units.
Action Guidance for the Public Housing Program. PHAs should
promptly make any needed adjustments in admissions policies, subject to
the usual procedures, to ensure compliance.
The administration of income targeting should be facilitated if the
requirements are applied on the same annual basis as the fiscal year of
the PHA's public housing or tenant-based assistance program. To allow
application of the requirements in this manner, the income targeting
requirements will be applied on a pro rata basis to the remainder of
the PHA's current fiscal year starting with April 1, 1999 to the end of
the current fiscal year, and thereafter by applicable fiscal year.
Alternatively, a PHA may apply the targeting initially to the period
starting April 1, 1999 and ending at the conclusion of the next PHA
fiscal year.
(2) Section 8 tenant-based assistance. With respect to Section 8
tenant-based assistance, for a PHA in each fiscal year, not less than
75% of its new admissions to the program must have incomes at or below
30% of the area median income. The income limits based on 30 percent of
median are listed in HUD's 1999 income limits publication which is
posted on the internet at http//www.huduser.org/data/factors.html.
Other admissions must comply with eligibility limits under the current
regulations (24 CFR 982.201(b)) and law.
Action Guidance for the Section 8 Tenant-Based Certificate and
Voucher Programs. The income targeting applies to admissions in each
PHA fiscal year. PHAs may set the initial period in the same manner as
is provided above for public housing.
If an award of vouchers to prevent or ameliorate the effects of
displacement (for instance, tenant-based assistance provided for a
preservation prepayment or when an owner opts out of the Section 8
program) would interfere with a PHA's compliance with the income
targeting requirements, the PHA may request that HUD approve a
different targeting requirement (which may take effect upon issuance of
the tenant-based assistance in question) and the PHA then may include
the HUD approved requirement in the PHA's next annual plan.
(3) Section 8 project-based assistance. For Section 8 project-based
assistance (including moderate rehabilitation and project-based
certificates), not less than 40% of new admissions to a specific
project must have incomes at or below 30% of the area median income.
Other admissions to a specific project must be at or below 80% of the
area median, with any HUD-instituted modifications for relatively low
income or high income areas as discussed above. In addition, the
previously existing nationwide targeting requirements for families with
incomes at or below 50% of area median income in pre-1981 and post-1981
projects continue to be applicable (see regulatory citation below).
Income targeting requirements do not apply to project-based assistance
made available to prevent or ameliorate the effects of displacement.
Initial Guidance for Section 8 Project-Based Assistance. The
following regulations will continue to apply:
(1) Income limits for admission (24 CFR 5.607);
(2) Anti-skipping for the purpose of selecting a relatively higher-
income family (24 CFR 5.410(e)(2)); and
(3) Ability to use worker preferences subject to the antiskipping
requirement (24 CFR 5.415(b)(1); provisions of 24 CFR 5.415(b)(1) that
reference to federal preferences may be disregarded since federal
preferences have been repealed).
In addition, owners (other than project-based certificate and
moderate rehabilitation owners) will have to modify their tenant
selection plans to conform to statutory and program requirements.
Owners' tenant selection plans should include how they will apply the
new income targeting requirements to ensure that not less than 40
percent of the units which become available each year will be leased to
families with income that does not exceed 30 percent of the median
income at the time they commence their lease.
HUD will be issuing additional guidance in a notice in the near
future.
Section 514--Repeal of Federal Preferences in the Public Housing
and Section 8 Programs. With respect to preferences, the QHWRA
provides:
(1) Permanent repeal of Federal preferences;
(2) Permanent repeal of the right of certain public housing
residents to retain federal preference status on the Section 8
certificate and voucher waiting list;
(3) Authorization for local preferences; and
(4) Elimination of the previous statutory preference for the
admission of elderly, disabled and displaced persons before other
single persons in the public housing and Section 8 programs
(accomplished by section 506 rather than section 514).
Action Guidance for Public Housing, Section 8 Certificate and
Voucher and Moderate Rehabilitation Programs. The QHWRA permanently
repeals federal preference requirements for the public housing and
Section 8 programs. PHAs are no longer required to select families from
their waiting lists using the federal preferences or provide the
singles preference. (PHAs may opt to continue the singles preference
and one or more of the former federal preferences.) HUD urges PHAs to
consider adopting admission preferences for victims of domestic
violence.
PHAs should promptly make any needed adjustments in admissions
policies, subject to the usual procedures to ensure that the
preferences they use will result in compliance with public housing
deconcentration and public
[[Page 8201]]
housing and Section 8 income targeting requirements.
Section 514 also provides that local preferences may be established
taking into account generally accepted data sources, including any
information obtained during the opportunity for public comment on the
PHA plan and in the development of the local comprehensive housing
affordability strategy (consolidated plan). Since to date there has not
been a PHA plan process, full compliance with this statutory section is
not possible with respect to local preferences that currently exist in
these programs. Because there is no indication in the QHWRA that
Congress intended to disrupt existing local preferences, existing local
preferences may remain without further immediate PHA action or may be
altered in the manner authorized before enactment of the QHWRA. Both
existing and proposed local preferences, however, must comply with the
new requirements for establishing preferences and the PHA plan process
that will commence in 1999. The QHWRA permanently eliminated in the
public housing and the Section 8 programs, the previous statutory
preference for the admission of elderly, disabled and displaced persons
before other single persons. PHAs may revise occupancy policies to
reflect this change.
Irrespective of these statutory changes, other public housing
selection preference regulations which are unrelated to these changes
continue to apply. In addition, the following regulations remain
applicable to tenant-based assistance: 24 CFR 982.204(d) prohibiting
the order of admission from the tenant-based waiting list based on
family or unit size; the prohibited admissions criteria in 24 CFR
982.202(b); and approval of any residency preferences in accordance
with 24 CFR 982.208 and 24 CFR 5.410(h). The nondiscrimination
requirement for public housing residents with respect to admissions to
tenant-based assistance also continues to apply (Section 8(s) of the
USHA).
Action Guidance for Other Section 8 Project-Based Programs. The
QHWRA permanently repeals federal preference requirements for Section 8
newly constructed or substantially rehabilitated housing and other
project-based Section 8 programs. Owners are no longer required to
select families from their waiting lists using the federal preferences
or provide the singles preference. Owners should make any changes
needed to comply with income targeting requirements. Any changes in an
owner's tenant selection system must be consistent with the Affirmative
Fair Housing Marketing Plan approved by HUD. HUD's multifamily housing
occupancy handbook, 4350.3, specifies that the tenant selection system
must consist of a written plan, be equitable and guard against
discrimination. Where an owner elects to make changes in the tenant
selection system, HUD strongly encourages the owner to provide
appropriate notification of implementation to applicants on the waiting
lists and other interested persons (e.g., by newspaper publication or
notice to applicants).
Subtitle B of the QHWRA--Public Housing
Section 519--Public Housing Capital and Operating Funds. Section
519 amends section 9 of the USHA to provide for the establishment of
capital and operating funds with new formulas. Only a few parts of this
statutory section are effective immediately. They are as follows:
Use of capital or operating funds by small PHAs. New subsection
9(g)(2) of the USHA, added by section 519 of the QHWRA, allows a PHA
with less than 250 dwelling units (small PHAs), to use capital or
operating funds for any eligible capital or operating expense if: (1)
the PHA is not designated troubled; and (2) the PHA operates its public
housing in a safe, clean and healthy condition, as determined by HUD.
Until enactment of the QHWRA, these PHAs have been receiving capital
funds for specific purposes under the competitive Comprehensive
Improvement Assistance Program (CIAP). New subsection 9(a) of the USHA,
however, provides for a merger of remaining CIAP funds into the Capital
Fund on October 1, 1999.
With the enactment of new subsection 9(g)(2) and the pending merger
of funds, HUD construes Congressional intent to be that small, non-
troubled PHAs may immediately use any CIAP or operating funds for
capital or operating purposes. Because CIAP funds were obtained
competitively based on representations of need, HUD would expect PHAs'
current use of CIAP funds for operating purposes to be judicious; for
example, to address an emergency need.
HUD reserves the right to determine, through its independent
inspections or other monitoring, that a PHA is ineligible for the
flexible use of capital and operating funds of subsection 9(g)(2) of
the USHA because the PHA is not operating and maintaining its public
housing in a safe, clean and healthy condition. HUD may notify a PHA of
this determination. If a small PHA does not receive this notification
from HUD, the PHA may use the flexibility of subsection 9(g)(2) unless
the PHA's last public housing management assistance program (PHMAP)
assessment contained a grade lower than ``E'' on Indicator #5,
Component #1.
Action Guidance. PHAs using this flexible funding authority must
retain the necessary accounting to indicate the sources and uses of all
funds, including their origination as capital (CIAP) or operating funds
(i.e., their accounting for capital funds must indicate any amount of
funds used for operating expenses). PHAs would continue to draw down
CIAP funds under the LOCCS against the program grant authorized by the
applicable annual contributions contract (ACC) amendment. PHAs also may
draw down capital funds only under the current federal rules that
require projected expenditure of the funds within three days. PHAs,
therefore, cannot draw down capital funds directly to establish or
augment reserves, or indirectly for this purpose by retaining larger
than a reasonably sized operating reserve.
Penalties for slow obligation or expenditure of capital funds. New
subsection 9(j) of the USHA provides for penalties for slow obligation
or expenditure of capital funds. While this subsection is generally not
yet effective, the QHWRA states that capital funds made available to a
PHA for fiscal year 1997 or prior fiscal years must be obligated by the
PHA not later than September 30, 1999.
The QHWRA also states that a PHA shall spend any assistance
received under section 9 of the USHA not later than 4 years (plus the
period of any extension approved by the Secretary in accordance with
new section 9(j)(2)) after the date on which funds become available to
the agency for obligation.
Action Guidance. PHAs must take all necessary steps to meet the
September 30, 1999 deadline.
Authority to NYCHA to Expend Funds for Asthma Reduction. New
subsection 9(n)(2) and (3) of the USHA allow the New York City Housing
Authority to expend, from funds otherwise available to it, up to
$500,000 annually for asthma reduction and $600,000 annually for a
comprehensive plan to address the need for services for elderly
residents, commencing in FY 1999.
Ceiling Rents. Subsection 519(d) of the QHWRA provides transitional
authority to implement ceiling rents, before the implementation of the
new funding formulas.
Action Guidance. During this transition period, PHAs may establish
or retain ceiling rents allowed under all preexisting laws, including
annual
[[Page 8202]]
appropriations laws and the Balanced Budget Downpayment Act, I. In
addition, PHAs may adopt and apply ceiling rents that reflect the
reasonable market value of the housing, but are not less than 75% of
the monthly cost to operate the PHA's housing (100% for housing
predominantly for elderly or disabled families, or both) and may
include the costs of monthly deposit for a replacement reserve. HUD
will define ``predominantly'' as at least 80 percent occupancy by such
families. The latter authorization may be used immediately and without
HUD approval, provided that PHAs keep reasonable documentation that the
ceiling rents reflect reasonable market value and are not lower than
the statutorily-required floors.
Transitional Funding Before Implementation of New Capital and
Operating Formulas. Subsection 519(e) provides requirements for
transitional funding until the new capital and operating formulas are
implemented. For FY 1999, HUD will provide funds to PHAs in accordance
with prior law (unless HUD provides further notification regarding the
distribution of capital funds). With respect to operating subsidy, this
subsection specifically provides that ceiling rents and the optional
earned income disregards authorized by the past several appropriations
acts continue to be treated as provided under prior law.
Action Guidance. In summary, prior law holds PHAs financially
harmless for adoption of authorized ceiling rents, but allows the
optional earned income disregards at PHAs' initial financial risk. This
treatment will be continued until a new formula is adopted.
Adoption of Rental Amount Other than Ceiling Rent or Optional
Earned Income Disregard. Subsection 519(e) also states that during the
transition period, if a PHA adopts a rental amount other than a ceiling
rent or an optional earned income disregard authorized by the prior
appropriations laws, which is less than the amount otherwise required
to be charged (typically 30% of a family's adjusted income), the
formula shall not be adjusted to compensate the PHA for this rent
reduction.
Action Guidance. HUD interprets this provision to authorize PHAs to
begin immediately, subject to appropriate local process, to charge
lower amounts than those otherwise required (or allowed under ceiling
rent or previously existing optional earned income disregard authority;
see the immediately preceding paragraph), as authorized by section 523
of the QHWRA (typically, ``up to'' 30% of a family's adjusted income;
new section 3(a)(2)(B)(ii) of the USHA). PHAs may take this step, prior
to adoption of a new formula, for purposes PHAs deem appropriate such
as promotion of resident self-sufficiency, even though the rest of
section 523 is not yet effective. This would be done, however, at a
PHA's financial risk. A PHA that chooses to implement this policy would
need to submit rent rolls for the purpose of FY 1999 subsidy
calculations that do not reflect the newly imposed rent decrease or
disregard. Instead, such rent rolls must presume that the PHA is
charging the rent otherwise required or allowed by law.
Section 520--Total Development Costs. Section 520 amends the
definition of ``development cost'' in section 3(c)(1) of the USHA to
exclude from this definition the costs associated with demolition or
remediation of environmental hazards associated with public housing
units that will not be replaced on the project site, or other
extraordinary site costs as determined by HUD.
Section 520 also amends 6(b) of the USHA to add a new subsection
6(b)(3) which provides that in calculating the total development cost
of a project under section 6(b)(2), HUD shall consider only capital
assistance provided by HUD to a PHA that are authorized for use in
connection with the development of public housing and shall exclude all
other amounts, including amounts provided under: (1) The HOME
Investment Partnerships Program; or (2) the CDBG Program.
Action Guidance. HUD will issue a separate notice in the near
future to impose total development cost requirements that are
consistent with the changes made by this section.
Section 522--Repeal of Public Housing Modernization Fund. Section
522 repeals section 14 of the USHA, but makes clear that before the
implementation of the new capital formula, PHAs may utilize any
authority under section 14(q) of the USHA, as amended. Section 14(q) of
the USHA allows PHAs to use capital funds for public housing
development and HOPE VI uses and allows mixed-finance public housing
developments. (Section 201 of the FY 1999 HUD Appropriations Act
clarified that such broader uses, but not operating expenses, are
permissible uses of FY 1998 and 1999 funds. The ability for PHAs other
than small PHAs to use capital funds partly for operating expenses does
not become effective until Federal fiscal year 2000.) In addition,
section 208 of the FY 1999 HUD Appropriations Act amended section 14(q)
of the USHA to provide that such assistance may involve the drawdown of
funds on a schedule commensurate with construction draws, for deposit
into an interest-bearing escrow account to serve as collateral or
credit enhancement for construction or rehabilitation bonds issued by a
public agency.
Section 523--Public Housing Family Choice of Rental Payment.
Section 523 amends section 3(a) of the USHA, and provides that each
family can elect annually whether the rent payment is a flat rate or
income based. Flat rents are set by a PHA at a rate based on the rental
value of the unit. Income based rents are calculated on the level of a
tenant's income, the basic calculation was not changed from the current
law calculation of the higher of 10% of income, 30% of adjusted income,
or the housing portion of welfare, where applicable. The current law
amounts for income-based rents, however, were changed from required
amounts to maximum amounts a PHA can charge.
Action Guidance. Although this section is not effective now except
as indicated in the discussion above of section 519(e), PHAs should
begin the process of setting flat rents as required by new section
3(a)(2)(B)(i) of the USHA. These flat rents are to be based on the
rental value of the unit, which HUD interprets to be the same as the
reasonable market value of the unit authorized for ceiling rents. HUD
will provide further guidance, but PHAs should anticipate that the rent
choice authorized by section 523 would have to be offered to families
admitted or subject to recertification after October 1, 1999.
Section 524--Occupancy by Police Officers and Over-Income Families
in Public Housing. Section 524 amends section 3(a) of the USHA to
provide that PHAs may allow police officers to reside in public
housing. Under this section, small PHAs may also rent units to over-
income families on a month-to-month basis, in accordance with statutory
requirements, if there are no eligible families applying for assistance
for that month, provided that the over-income family agrees to vacate
(with at least 30 days notice) when the unit is needed for an income-
eligible family.
Action Guidance. This section is effective immediately, but the
provision pertaining to police officers is subject to inclusion in the
PHA plan. Because current statutory provision is not repealed during
this fiscal year, HUD will allow occupancy by police officers under the
terms of current law until the PHA plan requirement can be implemented.
With respect to the housing of over-income families where other
families
[[Page 8203]]
are not available to small PHAs, a PHA must publish a 30-day notice of
available units in at least one newspaper of general circulation.
Section 530--Housing Quality Requirements. Section 530 amends
section 6 of the USHA to add a new subjection (f) which requires annual
contributions contracts to include a requirement that a PHA maintain
its public housing units in compliance with safety and habitability
standards specified by HUD. In developing these standards, HUD is to
make them to the greatest extent practicable, consistent with the
housing quality standards under the Section 8 voucher program. This
section also requires PHAs to conduct annual inspections for each
project to determine whether the units comply with the standards.
Action Guidance. HUD's new Public Housing Assessment System (PHAS),
which was established by final rule issued on September 1, 1998 (63 FR
46596), utilizes new uniform physical condition standards that are
consistent with the housing quality standards currently used in the
Section 8 tenant-based assistance program. See also HUD's Uniform
Physical Condition Standards final rule, published on September 1, 1998
at 63 FR 46566. PHAs are currently required by statute to conduct an
annual inspection of their projects.
Section 531--Demolition and Disposition of Public Housing. Section
531 amends section 18 of the USHA and provides that PHAs may demolish
and dispose of projects upon application to HUD when the housing is
determined obsolete and modifications are not cost-effective. This
statutory section completely revises public housing demolition and
disposition requirements, and also repeals one-for-one replacement
requirements. The immediate effective date of this statutory section
raised two threshold issues for HUD to consider.
First, how should HUD treat the pipeline of demolition and
disposition applications received prior to October 21, 1998, and those
received after that date but prior to the effectiveness of the
applicable regulations and processes?
Second, how should HUD treat the new requirement found in amended
section 18 of the USHA--that the public housing agency has specifically
authorized the demolition or disposition in its PHA plan and has
certified that the actions contemplated in the PHA plan comply with
this section?
HUD believes that it is consistent with Congressional intent not to
interrupt the processing of applications.
Action Guidance. 1. Pending Applications; New Applications. In view
of the Congressional intent and to expedite the processing of
demolition and disposition applications during this period prior to
submission and approval of PHA plans under the new law, demolition/
disposition applications will be reviewed and processed in two groups.
Group 1 are those applications received at HUD's Special Applications
Center (SAC) on or before October 21, 1998, the date the QHWRA was
signed into law. Group 2 are those applications received at the SAC
after October 21, 1998.
A. Group 1 Applications. Applications in Group 1 will generally be
reviewed and approved in accordance with 24 CFR part 970 which was in
effect at the time of the application submission. However, if the SAC
staff identifies deficiencies in a Group 1 application, the PHA has the
option at that time to either (a) correct the deficiencies in
accordance with 24 CFR part 970 or (b) withdraw its application and
resubmit it at a later date based on HUD's guidance as identified in
this Notice for implementing section 531 of the QHWRA. In addition, HUD
will implement four specific provisions of the QHWRA for all pending
applications in Group 1, as follows:
The one-for-one replacement requirement is eliminated;
PHAs that request to demolish the lesser of 5 units or 5
percent of the units in the PHA's inventory in a 5 year period, and
where the vacant space will be used for meeting the service or other
needs of the public housing residents or the units to be demolished are
beyond repair, may demolish without submitting an application and
requesting HUD approval (see paragraph 2 below on ``De Minimis
Exception for Demolition'');
Waiver of payment of debt (modernization or development
debt) for bonded developments;
Elimination of the requirement to make an offer to sell
the property proposed for demolition to the resident organization where
the PHA is requesting to demolish property; in view of the QHWRA's
elimination of this requirement with respect to demolition, the
purchase option will not be deemed ``appropriate'' for such property
under the terms of section 18(b)(1) of the USHA before its amendment by
the QHWRA.
B. Group 2 Applications. Under Section 18(a)(3) of the revised
USHA, in order for a demolition or disposition application to be
approved, a PHA must have ``specifically authorized the demolition or
disposition in the public housing agency plan, and has certified that
the actions contemplated in the public housing agency plan comply with
this section.''
HUD's interim rule on PHA plans, published elsewhere in today's
Federal Register, provides further guidance on the fulfillment of this
requirement for demolition/disposition. In brief, HUD's rule allows the
submission of interim PHA plans covering demolition or disposition, so
that a PHA may receive a timely approval which otherwise may not occur
because of the initial schedule for submitting PHA plans. A separate
notice to be issued by HUD's Office of Public and Indian Housing will
describe the procedures that govern a demolition or disposition
application under section 18 of the USHA as amended by the QHWRA, in
addition to those procedures and requirements related to the PHA plan,
before conforming changes are made to the applicable regulations.
2. De Minimis Exception for Demolition. PHAs proposing to demolish
not more than the lesser of 5 dwelling units or 5 percent of the total
dwelling units owned by the PHA over a 5-year period, and that plan to
use the space for meeting the service or other needs of the public
housing residents or are demolishing units that are beyond repair, may
demolish without submitting an application. PHAs using the de minimis
exception are required to complete Sections 1--5 of HUD Form 52860. HUD
will use this information to track the demolition in HUD's data system
for purposes such as determination of subsidy amounts; HUD will not use
this information to determine whether a PHA can demolish the units.
Once the demolition is completed, the PHA must report the actual date
of demolition to the HUD Field Office. PHAs should note that before
committing any funds for or proceeding with demolition that will be
funded or reimbursed with USHA funds, the PHA must receive HUD approval
of a Request for Release of Funds to the extent required in accordance
with 24 CFR part 58.
3. Uniform Relocation Act. Section 531(g) of the QHWRA provides
that the Uniform Relocation and Real Property Acquisition Policies Act
of 1970 (URA) shall not apply to activities under section 18 of the
USHA. The URA, however, continues to apply to:
(a) Any person displaced before October 21, 1998 (the date of
enactment of the QHWRA);
(b) Any person displaced as a result of HUD's approval of a
demolition before October 21, 1998;
[[Page 8204]]
(c) Any person displaced as a result of a demolition that is part
of a HOPE VI project (demolitions under HOPE VI are subject to the URA
because they are not subject to section 18 of the USHA);
(d) Any person displaced as a result of a demolition or disposition
that occurs from an assessment of a project for mandatory conversion to
vouchers under section 202 of the FY 1996 HUD Appropriations Act or
section 537 of the QHWRA or of voluntary conversion to vouchers out
under section 533 of the QHWRA. (Demolitions under section 202 of the
FY 1996 HUD Appropriations Act are subject to the URA because they are
governed by the law as in effect before enactment of the QHWRA and
because they are not subject to section 18 of the USHA. Demolitions
under section 537 of the QHWRA are subject to the URA because these
demolitions are not subject to section 18 of the USHA); and
(e) Any person displaced as a result of the acquisition of the site
for a project receiving Federal financial assistance.
Section 535--Demolition, Site Revitalization, Replacement Housing,
and Tenant-Based Assistance Grants for Public Housing Projects. Section
535 amends section 24 of the USHA and provides the continued authority
for the HOPE VI program, and establishes application selection and
grant requirements.
Action Guidance. Because this section is effective immediately,
HUD's FY 1999 HOPE VI Notice of Funding Availability will reflect the
terms of this section.
Exemption for severely distressed public housing demolished in
accordance with a revitalization plan. New section 24(g) of the USHA
exempts severely distressed public housing demolished in accordance
with a revitalization plan from the demolition requirements of section
18 of the USHA. However, any such housing disposed of and any housing
developed to replace the demolished housing are subject to section 18
of the USHA.
Action Guidance. HOPE VI revitalization plans approved after
October 21, 1998 (the date of enactment of the QHWRA) will receive this
exemption.
Section 537--Required Conversion of Distressed Public Housing to
Tenant-Based Assistance. Section 537 adds a new section 33 to the USHA
and repeals its forerunner provision in the FY 1996 HUD Appropriations
Act. A component of each PHA plan is its 5-year plan for the removal of
public housing units identified as distressed from the public housing
inventory and the ACC. This plan for removal of units is subject to
review by HUD.
Action Guidance. While this section is not yet effective, the
language of this section clarifies that public housing developments
identified by HUD or a PHA for conversion or for assessment of whether
conversion is required under the preexisting law and regulations shall
remain subject to that law and regulations (Section 202 of the VA/HUD/
Independent Agencies Appropriations Act of 1996 and implementing
regulations at 24 CFR part 971).
Subtitle C of the QHWRA--Section 8 Rental and Homeownership
Assistance
Section 547--Section 8 PHA Administrative Fees for the Certificate,
Voucher and Moderate Rehabilitation Programs. Section 547 amends
section 8(q) of the USHA and changes the prior administrative fee
system slightly, by increasing the fee for the first 600 certificate,
voucher and moderate rehabilitation units administered by a PHA from
7.5% to 7.65% of a defined base amount beginning October 1, 1998. HUD
will issue a separate notice indicating how the increase in FY 1999
administrative fees is to be paid.
Action Guidance for the Section 8 Certificate, Voucher and Moderate
Rehabilitation Programs. A Senate colloquy on the QHWRA legislation
indicated that HUD should allow administrative fee adjustments to cover
any necessary additional expenses for serving persons with disabilities
fully, such as additional counseling (housing search assistance)
expenses (Congressional Record of October 8, 1998, p. S11840). PHAs
that have undertaken or will undertake, such expenses may document the
services provided, describe the expenses and propose administrative fee
adjustments to HUD.
Section 548--Law Enforcement and Security Personnel in Project-
Based Section 8 Housing. To increase security, Section 548 provides
that Section 8 assistance may be provided to police officers and other
security personnel who are not otherwise eligible for assistance.
Action Guidance for the Section 8 Project-Based Certificate,
Moderate Rehabilitation and Other Section 8 Project-Based Programs.
Section 548 is applicable to FY 1999 and following fiscal years, and is
applicable to Section 8 moderate rehabilitation, project-based
certificate, new construction, substantial rehabilitation and other
project-based Section 8 projects. Owners must apply to the HUD Field
Office for authorization to house over-income police officers and other
security personnel in the assisted units. Until otherwise notified, the
owner application needs to include a statement demonstrating the need
for increased security at the project, and a description of the
proposed gross rent for the unit and any special conditions for
occupancy. Processing instructions will be provided to HUD Field
Offices.
Section 549--Advance Notice to Tenants of Expiration, Termination,
or Owner Nonrenewal of Section 8 Assistance Contract. Section 549(a) of
the QHWRA amends section 8(c)(9) of the USHA to make permanent the
tenant-based notice and endless lease provisions which had been
effective through FY 1998 and to change the project-based contract
termination notice requirement from 6 months to 1 year. Section 549(a)
also eliminates the notice and rent adjustment provisions of sections
8(c)(8) and (10).
Section 549(b) amends section 8(c)(9) to require the project-based
1-year notice to include information about the possibility of
nonrenewal of assistance (when the owner seeks renewal but
appropriations are uncertain) and the resulting protections. Section
549(b) also requires a 6-month notice to HUD and tenants when the owner
agrees to a 5-year renewal that is subject to the availability of
appropriations.
Section 549(c) amends section 514(d) of the Multifamily Assisted
Housing Reform and Affordability Act that addresses the mortgage
restructuring, to require that the owner who is not renewing project-
based assistance to give notice of the termination in addition to the
1-year notice at least 120 days before termination.
1. Tenant-based assistance. Subsection (a) of section 549,
Permanent Applicability of Notice and Endless Lease Provisions, is
effective October 21, 1999. That subsection makes permanent the
suspension in recent annual appropriations acts of the 90-day owner
termination notice to HUD and endless lease term with respect to the
tenant-based Section 8 programs. Of course, landlords still must
terminate leases and conduct evictions in accordance with other
applicable laws.
Action Guidance for Section 8 Tenant-Based Certificate and Voucher
Programs. PHAs should advise interested owners who are participating or
who are potential participants in the tenant-based assistance programs
that the 90-day owner termination and endless lease term requirements
have been permanently eliminated. Additional implementation guidance
was issued December 18, 1998 in Notice PIH 98-64.
2. Project-based assistance. Subsection (a) of section 549 also
[[Page 8205]]
requires owners of projects receiving project-based section 8
assistance to provide not less than one-year written notification to
tenants and HUD of the expiration or termination of the contract. Note
that section 8(c)(8) of the USHA which required owners to provide a 90-
day notice to the tenants of any rent increase is repealed.
Action Guidance for Section 8 Project-Based Certificate, Moderate
Rehabilitation and Other Project-Based Programs. Owners who gave notice
prior to the enactment of the QHWRA (October 21, 1998) are covered
under the 180-day notice requirement. Owners who give notice to tenants
and HUD on or after October 21, 1998 must fulfill the entire one-year
notification requirement. HUD's Office of Housing will issue further
guidance in the near future. Guidance concerning the Section 8 Moderate
Rehabilitation Program notice requirements is found in Notice PIH 98-
62, issued December 15, 1998.
Section 551--Funding and Allocation (of Public Housing and Section
8 Funds). Section 551 amends section 213 of the Housing and Community
Development Act of 1974 (42 U.S.C. 1439) which section addresses
applications for housing assistance under the USHA or section 101 of
the Housing and Urban Development Act of 1965. Section 551 most
importantly repeals restrictions on funding allocations related to an
obsolete nonmetropolitan set-aside and notification to jurisdictions
and solicitation of comments regarding certain funding awards.
Action Guidance for Public Housing and Section 8 Programs. This
notice makes section 551 effective immediately. Local government
comments with respect to affected PHA applications for Section 8 and
public housing funds are no longer required.
Section 554--Leasing to Voucher Holders. This section immediately
repeals the so-called ``take one, take all'' Section 8 tenant-based
provision that has been suspended in recent annual appropriations acts.
Action Guidance for the Section 8 Tenant-Based Certificate and
Voucher Programs. The intent of Congress was to make the tenant-based
assistance program more attractive to private landlords and encourage
participation. PHAs should make a concerted effort to inform the
prospective owner community of this permanent change, particularly for
marketing the tenant-based assistance program to owners of units in
low-poverty areas.
Section 555 and Section 545 [Sec. 8(o)(15)]--Section 8 Tenant-Based
Homeownership Option. These sections provide necessary additional
flexibility for PHAs to use vouchers to increase homeownership.
Action Guidance for the Section 8 Tenant-Based Certificate and
Voucher Programs. HUD will be providing further guidance in the near
future.
Subtitle D of the QHWRA--Home Rule Flexible Grant Demonstration
(Public Housing and Tenant-Based Section 8 Programs)
Subtitle D of the QHWRA adds a demonstration program in which
eligible jurisdictions, typically units of general local government,
could receive public housing and tenant-based assistance for up to five
years to meet specified performance goals.
Action Guidance for Public Housing and Section 8 Tenant-Based
Programs. While HUD may issue additional guidance later, any eligible
jurisdiction wishing to participate in the demonstration may follow the
statute's requirements and submit an application to the Assistant
Secretary, Office of Public and Indian Housing. HUD will not approve
such an application, however, unless the application presents a
compelling case that the eligible jurisdiction's participation and
proposal would achieve the goals of the statute (which include the
underlying program management and performance goals of the public
housing and tenant-based assistance programs) in a superior manner to
continuation of program management with the affected PHA.
Subtitle E of the QHWRA--Accountability and Oversight of Public
Housing Agencies Administering the Public Housing and Section 8
Programs
Section 565--Expansion of Powers for Dealing with Public Housing
Agencies in Substantial Default. In addition to providing for an
expansion of various powers to be exercised by HUD or receivers, this
section requires HUD to petition for court-ordered receivership (or to
implement an administrative receivership, in the case of PHAs with
fewer than 1,250 public housing units) with respect to certain troubled
PHAs. The troubled PHAs subject to that requirement are those that do
not:
(1) Within one year of the later of the date of enactment of the
Act or receiving notice of a ``troubled'' designation, improve their
performance score by at least half of the difference between their most
recent score and the score necessary to remove the troubled
designation; and
(2) Within two years of the later of such dates, escape troubled
designation.
Section 565(d) states that HUD may administer these amendments as
necessary to assure its efficient and effective initial administration.
The initial administration of this section is affected by two ongoing
processes.
First, PHAs ordinarily receive performance scores throughout the
calendar year after their staggered fiscal year ends. To meet the
statutory requirement for PHAs that receive notice of a troubled
designation after October 21, 1998, performance assessments will be
scheduled specifically for years commencing with the beginning of the
first quarter after receipt of that notice. For PHAs that were
designated troubled before October 21, 1998, performance assessments
will be scheduled specifically for years ending October 21, 1999, and
if necessary, October 21, 2000. With respect to these assessments,
which in most cases will not correspond to a PHA's fiscal year, HUD may
utilize year-end financial information or the most recent resident
satisfaction surveys where HUD determines that such use will reasonably
reflect the PHA's situation as of the assessment date.
Second, PHAs have been receiving performance scores under the
Public Housing Management Assessment Program (PHMAP), but commencing
with PHA fiscal years ending September 30, 1999, will receive scores
under the new Public Housing Assessment System (PHAS). Thus, in some
instances, during the transitional year PHAS scores will have to be
compared with PHMAP scores to determine whether the 50% improvement
requirement has been met. Where HUD determines that the 50% improvement
has not been met, but that this failure is attributable to the
transition between PHMAP and PHAS, HUD will not seek or impose court or
administrative receiverships based on that requirement. (HUD will have
the information needed to make that determination, largely based on the
``management'' component of PHAS.) The requirement to escape troubled
status within two years, however, will be imposed notwithstanding the
transition from PHMAP to PHAS.
Subtitle F--Safety and Security in Public and Assisted Housing
Section 575--Provisions Applicable Only to Public Housing and
Section 8 Assistance. Section 575 amends several subsections of section
6 of the USHA and contains a number of provisions concerning public
housing and Section 8 applicant screening and subsidy termination for
criminal activity. Except for subsection (e) of section 575, the
provisions of section 575 are not yet applicable.
[[Page 8206]]
Action Guidance for the Public Housing Program. Subsection (e) of
section 575, Obtaining Information from Drug Abuse Treatment
Facilities, was effective October 21, 1998 and is applicable only to
public housing. Any PHA that wishes to use the authority of this
subsection to obtain information whether public housing applicants are
currently using illegal controlled substances from drug abuse treatment
facilities must follow the specific requirements of subsection (e).
Subtitle G--Repeals and Related Provisions
Section 584--Use of American Products. This section reflects
Congressional intent that, to the greatest extent practicable, all
equipment and products purchased with funds made available under the FY
1999 HUD Appropriations Act should be American made.
Action Guidance. In providing financial assistance under the FY
1999 HUD Appropriations Act or in entering into any contract with any
entity using funds made available under the FY 1999 HUD Appropriations
Act, HUD, to the greatest extent practicable, is to provide a notice
that describes Congressional intent in this regard. HUD is bringing
this matter to the attention of the readers of this notice and urges
them to take appropriate action.
Section 592--Use of Assisted Housing by Aliens. This section
removes the option of PHAs to elect not to comply with section 214 of
the Housing and Community Development Act of 1980 (Restriction on
Assistance to Noncitizens). This option was provided by the Immigration
Reform and Immigrant Responsibility Act of 1996 (Pub.L. 104-298,
approved September 30, 1996). In its place, the QHWRA provides that
PHAs, notwithstanding the requirement of section 214(h)(1), may elect
not to affirmatively establish and verify eligibility before providing
financial assistance to an individual or family. Section 214(h)(1)
provides that ``No individual or family applying for financial
assistance may receive such financial assistance prior to the
affirmative establishment and verification of eligibility of at least
the individual or one family member under subsection (d) by the
applicable Secretary or other appropriate entity.''
Action Guidance for Public Housing and Section 8 Certificate,
Voucher, and Moderate Rehabilitation Programs. The amendments to
section 214 made by the QHWRA essentially reinstate HUD's noncitizens
regulations as they were in existence before the amendments made by the
Illegal Immigration Reform and Immigrant Responsibility Act of 1996.
The pre-1996 requirements did not require PHAs to affirmatively
establish and verify eligibility of at least the individual or one
family member before the individual or family may receiving financial
assistance. Additionally, the pre-1996 requirements did not provide
PHAs with the option not to comply with section 214. With the
amendments made by QHWRA, PHAs must comply with section 214 except that
they are not required to affirmatively establish and verify eligibility
of at least one family member before providing financial assistance.
PHAs, however, have the option to adhere to that requirement if they so
choose.
In the event a PHA elected to opt out of compliance with section
214, the PHA may, but is not required to, immediately commence
verification of eligibility of families for whom eligibility status
under section 214 has not yet been undertaken. A PHA must, however,
verify eligibility status in accordance with the requirements of
section 214 and the regulations at 24 CFR part 5, subpart E, no later
than the date of the family's annual reexamination.
Section 597--Section 8 Moderate Rehabilitation Program. In part,
Section 597 establishes rules for determining contract rent levels at
which expiring moderate rehabilitation contracts will be renewed.
Action Guidance for Section 8 Moderate Rehabilitation Program. PHAs
must generally extend for one year the project-based HAP contracts for
non-SRO, non-mark-to-market multifamily moderate rehabilitation
projects at contract rents that are the lower of (1) current rents
adjusted by HUD's operating cost adjustment factor, (2) comparable
rents, or (3) FMR less any amounts allowed for tenant-purchased
utilities. HUD Field Offices were provided information concerning
moderate rehabilitation renewals on October 23, 1998; HUD provided
further implementing guidance in Notice PIH 98-62 (HA), issued December
15, 1998.
Section 599--Tenant Participation in Multifamily Housing Projects.
Section 599 of the QHWRA amends section 202 of the Housing and
Community Development Amendments of 1978 to extend the rights of
tenants to organize to include all projects receiving project-based
Section 8 assistance (including moderate rehabilitation and project-
based certificate projects) and to tenants receiving ``enhanced''
vouchers under the provisions of the Emergency Low Income Housing
Preservation Act of 1987, or the Low-Income Housing Preservation and
Resident Homeownership Act of 1990, or the Multifamily Assisted Housing
Reform and Affordability Act of 1997.
Action Guidance for Project-Based Section 8 and Enhanced Vouchers.
HUD will issue rulemaking governing tenants' rights to organize at
projects receiving project-based Section 8 assistance or enhanced
vouchers in connection with preservation projects or restructuring
projects (ELIHPA, LIHPRA and MAHRA).
Section II--Certain Statutory Provisions That Require Rulemaking
The following additional provisions of the QHWRA either require
rulemaking for implementation by statute or HUD has determined in its
review of the statutory provision that rulemaking is necessary for
implementation. This list does not include conforming rules that simply
amend existing HUD regulations to reflect the new statute. HUD may
determine that other sections need rulemaking as the implementation
process progresses. These sections will be identified in HUD's
Semiannual Agenda of Regulations to be published in April 1999 as part
of the Federal Government's Unified Regulatory Agenda.
Section 511--Public Housing Agency Plan (for Public Housing and
Section 8 Programs). This section establishes a comprehensive planning
process for PHAs--a 5-year plan and an annual plan update. The 5 year
plan describes the mission of the PHA and the PHA's long range goals
and objectives for achieving its mission over the next 5 years. The
annual plan provides details about the PHA's immediate operations,
residents, programs and services, and the PHA's strategy for handling
operational concerns, residents concerns and needs, programs and
services for the upcoming fiscal year.
Implementation Method. The QHWRA requires HUD to implement this
section by issuing an interim rule no later than 120 days after
enactment of the QHWRA; that is, by February 18, 1999. The interim rule
must provide a 60-day public comment period. The QHWRA also requires
HUD to solicit recommendations from (1) State or local PHAs, (2) public
housing residents, and (3) other appropriate parties. The QHWRA also
requires HUD to convene at least two public forums. The final rule,
which must be issued no later than by October 21, 1999, must discuss
the recommendations, public comments and HUD responses to the
recommendations and comments.
[[Page 8207]]
Please note that the interim rule is published elsewhere in today's
Federal Register.
Section 515 --Joint Ventures and Consortia of Public Housing
Agencies. This section permits two or more PHAs to participate in a
consortium to administer any or all of their housing programs. This
section also permits a PHA, in accordance with its PHA plan, to form a
subsidiary or joint venture to administer programs or provide
supportive or social services. A consortium must operate in accordance
with a consortium agreement and a joint PHA plan. The income generated
by a subsidiary or joint venture must be used for low-income housing or
to benefit the residents, and will not result in lower funding to the
PHA unless the capital and operating fund formulas so provide.
Implementation Method. HUD has determined that proper
implementation of at least the consortium provisions requires
rulemaking.
Section 519--Public Housing Capital and Operating Funds. Section
519 creates two grants for funding public housing activities--the
Capital Fund and Operating Fund. Assistance through these new funding
mechanisms is to commence for FY 2000, except that HUD may extend the
implementation of the Operating Fund allocation formula by up to six
months if necessary. (Please see discussion of this statutory provision
under Section I for those provisions of section 519 that are
immediately effective.)
Implementation Method. The QHWRA requires HUD to develop allocation
formulas for these funds through the negotiated rulemaking process.
Section 526--Pet Ownership for Public Housing. Section 526 permits
a resident of public housing, as defined in new section 31 of the USHA,
to have one or more pets in the unit if the resident maintains each pet
responsibly in accordance with applicable State and local laws and with
the PHA's policies stated in the PHA plan.
Implementation Method. The QHWRA provides that section 526 will
take effect upon the effective date of regulations issued by HUD to
carry out this section. The QHWRA also provides that HUD shall issue
effective regulations after notice and opportunity to comment by the
public.
Section 533--Conversion of Public Housing to Vouchers; Repeal of
Family Investment Centers. Section 533 requires PHAs to perform a
``conversion assessment'' of each of its public housing projects to
determine the relative benefit of converting to tenant-based assistance
under the section 8 program.
Implementation Method. HUD has determined that proper
implementation of section 533 requires rulemaking.
Section 537--Required conversion of distressed public housing to
tenant-based assistance. Section 537 adds a new section 33 to the USHA
and repeals its forerunner provision in the FY 1996 HUD Appropriations
Act. A component of each PHA plan is its 5-year plan for the removal of
public housing units identified as distressed from the public housing
inventory. This plan for removal of units is subject to review by HUD.
Implementation Method. HUD has determined that proper
implementation of section 537 requires rulemaking. See guidance in
Section I of this Notice regarding continued applicability of prior law
and regulations.
Section 539--Mixed-Finance Public Housing. Section 539 adds a new
section 37 to the USHA authorizing development of projects financially
assisted by private resources as well as public housing program funds.
Implementation Method. New section 37 provides that HUD shall issue
such regulations as may be necessary to promote the development of
mixed-finance projects.
Section 545--Merger of Certificate and Voucher Programs. Section
545 amends section 8(o) of the USHA to merge the Section 8 certificate
and voucher programs.
Implementation Method. In general, the merger of certificates and
vouchers is not yet effective. HUD will be issuing a rule that merges
these two programs. Therefore, PHAs should continue to operate these
programs as previously operated, except with respect to specific
changes highlighted by this Notice or as otherwise notified by HUD.
This includes assistance for families currently under lease and the
provision of turnover or newly awarded assistance to new families.
Section 556--Section 8 Renewals for Tenant-Based Certificate and
Voucher Funds. Section 556 amends section 8 of the USHA to add a new
subsection (dd) and authorizes HUD to renew all expiring tenant-based
contracts. New subsection (dd) directs HUD to establish an allocation
baseline amount of assistance to cover the renewals, and to apply an
inflation factor (based on local or regional factors) to the baseline.
Implementation Method. Section 556 requires HUD to issue a notice
by December 31, 1998, and to develop final regulations through the
negotiated rulemaking process.
Please note that elsewhere in today's Federal Register HUD has
published for the benefit of the public the notice that was issued
directly to PHAs on December 31, 1998.
Section 559--Rulemaking and Implementation. Section 559 provides
for implementation of sections 545 through 558 and other provisions in
title V that relate to the voucher program (most notably, the merger of
the certificate and voucher programs) through ``such interim
regulations as may be necessary'' and final regulations necessary to
implement these provisions. This section also requires HUD to seek
recommendations from various types of organizations on the
implementation of sections 8(o)(6)(B), 7(B), 10(D) of the USHA and
renewals of expiring tenant-based assistance. HUD is to convene not
less than two public forums to seek such recommendations.
Section 586--Amendments to Public and Assisted Housing Drug
Elimination Act of 1990. Section 586 amends the Anti-Drug Abuse Act of
1988 to include additional eligible activities and provide for more
predictable fund distribution.
Implementation Method. The statute directs HUD to prescribe by
regulation the criteria for establishing a class of PHAs that have
urgent or serious crime problems, for which funds may be reserved under
this program.
Please note that elsewhere in today's Federal Register, HUD is
publishing an Advance Notice of Proposed Rulemaking to solicit public
comments on HUD's proposed approach to this rulemaking.
Section III--Future Guidance
The QHWRA makes many significant changes to HUD's public housing
and Section 8 programs. With many of the changes immediately effective,
substantial responsibility is placed on PHAs and Section 8 owners to
implement these changes promptly. HUD is committed to working closely
with its public housing and Section 8 partners to make the changes in
its public housing and Section 8 programs a success. The successful
administration of the new programs created by the QHWRA or program
changes made by the QHWRA benefits those most in need of these
programs--low-income families. HUD welcomes comments from its program
partners, and HUD will continue to provide additional guidance through
direct notices to PHAs and Section 8 owners, additional Federal
Register notices, or through other means that may be determined
appropriate.
[[Page 8208]]
Section IV--Findings
A Finding of No Significant Impact with respect to the environment
was made 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 7th Street, SW, Washington, DC
20410.
Dated: February 10, 1999.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-3731 Filed 2-17-99; 8:45 am]
BILLING CODE 4210-33-P
