[Federal Register Volume 61, Number 40 (Wednesday, February 28, 1996)]
[Rules and Regulations]
[Pages 7586-7593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4169]
[[Page 7585]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Public and Indian Housing
_______________________________________________________________________
24 CFR Parts 950 and 990
Low-Income Public and Indian Housing--Vacancy Rule; Final Rule
Federal Register / Vol. 61, No. 40 / Wednesday, February 28, 1996 /
Rules and Regulations
[[Page 7586]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Parts 950 and 990
[Docket No. FR-3647-F-01]
RIN 2577-AB44
Low-Income Public and Indian Housing--Vacancy Rule
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This final rule establishes new conditions under which a
Public Housing Agency (PHA), an Indian Housing Authority (IHA), or
Resident Management Corporation may include vacant units in its
computation of eligibility under the Performance Funding System (PFS).
(The term housing authority (HA) is used throughout this final rule
when referring to both PHAs and IHAs.) The final rule gives greater
recognition to units that are vacant for reasons beyond the HA's
control, makes changes in the current treatment of vacant units that
are part of a modernization program, and, under certain circumstances,
has HAs exclude long-term vacant units from their inventory of units
available for occupancy.
DATES: April 1, 1996. Applicability date: Operating subsidy eligibility
will first be determined under the new provisions of this rule by PHAs
and IHAs having fiscal years beginning July 1, 1996.
FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, General Deputy Assistant
Secretary, Public and Assisted Housing Operations, Room 4210, U.S.
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC 20410, telephone (202) 708-1380 [this telephone number
is not toll-free]. For hearing- and speech-impaired persons, this
number may be accessed via TDD by calling the Federal Information Relay
Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act Statement
The information collection requirements contained in Secs. 950.725,
950.760, 990.109, and 990.117 of this rule have been approved by the
Office of Management and Budget, in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3520), and assigned OMB control
number 2577-0066. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
collection displays a valid control number.
Background
On July 19, 1995, the Department published a proposed rule (60 FR
37294) that would establish new conditions under which an HA may use a
Projected Occupancy Percentage of less than 97 percent in computing its
Dwelling Rental Income under the Performance Funding System (PFS). The
proposed rule incorporated the recommendations of a regulatory
negotiation advisory committee composed of persons who represent the
interests affected by the current vacancy rule.
Discussion of Public Comments
The Department received eight public comments in response to the
proposed rule, including comments from five PHAs, two national HA
associations, and one IHA. One of the PHA commenters was a member of
the advisory committee.
The Department received very favorable comments for using a
negotiated rulemaking process to develop the proposed rule. This was
the first use of negotiated rulemaking by the Department and
consideration is being and will be given to using this model for other
rulemaking efforts in the future. The IHA commenter expressed regrets
that there was no IHA representative on the advisory committee. The
Department notes that the National American Indian Housing Council was
invited to join the committee, but declined membership.
The IHA commenter recommended that the definition of ``Units vacant
due to circumstances and actions beyond the IHA's control''
(Sec. 950.102) be expanded to include cultural, social, or religious
circumstances. The commenter notes that ``[i]n many Indian communities
* * * unexpected death, suicide, or violent act'' in a unit may
``affect the re-occupancy of [that] unit.'' The Department appreciates
the comment, but does not believe that this type of circumstance
seriously affects the ability of a significant number of IHAs to
maintain an overall acceptable occupancy level. The Department has
found that IHAs generally have high levels of occupancy and, thus,
would not be adversely affected by the provisions of the vacancy rule.
If such a circumstance did arise that caused the IHA to project an
occupancy percentage of less than 97 percent and to have more than 5
vacant units, a waiver request could be made and considered on the
merits of the case.
One commenter requested that reduced Comprehensive Grant Program
(CGP) funds be added to the list of acceptable ``beyond control''
circumstances. This rule does address the situation of a reduction in
CGP funding which occurs as a result of a rescission of appropriated
funds, although not as a ``beyond control'' circumstance. If such an
action results in an HA not being able to complete all the vacant unit
rehabilitation in its approved Annual Statement, the HA may seek a
waiver to permit full PFS eligibility for those units approved but not
funded. While the advisory committee discussed the need to mitigate the
consequences of a rescission, the only procedural process mentioned to
obtain relief was through a waiver. The specific waiver provision in
the proposed rule is omitted in the final rule, because waiver
authority already exists (see 24 CFR 990.101). Since the objective of
the commenter is being met, the Department does not feel it necessary
to overturn the decision of the committee.
One commenter noted that insufficient funding for otherwise
approvable applications for Comprehensive Improvement Assistance
Program (CIAP) funds was an acceptable ``beyond control'' circumstance
and asked why insufficient CGP funding could not also be an acceptable
reason. This rule does provide that the failure of an HA to fund an
otherwise approvable Resident Management Corporation (RMC) request for
CGP funds from its HA would be treated as an acceptable ``beyond
control'' circumstance that the RMC could use to justify using a
projected occupancy percentage of less than 97 percent. The advisory
committee agreed on this relief because both the HA application to the
Department for CIAP funds and a RMC request for CGP funds from its HA
could be denied because of insufficient funds. The CGP, however, is not
a competition program and the concept of insufficient funds as
described above does not apply. Funds are provided to eligible HAs on a
formula basis, and the HA knows what its resources are at the time it
develops its Annual Statement.
Two commenters addressed that portion of the proposed rule dealing
with vacant units undergoing modernization. One commenter stated that
the requirement that an HA place its vacant units under construction
within two Federal Fiscal Years (FFY) after the FFY in which the funds
are approved was very stringent. Another
[[Page 7587]]
commenter believed that the 2-year requirement should be extended if
HUD approves extensions to the modernization implementation schedule.
The committee had addressed this issue and reached a consensus that the
2-year provision would not be extended.
It should be noted that the 2-year time period does not include the
FFY in which the funds were received. Depending on when the HA received
its modernization funding, it could actually have up to 3 years to
place the vacant units under a construction contract. Also, if an HA
initially fails to place its vacant units under a construction contract
within the 2-year period, the HA would still be able to regain special
treatment at the time it did place the units under a construction
contract, although not retroactively.
The Department was part of the consensus on this issue and
continues to support the committee decision.
The Department received three comments regarding the process for
requesting a waiver. One commenter stated that if there were a
rescission of appropriated funds for the CGP, the HA should not have to
bear the burden of requesting a waiver. The Department appreciates the
comment, but because the impact of a rescission will vary widely, the
Department needs to know on a case-by-case basis what that impact will
be in order to provide relief; that information can only come from the
HA. The same commenter asked that procedures for requesting a waiver be
provided to HAs before the rule becomes final, and another commenter
requested that the rule include the conditions under which a waiver
will be approved. The proposed rule provided general guidance in
Sec. 990.121 (the PHA would have had to document that it has made best
efforts to correct the underlying problems and that it could not
correct the problems in a cost-effective manner), but the specific
documentation that the HA will have to submit cannot be determined in
advance because a waiver by its nature involves a special circumstance.
The final rule has omitted the separate waiver language from this part,
because of the waiver authority already provided in Sec. 999.101;
repetition of this authority is contrary to the Department's ongoing
efforts to streamline its regulations.
One commenter requested that the Department provide a 2-year
extension to any HA, instead of 1 year, if a rescission of appropriated
funds for the CGP occurs that prevents the HA from completing the
modernization of all of the vacant units that were in the HA's approved
Annual Statement. The committee did recognize that relief should be
given to an HA that had to change its approved Annual Statement in
order to reflect a rescission of funds. Because the relief provided
should relate back to the severity of the rescission and that severity
is not known in advance, it was difficult to develop an appropriate
measure of relief. The Department was part of the consensus to provide
this relief and believes that, until there has been some experience
with this type of unusual situation, the 1-year extension is
appropriate.
The Department received one comment on the transition provisions of
the proposed rule. The commenter believed that the rule would eliminate
Comprehensive Occupancy Plans (COPs), even for those HAs that are still
under a HUD-approved COP. This is not the case. An HA with a HUD-
approved COP at the time the final rule becomes effective may continue
to determine its PFS eligibility using the provisions of Sec. 990.118,
as that section exists before this final rule becomes effective. The
Department will not approve new COPs, however, after the effective date
of this rule, and after the time period of the COP has expired, the HA
will determine its projected occupancy percentage using the provisions
of this rule.
One commenter proposed that a lower standard of occupancy--of
between 93 percent to 95 percent, rather than 97 percent--would be more
reasonable for HAs. The appropriateness of the 97 percent occupancy
standard was discussed at length by the committee, and the members
concluded that, given current budget constraints, it was not feasible
to redefine the standard. The provisions of the proposed rule developed
by the committee, therefore, were based on an assumption that the 97
percent standard would remain in place; this final rule also continues
the 97 percent standard.
Other Matters
Environmental Impact
In accordance with 40 CFR 1508.4 of the regulations of the Council
on Environmental Quality and 24 CFR 50.20(o) of the HUD regulations,
the policies and procedures contained in this rule relate only to
operating costs that do not affect a physical structure or property
and, therefore, are categorically excluded from the requirements of the
National Environmental Policy Act.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule will not have a significant
economic impact on a substantial number of small entities. The rule
sets out eligibility criteria for low-income public and Indian housing
operating subsidies that may impact those HAs with large numbers of
long-term vacant units. However, HUD's data incident to establishing
the Vacancy Reduction Program indicates that high-vacancy PHAs are
relatively few in number (and high-vacancy IHAs virtually nonexistent),
and that a preponderance of the program's vacancies are in a very
limited number of the larger PHAs. Most HAs will be unaffected by this
rule.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the various levels of government. As a result,
the rule is not subject to review under the Order. The rule refines the
criteria under which operating subsidies are paid on HUD-assisted
housing owned and operated by HAs, but will not interfere with State or
local government functions.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the
Order. No significant change in existing HUD policies or programs
results from promulgation of this rule, as those policies and programs
relate to family concerns. The rule merely involves the amount of
funding that an HA should receive under a refinement of an existing
procedure.
The Catalog of Federal Domestic Assistance Program numbers for this
rule are 14.145, 14.146, and 14.147.
List of Subjects
24 CFR Part 950
Aged, Grant programs--housing and community development, Grant
programs--Indians, Indians, Individuals with disabilities, Low and
moderate income housing, Public housing, Reporting and recordkeeping
requirements.
[[Page 7588]]
24 CFR Part 990
Grant programs--housing and community development, Public housing,
Reporting and recordkeeping requirements.
For the reasons set out in the preamble, parts 950 and 990 of title
24 of the Code of Federal Regulations are amended as follows.
PART 950--INDIAN HOUSING PROGRAMS
1. The authority citation for part 950 continues to read as
follows:
Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa-1437ee and
3535(d).
2. Section 950.102 is amended by adding in alphabetical order
definitions for ``Long-term vacancy'', ``Units vacant due to
circumstances and actions beyond the IHA's control'', and ``Vacant unit
undergoing modernization'', and by revising the definition for ``Unit
months available'', to read as follows:
Sec. 950.102 Definitions
* * * * *
Long-term Vacancy. This term means the same as it is used in the
definition of ``Unit Months Available'' in this section.
* * * * *
Unit Months Available. Project Units multiplied by the number of
months the Project Units are available for occupancy during a given IHA
fiscal year. For purposes of this subpart, a unit is considered
available for occupancy from the date established as the End of the
Initial Operating Period for the Project until the time the unit is
approved by HUD for deprogramming and is vacated or is approved for
nondwelling use. In the case of an IHA development involving the
acquisition of scattered site housing, see also Sec. 950.705(b). A unit
will be considered a long-term vacancy and will not be considered
available for occupancy in any given IHA Requested Budget Year if the
IHA determines that:
(1) The unit has been vacant for more than 12 months at the time
the IHA determines its Actual Occupancy Percentage;
(2) The unit is not either: (i) a vacant unit undergoing
modernization; or (ii) a unit vacant for circumstances and actions
beyond the IHA's control, as these terms are defined in this section;
and
(3) The IHA determines that it will have a vacancy percentage of
more than 3 percent and will have more than five vacant units, for its
Requested Budget Year, even after adjusting for vacant units undergoing
modernization and units that are vacant for circumstances and actions
beyond the IHA's control, as defined in this section. (Reference in
this subpart to ``more than five units'' or ``fewer than five units''
shall refer to a circumstance in which 5 units equals or exceeds 3
percent of the number of units to which the 3 percent threshold is
applicable.)
Units Vacant Due to Circumstances and Actions Beyond the IHA's
Control. Dwelling units that are vacant due to circumstances and
actions that prohibit the IHA from occupying, selling, demolishing,
rehabilitating, reconstructing, consolidating or modernizing vacant
units and are beyond the IHA's control. For purposes of this
definition, circumstances and actions beyond the IHA's control are
limited to:
(1) Litigation. The effect of court litigation such as a court
order or settlement agreement that is legally enforceable. An example
would be units that are being held vacant as part of a court-ordered or
HUD-approved desegregation plan.
(2) Laws. Federal, Tribal, or State laws of general applicability,
or their implementing regulations. Units vacant only because they do
not meet minimum standards pertaining to construction or habitability
under Federal, State, or local laws or regulations will not be
considered vacant due to circumstances and actions beyond the IHA's
control.
(3) Changing market conditions. For example, small IHAs that are
located in areas experiencing population loss or economic dislocations
may face a lack of demand in the foreseeable future, even after the IHA
has taken aggressive marketing and outreach measures.
(4) Natural disasters.
(5) Insufficient funding for otherwise approvable applications made
for Comprehensive Improvement Assistance Program (CIAP) funds.
(6) Resident Management Corporation funding. The failure of an IHA
to fund an otherwise approvable RMC request for Federal modernization
funding;
(7) Casualty Losses. Delays in repairing damage to vacant units due
to the time needed for settlement of insurance claims.
* * * * *
Vacant Unit Undergoing Modernization. Except as provided in
Sec. 950.775(a), a vacant unit in a project not considered to be
obsolete (as determined using the indicia in Sec. 970.6 of this
chapter), when the project is undergoing modernization that includes
work that is necessary to reoccupy the vacant unit, and in which one of
the following conditions is met:
(1) The unit is under construction (i.e., the construction contract
has been awarded or force account work has started); or
(2) The treatment of the vacant unit is included in a HUD-approved
modernization budget (e.g., the Annual Statement for the Comprehensive
Grant Program (CGP) (Form HUD-52837 or its successor), or the
Comprehensive Improvement Assistance Program (CIAP) Budget (Form HUD-
52825 or its successor)), but the time period for placing the vacant
unit under construction has not yet expired. The IHA must place the
vacant unit under construction within two Federal Fiscal Years (FFYs)
after the FFY in which the modernization funds are approved.
* * * * *
Sec. 950.705 [Amended]
3. Section 950.705(b) is amended by removing the first sentence.
4. Section 950.720 is amended by revising paragraph (b), to read as
follows:
Sec. 950.720 Other costs.
* * * * *
(b) (1) Costs attributable to units approved for deprogramming and
vacant may be eligible for inclusion, but must be limited to the
minimum services and protection necessary to protect and preserve the
units until the units are deprogrammed. Costs attributable to units
temporarily unavailable for occupancy because the units are utilized
for IHA-related activities are not eligible for inclusion. In
determining the PFS operating subsidy, these units shall not be
included in the calculation of Unit Months Available. Units approved
for deprogramming shall be listed by the IHA, and supporting
documentation regarding direct costs attributable to such units shall
be included as a part of the Performance Funding System calculation in
which the IHA requests operating subsidy for these units. If the IHA
requires assistance in this matter, the IHA should contact the HUD
Field Office.
(2) Units approved for nondwelling use to promote economic self-
sufficiency services and anti-drug activities are eligible for
operating subsidy under the conditions provided in this paragraph
(b)(2), and the costs attributable to these units are to be included in
the operating budget. If a unit satisfies the conditions stated below,
it will be eligible for subsidy at the rate of the AEL for the number
of months the unit is devoted to such use. Approval will be given for a
period of no more than 3 years. HUD may renew
[[Page 7589]]
the approval to allow payments after that period only if the IHA can
demonstrate that no other sources for paying the non-utility operating
costs of the unit are available. The conditions the unit must satisfy
are:
(i) The unit must be used for either economic self-sufficiency
activities directly related to maximizing the number of employed
residents or for anti-drug programs directly related to ridding the
development of illegal drugs and drug-related crime. The activities
must be directed toward and for the benefit of residents of the
development.
(ii) The IHA must demonstrate that space for the service or program
is not available elsewhere in the locality and that the space used is
safe and suitable for its intended use or that the resources are
committed to make the space safe and suitable.
(iii) The IHA must demonstrate satisfactorily that other funding is
not available to pay for the non-utility operating costs. All rental
income generated as a result of the activity must be reported as income
in the operating subsidy calculation.
(iv) Operating subsidy may be approved for only one site (involving
one or more contiguous units) per public housing development for
economic self-sufficiency services or anti-drug programs, and the
number of units involved should be the minimum necessary to support the
service or program. Operating subsidy for any additional sites per
development can only be approved by HUD Headquarters.
(v) The IHA must submit a certification with its Performance
Funding System Calculation that the units are being used for the
purpose for which they were approved and that any rental income
generated as a result of the activity is reported as income in the
operating subsidy calculation. The IHA must maintain specific
documentation of the units covered. Such documentation should include a
listing of the units, the street addresses, and project/management
control numbers.
(3) Long-term vacant units that are not included in the calculation
of Unit Months Available are eligible for operating subsidy in the
Requested Budget Year at the rate of 20 percent of the AEL. Allowable
utility costs for long term vacant units will continue to be funded in
accordance with Sec. 950.715.
* * * * *
5. In Sec. 950.725, paragraph (b)(3) is revised and the OMB
approval number is added at the end of the section, to read as follows:
Sec. 950.725 Projected operating income level.
(b) * * *
(3) Projected Occupancy Percentage. The IHA shall determine its
projected percentage of occupancy for all Project Units (Projected
Occupancy Percentage), as follows:
(i) General. Using actual occupancy data collected before the start
of the budget year as a beginning point, the IHA will develop estimates
for its Requested Budget Year (RBY) of: how many units the IHA will
have available for occupancy; how many of the available units will be
occupied and how many will be vacant, and what the average occupancy
percentage will be for the RBY. The conditions under which the RBY
occupancy percentage will be used as the projected occupancy percentage
for purposes of determining operating subsidy eligibility are described
below.
(ii) High Occupancy IHA--No Adjustments Necessary. If the IHA's RBY
Occupancy Percentage, calculated in accordance with Sec. 950.760, is
equal to or greater than 97%, the IHA's Projected Occupancy Percentage
is 97%. If the IHA's RBY Occupancy Percentage is less than 97%, but the
IHA demonstrates that it will have an average of five or fewer vacant
units in the requested budget year, the IHA will use its RBY Occupancy
Percentage as its projected occupancy percentage.
(iii) Adjustments in Determining Occupancy. If the IHA's RBY
Occupancy Percentage is less than 97% and the IHA has more than 5
vacant units, the IHA will adjust its estimate of vacant units to
exclude vacant units undergoing modernization and units that are vacant
due to circumstances and actions beyond the IHA's control. After making
this adjustment, the IHA will recalculate its estimated vacancy
percentage for the RBY.
(A) High Occupancy IHA after adjustment. If the recalculated
vacancy percentage is 3% or less (or the IHA would have five or fewer
vacant units), the IHA will use its RBY Occupancy Percentage as its
projected occupancy percentage.
(B) Low Occupancy IHA--adjustment for long-term vacancies. If the
recalculated vacancy percentage is greater than 3% (or more than 5
vacant units), the IHA will then further adjust its RBY Occupancy
Percentage by excluding from its calculation of Unit Months Available
(UMAs), all units that have been vacant for longer than 12 months that
are not vacant units undergoing modernization or are not units vacant
due to circumstances and actions beyond the IHA's control.
(iv) Low Occupancy IHA after all adjustments. An IHA that has
determined its RBY Occupancy Percentage in accordance with paragraph
(b)(iii)(B) of this section will be eligible for operating subsidy as
follows:
(A) Long-term vacancies removed from the calculation of UMAs will
be eligible to receive a reduced operating subsidy calculated at 20% of
the IHA's AEL.
(B) If the recalculated RBY Occupancy Percentage is 97% or higher,
the IHA will use 97%.
(C) If the recalculated RBY Occupancy Percentage is less than 97%,
but the vacancy rate after adjusting for vacant units undergoing
modernization and units that are vacant due to circumstances and
actions beyond the IHA's control is 3% or less (or the IHA has five or
fewer vacant units), the IHA may use its recalculated RBY Occupancy
Percentage as its projected occupancy percentage.
(D) If the recalculated RBY Occupancy Percentage is less than 97%
and the vacancy percentage is greater than 3% (or the IHA has more than
five vacant units) after adjusting for vacant units undergoing
modernization and units that are vacant due to circumstances and
actions beyond the IHA's control, the IHA will use 97% as its projected
occupancy percentage, but will be allowed to adjust the 97% by the
number of vacant units undergoing modernization and units that are
vacant due to circumstances and actions beyond the IHA's control. For a
small IHA using five vacant units as its occupancy objective for the
RBY, the IHA will determine what percentage five units represents as a
portion of its units available for occupancy and subtract that
percentage from 100%. The result will be used as the IHA's projected
occupancy percentage, but the IHA will be allowed to adjust the
projected occupancy percentage by vacant units undergoing modernization
and units that are vacant for circumstances and actions beyond the
IHA's control.
* * * * *
(Approved by the Office of Management and Budget under control
number 2577-0066.)
6. Section 950.760 is revised to read as follows:
Sec. 950.760 Determining Actual and Requested Budget Year Occupancy
Percentages.
(a) Actual Occupancy Percentage. When submitting Performance
Funding System Calculations for Requested Budget Years beginning on or
after July 1, 1996, the IHA shall determine an
[[Page 7590]]
Actual Occupancy Percentage for all Project Units included in the Unit
Months Available. The IHA shall have the option of basing this option
on either:
(1) The number of units occupied on the last day of the month that
ends 6 months before the beginning of the Requested Budget Year; or
(2) The average occupancy during the month ending 6 months before
the beginning of the Requested Budget Year. If the IHA elects to use an
average occupancy under this paragraph (a)(2), the IHA shall maintain a
record of its computation of its Actual Occupancy Percentage.
(b) Requested Budget Year Occupancy Percentage. The IHA will
develop a Requested Budget Year Occupancy Percentage by taking the
Actual Occupancy Percentage and adjusting it to reflect changes up or
down in occupancy during the Requested Budget Year due to HUD-approved
activities such as units undergoing modernization, new development,
demolition, or disposition. If after the submission and approval of the
Performance Funding System Calculations for the Requested Budget Year,
there are changes up or down in occupancy because of modernization, new
development, demolition or disposition that are not reflected in the
Requested Budget Year Occupancy Percentage, the IHA may submit a
revision to reflect the actual change in occupancy due to these
activities.
(c) Documentation Required to be Maintained. The IHA must maintain,
and upon HUD's request, make available to HUD specific documentation of
the occupancy status of all units, including long-term vacancies,
vacant units undergoing modernization, and units vacant due to
circumstances and actions beyond the IHA's control. This documentation
shall include a listing of the units, street addresses, and project/
management control numbers.
(Approved by the Office of Management and Budget under control
number 2577-0066.)
Sec. 950.770 [Removed and Reserved]
7. Section 950.770, Comprehensive Occupancy Plan (COP)
Requirements, is removed and reserved.
8. A new Sec. 950.775 is added, to read as follows:
Sec. 950.775 Transition Provisions.
(a) Treatment of units already under an approved modernization
budget Vacant units to be rehabilitated under modernization budgets
approved in FFY 1995 or prior are subject to the modernization
implementation schedule, without extension, previously approved by HUD.
It is the intent of HUD not to penalize IHAs that have longer
construction schedules in an approved modernization budget.
(b) Treatment of Existing COPs. (1) An IHA operating under a
Comprehensive Occupancy Plan (COP) approved by HUD under Sec. 950.770,
as that section existed immediately before April 1, 1996, may, until
the expiration of its COP, continue to determine its PFS eligibility
under the provisions of part 950 as that part existed immediately
before April 1, 1996. If the IHA does not elect to continue to
determine its PFS eligibility using its COP, the IHA's PFS eligibility
will be calculated in accordance with this part.
(2) HUD will not approve any extensions of COPs.
9. A new Sec. 950.777 is added, to read as follows:
Sec. 950.777 Effect of rescission.
If there is a rescission of appropriated funds that reduces the
level of Comprehensive Grant Program funding in an approved Annual
Statement under the CGP, to the extent that the IHA can document that
it is not possible to complete all the vacant unit rehabilitation in
the IHA's approved Annual Statement, the IHA may seek and HUD may grant
a waiver for 1 fiscal year to permit full PFS eligibility for those
units approved but not funded.
PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY
10. The authority citation for part 990 continues to read as
follows:
Authority: 42 U.S.C. 1437g and 3535(d).
11. Section 990.102 is amended by adding in alphabetical order
definitions for ``Long-term vacancy'', ``Units vacant due to
circumstances and actions beyond the PHA's control'', and ``Vacant unit
undergoing modernization''; by revising the definition for ``Unit
months available''; and by removing the definition for ``Vacant, On-
Schedule Modernization Units'', to read as follows:
Sec. 990.102 Definitions
* * * * *
Long-term vacancy. This term means the same as it is used in the
definition of ``Unit Months Available'' in this section.
* * * * *
Unit months available. Project Units multiplied by the number of
months the Project Units are available for occupancy during a given PHA
fiscal year. For purposes of this part, a unit is considered available
for occupancy from the date established as the End of the Initial
Operating Period for the Project until the time the unit is approved by
HUD for deprogramming and is vacated or is approved for nondwelling
use. In the case of a PHA development involving the acquisition of
scattered site housing, see also Sec. 990.104(b). A unit will be
considered a long-term vacancy and will not be considered available for
occupancy in any given PHA Requested Budget Year if the PHA determines
that:
(1) The unit has been vacant for more than 12 months at the time
the PHA determines its Actual Occupancy Percentage;
(2) The unit is not either: (i) A vacant unit undergoing
modernization; or (ii) A unit vacant for circumstances and actions
beyond the PHA's control, as these terms are defined in this section;
and
(3) The PHA determines that it will have a vacancy percentage of
more than 3 percent and will have more than five vacant units, for its
Requested Budget Year, even after adjusting for vacant units undergoing
modernization and units that are vacant for circumstances and actions
beyond the PHA's control, as defined in this section. (Reference in
this part to ``more than five units'' or ``fewer than five units''
shall refer to a circumstance in which five units equals or exceeds 3
percent of the number of units to which the 3 percent threshold is
applicable.)
Units vacant due to circumstances and actions beyond the PHA's
control. Dwelling units that are vacant due to circumstances and
actions that prohibit the PHA from occupying, selling, demolishing,
rehabilitating, reconstructing, consolidating or modernizing vacant
units and are beyond the PHA's control. For purposes of this
definition, circumstances and actions beyond the PHA's control are
limited to:
(1) Litigation. The effect of court litigation such as a court
order or settlement agreement that is legally enforceable. An example
would be units that are being held vacant as part of a court-ordered or
HUD-approved desegregation plan.
(2) Laws. Federal or State laws of general applicability, or their
implementing regulations. Units vacant only because they do not meet
minimum standards pertaining to construction or habitability under
Federal, State, or local laws or regulations will not be considered
vacant due to circumstances and actions beyond the PHA's control.
(3) Changing market conditions. For example, small PHAs that are
located in areas experiencing population loss or
[[Page 7591]]
economic dislocations may face a lack of demand in the foreseeable
future, even after the PHA has taken aggressive marketing and outreach
measures.
(4) Natural disasters.
(5) Insufficient funding for otherwise approvable applications made
for Comprehensive Improvement Assistance Program (CIAP) funds.
(6) RMC Funding. The failure of a PHA to fund an otherwise
approvable RMC request for Federal modernization funding;
(7) Casualty Losses. Delays in repairing damage to vacant units due
to the time needed for settlement of insurance claims.
* * * * *
Vacant unit undergoing modernization. Except as provided in
Sec. 990.119(a), a vacant unit in a project not considered to be
obsolete (as determined using the indicia in Sec. 970.6 of this
chapter), when the project is undergoing modernization that includes
work that is necessary to reoccupy the vacant unit, and in which one of
the following conditions is met:
(1) The unit is under construction (i.e., the construction contract
has been awarded or force account work has started); or
(2) The treatment of the vacant unit is included in a HUD-approved
modernization budget (e.g., the Annual Statement for the Comprehensive
Grant Program (CGP) (Form HUD-52837 or its successor), or the
Comprehensive Improvement Assistance Program (CIAP) Budget (Form HUD-
52825 or its successor)), but the time period for placing the vacant
unit under construction has not yet expired. The PHA must place the
vacant unit under construction within two Federal Fiscal Years (FFYs)
after the FFY in which the modernization funds are approved.
Sec. 990.104 [Amended]
12. Section 990.104(b) is amended by removing the first sentence.
13. Section 990.108 is amended by revising paragraph (b), to read
as follows:
Sec. 990.108 Other costs.
* * * * *
(b)(1) Costs attributable to units approved for deprogramming and
vacant may be eligible for inclusion, but must be limited to the
minimum services and protection necessary to protect and preserve the
units until the units are deprogrammed. Costs attributable to units
temporarily unavailable for occupancy because the units are utilized
for PHA-related activities are not eligible for inclusion. In
determining the PFS operating subsidy, these units shall not be
included in the calculation of Unit Months Available. Units approved
for deprogramming shall be listed by the PHA, and supporting
documentation regarding direct costs attributable to such units shall
be included as a part of the Performance Funding System calculation in
which the PHA requests operating subsidy for these units. If the PHA
requires assistance in this matter, the PHA should contact the HUD
Field Office.
(2) Units approved for nondwelling use to promote economic self-
sufficiency services and anti-drug activities are eligible for
operating subsidy under the conditions provided in this paragraph
(b)(2), and the costs attributable to these units are to be included in
the operating budget. If a unit satisfies the conditions stated below,
it will be eligible for subsidy at the rate of the AEL for the number
of months the unit is devoted to such use. Approval will be given for a
period of no more than 3 years. HUD may renew the approval to allow
payments after that period only if the PHA can demonstrate that no
other sources for paying the non-utility operating costs of the unit
are available. The conditions the unit must satisfy are:
(i) The unit must be used for either economic self-sufficiency
activities directly related to maximizing the number of employed
residents or for anti-drug programs directly related to ridding the
development of illegal drugs and drug-related crime. The activities
must be directed toward and for the benefit of residents of the
development.
(ii) The PHA must demonstrate that space for the service or program
is not available elsewhere in the locality and that the space used is
safe and suitable for its intended use or that the resources are
committed to make the space safe and suitable.
(iii) The PHA must demonstrate satisfactorily that other funding is
not available to pay for the non-utility operating costs. All rental
income generated as a result of the activity must be reported as income
in the operating subsidy calculation.
(iv) Operating subsidy may be approved for only one site
(involving one or more contiguous units) per public housing development
for economic self-sufficiency services or anti-drug programs, and the
number of units involved should be the minimum necessary to support the
service or program. Operating subsidy for any additional sites per
development can only be approved by HUD Headquarters.
(v) The PHA must submit a certification with its Performance
Funding System Calculation that the units are being used for the
purpose for which they were approved and that any rental income
generated as a result of the activity is reported as income in the
operating subsidy calculation. The PHA must maintain specific
documentation of the units covered. Such documentation should include a
listing of the units, the street addresses, and project/management
control numbers.
(3) Long-term vacant units that are not included in the calculation
of Unit Months Available are eligible for operating subsidy in the
Requested Budget Year at the rate of 20 percent of the AEL. Allowable
utility costs for long term vacant units will continue to be funded in
accordance with Sec. 990.107.
* * * * *
14. In Sec. 990.109, paragraph (b)(3) and the parenthetical
statement containing the OMB approval number at the end of the section
are revised to read as follows:
Sec. 990.109 Projected operating income level.
(b) * * *
(3) Projected Occupancy Percentage. The PHA shall determine its
projected percentage of occupancy for all Project Units (Projected
Occupancy Percentage), as follows:
(i) General. Using actual occupancy data collected before the start
of the budget year as a beginning point, the PHA will develop estimates
for its Requested Budget Year (RBY) of: how many units the PHA will
have available for occupancy; how many of the available units will be
occupied and how many will be vacant, and what the average occupancy
percentage will be for the RBY. The conditions under which the RBY
occupancy percentage will be used as the projected occupancy percentage
for purposes of determining operating subsidy eligibility are described
below.
(ii) High Occupancy PHA--No Adjustments Necessary. If the PHA's RBY
Occupancy Percentage, calculated in accordance with Sec. 990.117, is
equal to or greater than 97%, the PHA's Projected Occupancy Percentage
is 97%. If the PHA's RBY Occupancy Percentage is less than 97%, but the
PHA demonstrates that it will have an average of five or fewer vacant
units in the requested budget year, the PHA will use its RBY Occupancy
Percentage as its projected occupancy percentage.
(iii) Adjustments in Determining Occupancy. If the PHA's RBY
Occupancy Percentage is less than 97% and the PHA has more than 5
vacant units, the PHA will adjust its estimate of vacant units to
exclude vacant units
[[Page 7592]]
undergoing modernization and units that are vacant due to circumstances
and actions beyond the PHA's control. After making this adjustment, the
PHA will recalculate its estimated vacancy percentage for the RBY.
(A) High Occupancy PHA after adjustment. If the recalculated
vacancy percentage is 3% or less (or the PHA would have five or fewer
vacant units), the PHA will use its RBY Occupancy Percentage as its
projected occupancy percentage.
(B) Low Occupancy PHA--adjustment for long-term vacancies. If the
recalculated vacancy percentage is greater than 3% (or more than 5
vacant units), the PHA will then further adjust its RBY Occupancy
Percentage by excluding from its calculation of Unit Months Available
(UMAs), all units that have been vacant for longer than 12 months that
are not vacant units undergoing modernization or are not units vacant
due to circumstances and actions beyond the PHA's control.
(iv) Low Occupancy PHA after all adjustments. A PHA that has
determined its RBY Occupancy Percentage in accordance with paragraph
(b)(iii)(B) of this section will be eligible for operating subsidy as
follows:
(A) Long-term vacancies removed from the calculation of UMAs will
be eligible to receive a reduced operating subsidy calculated at 20% of
the PHA's AEL.
(B) If the recalculated RBY Occupancy Percentage is 97% or higher,
the PHA will use 97%.
(C) If the recalculated RBY Occupancy Percentage is less than 97%,
but the vacancy rate after adjusting for vacant units undergoing
modernization and units that are vacant due to circumstances and
actions beyond the PHA's control is 3% or less (or the PHA has five or
fewer vacant units), the PHA may use its recalculated RBY Occupancy
Percentage as its projected occupancy percentage.
(D) If the recalculated RBY Occupancy Percentage is less than 97%
and the vacancy percentage is greater than 3% (or the PHA has more than
five vacant units) after adjusting for vacant units undergoing
modernization and units that are vacant due to circumstances and
actions beyond the PHA's control, the PHA will use 97% as its projected
occupancy percentage, but will be allowed to adjust the 97% by the
number of vacant units undergoing modernization and units that are
vacant due to circumstances and actions beyond the PHA's control. For a
small PHA using five vacant units as its occupancy objective for the
RBY, the PHA will determine what percentage five units represents as a
portion of its units available for occupancy and subtract that
percentage from 100%. The result will be used as the PHA's projected
occupancy percentage, but the PHA will be allowed to adjust the
projected occupancy percentage by vacant units undergoing modernization
and units that are vacant for circumstances and actions beyond the
PHA's control.
* * * * *
(Approved by the Office of Management and Budget under control
number 2577-0066. Paragraphs (e) and (f) have been approved by the
Office of Management and Budget under control number 2577-007.)
15. Section 990.117 is revised to read as follows:
Sec. 990.117 Determining Actual and Requested Budget Year Occupancy
Percentages.
(a) Actual Occupancy Percentage. When submitting Performance
Funding System Calculations for Requested Budget Years beginning on or
after July 1, 1996, the PHA shall determine an Actual Occupancy
Percentage for all Project Units included in the Unit Months Available.
The PHA shall have the option of basing this option on either:
(1) The number of units occupied on the last day of the month that
ends 6 months before the beginning of the Requested Budget Year; or
(2) The average occupancy during the month ending 6 months before
the beginning of the Requested Budget Year. If the PHA elects to use an
average occupancy under this paragraph (a)(2), the PHA shall maintain a
record of its computation of its Actual Occupancy Percentage.
(b) Requested Budget Year Occupancy Percentage. The PHA will
develop a Requested Budget Year Occupancy Percentage by taking the
Actual Occupancy Percentage and adjusting it to reflect changes up or
down in occupancy during the Requested Budget Year due to HUD-approved
activities such as units undergoing modernization, new development,
demolition, or disposition. If after the submission and approval of the
Performance Funding System Calculations for the Requested Budget Year,
there are changes up or down in occupancy because of modernization, new
development, demolition or disposition that are not reflected in the
Requested Budget Year Occupancy Percentage, the PHA may submit a
revision to reflect the actual change in occupancy due to these
activities.
(c) Documentation Required to be Maintained. The PHA must maintain,
and upon HUD's request, make available to HUD specific documentation of
the occupancy status of all units, including long-term vacancies,
vacant units undergoing modernization, and units vacant due to
circumstances and actions beyond the PHA's control. This documentation
shall include a listing of the units, street addresses, and project/
management control numbers.
(Approved by the Office of Management and Budget under control
number 2577-0066.)
Sec. 990.118 [Removed and Reserved]
16. Section 990.118, Comprehensive Occupancy Plan Requirements, is
removed and reserved.
17. Section 990.119 is revised, to read as follows:
Sec. 990.119 Transition Provisions.
(a) Treatment of units already under an approved modernization
budget. Vacant units to be rehabilitated under modernization budgets
approved in FY 1995 or prior are subject to the modernization
implementation schedule, without extension, previously approved by HUD.
It is the intent of HUD not to penalize PHAs that have longer
construction schedules in an approved modernization budget.
(b) Treatment of Existing COPs. (1) A PHA that is operating under a
Comprehensive Occupancy Plan (COP) approved by HUD under Sec. 990.118,
as that section existed immediately before April 1, 1996, may, until
the expiration of its COP, continue to determine its PFS eligibility
under the provisions of part 990 as that part existed immediately
before April 1, 1996. If the PHA does not elect to continue to
determine its PFS eligibility using its COP, the PHA's PFS eligibility
will be calculated in accordance with this part.
(2) HUD will not approve any extensions of COPs.
18. A new Sec. 990.121 is added, to read as follows:
Sec. 990.121 Effect of rescission.
If there is a rescission of appropriated funds that reduces the
level of Comprehensive Grant Program funding in an approved Annual
Statement under the CGP, to the extent that the PHA can document that
it is not possible to complete all the vacant unit rehabilitation in
the PHA's approved Annual Statement, the PHA may seek and HUD may grant
a waiver for 1 fiscal year to permit full PFS eligibility for those
units approved but not funded.
[[Page 7593]]
Dated: February 14, 1996.
Kevin E. Marchman,
Deputy Assistant Secretary for Distressed and Troubled Housing
Recovery.
[FR Doc. 96-4169 Filed 2-27-96; 8:45 am]
BILLING CODE 4210-33-P
